SUMMARY
Financial planning is critical to the success of emerging startups
A sound financial strategy helps them propel their market expansion plans and acts as a buffer against financial disaster
To transform your startup's financial future and iron out the future economic challenges, read more…
“I found a million dollar baby in a five-and-ten-cent store,” a popular ballad sung by Bing Crosby in 1930, was an instant rage. A strong analogy can be drawn between the Crosby song and the emerging Indian startup space with small and medium businesses (SMBs) playing a pivotal role in the growth of the Indian economy.
Backed by bolstering digital transition, SMBs and startups had shown promising growth in the pre-pandemic era. However, the virus has taken a heavy toll on the overall growth of Indian startups and small businesses.
I believe this is the right time for a course correction. Entrepreneurs who have entered the arena and survived the Covid 19 tsunami must learn to adapt and evolve. You should always be on your toes and think before taking the final plunge.
Financial planning is the key to success. A proper financial strategy can save new businesses from unforeseen challenges. It also helps keep the cash flow intact while building a long-standing future for your company. In fact, it is a critical element for emerging startups. A sound financial strategy helps them propel their market expansion plans and keep them cloistered from any financial disaster.
From my experience, I can list five tips that will assist in effective financial planning for new founders. To transform your startups and help iron out the impending economic challenges, you should consider:
Hiring A Financial Expert
Seek expert advice from a skilled professional to understand the best way to manage your startup’s financial needs. A volatile market might impact the revenue channel of your business and impact growth. To sustain in those unpredictable days, you have to stay prepared and keep your guard up.
A good finance manager will always help you stay alert and keep the company’s cash flow smooth. This will help fuel the venture’s day-to-day operation. A smart mentor can help you predict the market, regulate the company’s future investment, and help your startup reap maximum benefit.
Keeping A Contingency Fund Ready
Always keep a contingency fund ready! Save a certain amount from the seed investment and use it to combat any unforeseen financial emergency that may arise. The contingency fund can also help reduce your debt burden by acting as the initial investment in your business.
Maintain A Healthy Credit History
Healthy and trustworthy credit history is extremely important for a new company. Credit is the lifeblood of a growing venture. New companies often utilise their seed investment or even go for loans to build initial business infrastructure. In fact, loans play a huge role in the development of a company as well as sustaining it while it focuses on the core operations.
So, it’s vital for a founder to maintain a good credit score which will help you avail easy credit. Often brick and mortar banks are apprehensive about disbursing loans to new businesses. With many emerging Indian neobanks offering easy loans to new businesses via credit cards, your healthy credit score will come into play here and help you and your business to kick off with the help of a loan.
Set A Budget
Control your business spending by setting a budget. Credits are always luring, but as a newcomer, you have to be cautious and maintain the right balance between expenses and earnings.
A budget will always help you stay within the limit and will keep you shielded from unnecessary debts. it’s vital that you keep track of your cash flow while you are building your budget. The cash flow projection will help you gauge your future business income along with the expenses that the company has to shoulder in the coming months.
Understand The Tax Structure
Understanding the tax skeleton of the country is essential for any aspiring entrepreneur. Be proactive and acquire the proper knowledge about the relevant tax registrations to avoid future hassles and financial deadlocks. Moreover, by taking an active interest in the GST structure, you will be able to ensure substantial tax compliance in the company.
New businesses are the cornerstone of India’s economy. With startup founders providing employment opportunities and innovative tech, they are in a key position to explore and mobilise new markets. The growth of the entrepreneurs is highly dependent on a conducive financial environment. Entrepreneurs need a strong and transparent tax structure and smart financial policies aided by the government.
