A whopping 90% of startups fail, with about 10% failing during their first year. Why does this happen? Unfortunately, many startups forget to plan before they act, leading them to spend money on the wrong things and hire incompetent staff.
This is why financial management should be a top priority. Experts like Rani Tarek Jarkas can help you manage your financial health, ensuring that you don’t make the same mistake as the majority of new businesses.
Essential financial management tips for startups from Rani Tarek Jarkas
- Determine your goals
First things first: Establish realistic objectives for your new business. Set aside big, ambitious goals for now and focus on manageable, verifiable revenue targets, allowing you to get a better feel of the market and manage your expenses.
When creating your budget, ensure you cover everything your business needs to grow in its first year. In addition, separate your estimated expenses into three categories:
- Essential costs, such as business registration fees and equipment
- Fixed costs, such as rent, permits, and website hosting
- Variable costs, such as legal fees, income taxes, and advertising fees
- Open a business account.
After launching a startup, one of the first and most important tasks is opening a business bank account. This will allow you to keep your business expenses separate from personal costs and protect your assets.
But most importantly, having a separate business account helps you prepare for taxes. This way, you can easily find opportunities for tax deductions and avoid bookkeeping nightmares.
- Manage your cash flow
61% of small businesses struggle with managing their cash flow. It’s not hard to see why. After all, keeping track of the money that moves in and out of your startup becomes more difficult as you grow.
Nevertheless, managing your cash flow is the key to your business’s financial health. To do this, you should send invoices as soon as possible, adjust your inventory, and monitor your debt and savings. Moreover, avoid borrowing money if you aren’t in immediate financial need.
Working with a financial expert may also help you stay on top of your expenses and maximize your profits. Rani Tarek Jarkas is a certified Financial Services Executive collaborating with companies and individuals to prepare their businesses for success.