Suzzanne Uhland has always stressed the importance of paying special attention to today’s economic landscape in order to foresee possible complications, especially those that often lead corporations to file for Chapter 11. Although even well-established companies are not exempt from the dreary and dramatic consequences of bad management decisions, bankruptcy is perhaps one of the most important aspects entrepreneurs and startups should pay special attention to.
Startups tend to exude lots of enthusiasm and innovation, especially after launching their initiatives; however, they all struggle against the same obstacle: lack of capital. Irrespective of a business’s funding status, every CEO or funder needs to adopt a protective stance when it comes to human and other financial resources. Besides, many startups and entrepreneurs possess a very distinctive way of leadership, and sadly, oftentimes these traits lead their businesses into the red zone. In order to avoid financial missteps, entrepreneurs and startups ought to pay special attention to the following words of advice:
It Is All About The Job
In order to build a successful startup, entrepreneurs have to dedicate hundreds of hours of hard work and, moreover, make a myriad of personal and familiar sacrifices. When it comes to outlining the financial part, many fail at separating finances from their personal lives. In fact, such confusion is perhaps one of the most basic causes why a plethora of these initiatives go sideways during early stages. Startup owners might be acquainted with the way finances are run under today’s fast-paced economy; however, there is a huge gap between running personal finances and the financials of a business. Things actually tend to worsen everytime inexperienced entrepreneurs offset their personal expenses through their businesses. Word of advice: do not do it.
The Mirage Of Multitasking
The smartest way to secure the financials of a company, irrespective of its trajectory and experience, is by hiring someone skilled enough to do this job as expected. Entrepreneurs, nonetheless, need to adopt a cautious stance, of course, and oversee the process, but only after they have found someone they can trust. It actually pays off to bring in talented individuals. Financials are somewhat of a mixture between science and art, and securing the right personnel to carry out such an important part of a business is key if the idea is to thrive and succeed.
Results are important, but…
Results are important. And maybe that is why the vast majority of entrepreneurs focus on getting there rather on the steps that lead to them. Entrepreneurs and pretty much every business owner needs to pay special attention to every single penny; a startup needs to have clarity on aspects such as revenue, expenses, capital, accounts receivable, accounts payable and a general overview of financial cycles and today’s economic juncture. Of course, financial models provide a general interpretation of some of the aforementioned aspects; however, it makes more sense to have someone skilled make accurate projections.
The Importance Of Paying Attention To Details
Even well-established businesses fail simply because they get used to overlooking the details. Entrepreneurs need to pay special attention to details, as they are important for every single phase of their businesses: research, product development, competition assessment, and, obviously, finances. Business owners need to make sure they understand what they are dealing with within a specific industry; they need to understand why they have to have two separate business models: a projected versus an actual one; they need to be highly meticulous about the information and all the paperwork involved.
Why Disregarding Multiple Sources Of Funding Is A Bad Idea
Entrepreneurs often believe they can do everything. However, reality dictates otherwise, especially when it comes to finding sources of funding. There is a simple, logic, rule: startups need to find several sources of funding. Equity is perhaps more workable as family and friends often offer some support; but on a serious note, there are more sources aside from the traditional angel investors and venture capitalists such as existing and potential customers and vendors.
Always Look At Investors As Someone Close
A very common mistake in the startup sphere is the lack of information about investors. Or, better said, entrepreneurs simply do no research enough who they are treating with. In fact, many business owners do not know basic terminology and the difference between angles, venture capitalists, and equity firms. Besides, they do not have an established investment criteria. It is no less than important to dig deeper when it comes to letting someone from the outside lay their hands on a company’s assets and finances; it is perhaps even more important to dedicate time to assess what type of investment does a particular business need, trying to determine whether the company is the right fit for such investor and vice versa.
* Featured Image courtesy of David McEachan at Pexels.com