Whether you’re in the planning stages, in the middle of a “soft launch” or hitting the market at a full gallop, managing the financial resources you have is always an early topic of discussion.

·         How will the business finance the startup, and under what terms?

·         How much will you need to bring your entrepreneurial vision to reality?

·         How will the business generate capital?

·         How will the business expand revenue sources?

Getting a startup to actually “start up” takes a lot of research, preparation, number crunching, best guessing, and an understanding of money management in the early stages of business growth.

Get good advice. Reliable information on starting a business is easy to find, either on the Internet and in person. Visit the Small Business Administration website for practical information on everything from financing to running a lean company. The SBA is an invaluable resource for startup owners. It’s free, and it’s designed to help people just like you.

Another resource for startup advice is SCORE, which maintains regional offices staffed by experienced entrepreneurs. They provide free mentoring services to increase your chances of achieving business success. Again, reliable information at no cost, and no cost is often what startups need most.

Develop a realistic budget and cash flow projections. Before you go out and rent an office suite in a posh office park, you have to know the company’s monthly expenses, from supplies and salaries to inventory and business insurance. Then you’ll need to realistically estimate how much money you’ll be earning each month. Developing a budget enables you to craft more realistic plans and projections.

If you’ve made pie-in-the-sky assumptions, you’ll be clueless when reality hits six months down the road. Do the math. Develop the worst-case scenario. Then, plan for an even worse case.

Know where startup capital is coming from. Make sure you have financing in place, or alternate sources of personal financing, before betting the ranch on your business idea.

Even the smallest of small businesses needs the basics: A reliable computer. Software. Business license fees. All that costs money. Most lenders and investors shy away from startups. Without a history of credit worthiness, business capital may not be available.

This means you may have to finance your startup out of pocket, or you may have to collateralize a business loan with personal property – like the family homestead. Before you dive in headfirst, weigh the pros and cons of borrowing from friends and relatives, and self-financing.

Don’t give up too much for too little. When you first start out and want money to expand, a small infusion of capital from an investor may sound great, and having someone else with faith in your business plan can be an ego boost.

However, don’t give up too much to get that cash. Everything is negotiable. Some investors – venture capitalists – may want an ownership stake. Spend the money to find out how much your growing business is worth before offering a percentage to an investor. Professional business valuators can assess the overall fiscal health of your business, review future plans and assign a dollar value to your enterprise.

Develop an automated system for money management. Smart business owners don’t keep receipts in a shoebox. Invest in basic accounting software to track income and outgo at least monthly. Reports generated by online banking and business credit cards can help you keep an eye on your cash flow.

Use your bank’s commercial services to automate monthly payments and enable you to accept remote payments through a sales employee’s smartphone.

Start building credit ASAP. You may not need it today, but at some point in the growth of your business, you may want to borrow capital to expand. Having a sound business credit history takes time. Start building one as soon as possible to have more borrowing options in the future. And keep current on payments to build a squeaky clean credit report.

A startup is an exciting adventure. Make sure you’ve charted a prudent course for business success.


The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.