In a modern business landscape, fundraising act as a major constituent to support startup growth and so, there are many ways to get funding. Besides helping newly-built business grow, funding also helps startup achieve financial objectives, removes glitches along the way, matches business standards and high level competition, as well as stays competitive in the business market.
Although too often fund raised is seen by companies as a mark of accomplishment, you should notice that raising money will not solve any of startup problems – nor will it determine your long-term success. In some cases, it will amplify problems that exist within a startup instead. Thus, you should be careful in spending every cent kept in your startup budget. Moreover, your finance team should audit every aspect of business carefully to track any financial issues that could destroy the future of your company. Therefore, managing your startup fund in the right and organised way is essential.
How to do it, then? Here comes the best tips from Consult Straza to avoid setting your startup funds on fire.
Set startup priority at the beginning – To avoid wasting time and money, setting priority is the best strategy. If you are working on your startup now – let’s say, you are building an app for mobile phone. Then, what do you think is the first priority? Development is. It should be your main priority over marketing at the very first start until you have finalised a product or service development.
So, jot down from the most to the least important things you should get done. Keep the list on mind and stick it to a place where you can see it every day. This way, you can spend your time and money on things that matter most first than things that could wait later.
Identify risks early and limit their impact – Planning everything ahead is a good strategy. Yet, you might still face unexpected problems along the way. However, strong leader and capable team can foresee potential problems and plan ahead in order to limit the impact of the problems that might arise. If it turns out that the problem is something that you cannot handle, it would be better to consult with experts in the matter.
For example: if your business rely heavily on platforms such as Facebook, LinkedIn, or App Store, changes made in these social media’s policy might also change the way you run your business. Therefore, to minimise the negative impacts, you should limit these types of risks and create a backup plan.
Make real budget and trust someone experienced to oversee it – When you receive a funding for your early-stage startup, you might already have an idea to where and how you should spend it. Yet, ideas often change and budget should still be stable. Therefore, it needs a true and natural-gifted person to manage your budgeting. If you have trouble to manage this, you should be honest with yourself and get someone who is expert in the field instead.
Get the right experienced advisor – An interesting fact is everyone does not like a no answer, yet everyone needs a no answer. One of the benefits of being told ‘no’ is that we can realise how silly idea we once have. Thus, in a business, an advisor is needed to sometimes hit you with the simple yet big truth of business. The right advisor can tell you the truth even when you don’t want to hear it. He should be able to keep you accountable.
Build runaway twice – Many early startups raise enough money to last for a year or two then need to start all over again. But you don’t have to be in the same cycle. You can do better by creating a long financial runway. It means that even with no or low sales, your business can still fully function for more than a year – if possible two years. So, you will have enough space to experiment, fail, and recover. Tips to remember, building a long runway will only work if you have a careful budget plan and can stick to that budget, at least within reason.
See also: 6 Ways to Get Funding for Your Early-Stage Startup