Funding Your New Business: Financial Advice for Startups

The number of new businesses starting in the UK is on the rise with 665,495 company incorporations in 2019 to 2020 and many people starting their own businesses since the start of the pandemic. It is exciting to see so many startups launching, but continuity, profitability and financial wellbeing remain major challenges for new businesses.

Many new businesses fold within the first few years due to financial problems. So, what are a few financial tips that will help businesses to get set up and running and lay the foundation for future success?

Calculate Startup Costs

First, it is important to work out just how much money you need to get set up and running. Many businesses plough ahead without calculating their startup costs, which means that they struggle to get the business how they had envisaged it and often run into financial problems before long. Instead, work out what you need and then wait until you have secured this amount.

Get a Loan

Often, the best funding solution is to get a loan from a bank. This is a good option because you can very quickly get your hands on the money, and you do not have to give up any control or equity in the business. Even if you have a bad credit rating, you can still get approved for a loan from a specialist loan provider.

Use Crowdfunding

These days, another good funding option is to use crowdfunding. This is because crowdfunding allows you to raise a large amount from many investors and you do not have to give up any kind of control. Not only this, but crowdfunding can also be a smart way to get your business noticed and to help generate excitement before you launch.

Track Cash Flow

Startups often fail because they encounter cash flow problems early on. This is why it is so important to track cash flow and to use high-quality accounting software so that you can monitor spending and maintain accurate books. This will help you to determine small problems before they become major issues, find ways to make savings and improve cash flow.

Keep Spending Down

Initially, you want to keep spending down as much as you can without sacrificing quality or making work too challenging for your team. Keeping spending down will help to improve your bottom line and help you to manage during the tricky early stage when there may not be much money coming into the business.

Hopefully, these financial tips will come in handy when starting a new business. It is exciting to see so many new business ventures starting, but many end up folding within a few years due to financial problems and you will want to avoid these at all costs.

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