How can a start up budget their finances

For the start-up business the process of budgeting plays an important role in figuring out the sources from where to get the cash in order to meet the financial need of the business. Financial stability is considered as the key factor while planning upon budgeting for the start-up. A backup plan act as a saviour in achieving the financial stability. If a start-up fails to budget their finances in the most efficient manner then they are unknowingly planning their failure.

The main reason behind the failure of most of the start-ups is not the money but the lack of knowledge about budgeting and finances. Every budgets and projections for the future is based on assumptions as no one can predict future.

Common problems faced by start-ups

1. Availability of sufficient working capital: Working capital is the capital of the business which is used in its day to day operation of the business. It is also known as life blood of any business. One of the most important responsibilities of any start-up business is to maintain a sufficient amount of the working capital so that it can focus on acquiring new customers and developing new products.

2. Enough sales but low profits: Another major difficulty that mostly every business faces is a situation where hidden costs eating away at your bottom line which can ultimately increase the expenses which could be out of control. In order to avoid such a situation, a bold purchasing policy needs to be created.

3. Avoid fall in sale due to unavoidable reasons: Start-up in their initial stages are not ready to face fall in sales due to unavoidable reasons. In order to avoid such a situation it is very important to forecast cash needs by keeping a close check on financial statements.

4. Regular receipt of late payments from clients: More than 80% of the start-ups are troubled by late payments from their customers on a very frequent basis which is the potential threat to the existence of business in long run. It is very important to have very strict credit policies to cope up with such situation.

5. Excessive sales promotions: Whenever businesses run slow, they tend to resort to sales promotions, discounts, coupons etc., just to boost their sales. When sales are low, offering excessive discounts is not the solution. In most of the cases, it was seen that the customer oriented sales promotions can achieve short term sales to offset the competitive pressure but at the same time it threatens the long term survival of the business brand. 

6. Right funding option: A start-up have a variety of funding options available such as friends and family, business loans, angel money, bootstrapping, venture capital, etc. Although a variety of funding options are available but still a business should have clarity on their current financial position and also evaluate their risk tolerance for each such funding.

7. Deficiency in cash flow management: Cash flow means the total money being transferred into and out of the business. In other words, it relates to money in, money out. A deficiency in the cash flow management can turns out to be the biggest threat which could add to the failure of start-up business. Proper monitoring of cash flow could warn the business well in advance regarding the need for cash and enables you to prepare a better financial road ahead.

8. Inadequate revenue and expense projections: If any business wants to succeed, it is very important for the start-ups to know the revenue sources and the expenses that will be incurred in the course of business. Never take the impulsive decisions, it could make the expenses going off the track. Thus, it is always advisable to have budget in place while decision making.

Conclusion

It would be right to say that finance is the blood of the business. Business cannot be run without a sufficient and regular cash flow. Thus, it is very important to be financially strong and available of proper budgeting and proposed finance which is the key success of the start-ups.

For more information contact us on given communication details, Email Id Swati@neusourcestartup.com and Phone Number 9540026175.

The Neusource Startup Mind is the finest business startup consultant that offer various services of registration like Proprietorship Firm Registration, Partnership Firm Registration, LLP Registration, Company registration, GST Registration, Copyright Registration, ISO Registration Trademark registration, and other FSSAI License, etc. 

Akash Rai

"Any time is a good time to start a company.” Neusource indulge in providing business consultancy services which help startups to accomplish their desired results as a TAJ EXPRESS. If you’re passionate about something and you work hard, then neusource is the right choice for you.