Financial decisions are not fun, but they are essential if you wish to keep your business afloat. Looking long and hard at your options and going through all the different levels of financial preparation you need to make for your business in advance will mean you can better budget, prepare, and finance your business from conception to success.
Which Bank You Will Work With
The bank you will work with is very important, and though many will act the same, you need one that offers you benefits your business needs. Some will have better programs for big businesses, others for those just starting out. Don’t automatically go for the bank you use for your personal finances, as they might not always be the best option for your business. Therefore, you should spend plenty of time researching and comparing what they offer.
How You Intend to Raise Money to Build and Launch
Self-financing your business can seem like a great idea, and it is, so long as you also have the cash reserves left over to support your family and maintain your lifestyle. You can bet it all, yes, but you don’t have to. It can be a smarter move to take out a loan to cover your business and keep your savings where they are so that you can spread out the cost and have a very comfortable buffer during the hard first few years.
Applying for a loan will require a bit of work of your behalf. You need to give the loan company a reason to invest in your business. If you turn up to a loan meeting unprepared, then you could find yourself being rejected. After all, investors are not going to put their hard-earned cash into a project that isn’t going to benefit them in the long run. Therefore, you will need to prep yourself in advance. This includes creating an overview of what your business is, you could show evidence that there is a gap in the market, and what the expected turnover for a business such as this could be. Do this and you could find it much easier to be approved for any loan you apply for.
Watch out for any catches and never take out more than you can reasonably pay back, so always read the fine print to make sure that you will not find yourself in too much debt. This is the last thing you want when starting a new business.
How You Intend to Predict Your Cashflow
You will likely have periods where you see bigger payments coming in than others. Though it can be very difficult to predict this cashflow before you launch, or within your first year, you should have the industry experience to know what to expect. If there are slow periods in July, then you need to prioritize saving during the lead-up, and so on.
How You Plan on Paying All Your Employees
Different payment methods are good for different scenarios. If you intend to work from the start with a lot of different employees, freelancers, or suppliers, then you need an option that is fast and works in bulk batches. If you only have a few transfers to make then the most budget-friendly option is going to be your friend. Know how you intend to pay your employees and suppliers from the start so that you can better streamline the process and ensure everyone gets paid on time.
Something else that many people don’t always think about regarding paying employees is when you will pay them. Will you pay them on the last Friday of the month? Every four weeks? Or on a set date? Usually, the 28th (or as close to) is a popular option for many businesses.
How You Plan on Paying Your Suppliers
Streamlining your payments to your suppliers is key to keep them happy and to ensure you have a healthy, thriving relationship. Suppliers often have very small profit margins as businesses from every avenue work to negotiate their prices lower. This is a good business practice, but don’t impact the relationship further by providing late payments or needing to be chased up. Automate the process and take the hassle out of your hands.
How You Plan on Handling Your Debts
A financial buffer can help you pay off your debts, which is why you always need to save in advance before starting a business. It is up to you to sponsor and keep your business afloat until it gets on its feet, and a healthy savings account can do this for longer.
Check out my guide on how to start your business right with tons of useful tips I learned by successfully starting, building, and selling multiple companies.