Startups have become norm of the day today. However with new startups coming up every day and people funding new businesses like never before, we still see failures at a large scale. As per a survey about 85-90 percent of startups fail in their first year. One of the main causes of startup failures is improper management of Finances. Financial research can quickly become a lifeline to keeping your business from drowning in these shark-infested waters. You need information to make strategic decisions moving forward.
Financial mistakes can be a deciding factor for any business let alone startups. The competition is so severe that every single ill made financial decision might prove detrimental to your dream startup. We have figured out 5 important points that startups must keep in mind at all costs.
1. Keep a track of your Finances through Financial reporting
We all know finances are what keep the business going, hence it becomes very important for us to be aware of our finances as startups. An effective financial report provides you with a way to track your business’s success. In order to create the accurate reports, you need to analyze data from a number of different sources by using varying criteria. Financial reports show you the value of your business. Financial research is the best way to create an accurate financial statement.
2. Creating an accurate Balance Sheet
For any entity to progress, you must know your Balance sheet thoroughly, A balance sheet provides a quick look at how much a business is worth. It takes assets, liabilities, and equities into account. For any Balance Sheet we must always be aware that Liabilities+Equities= Assets
The ability to correctly classify assets and liabilities is challenging for small business owners. Identifying the wrong liability could make your business appear to be less financially healthy. Without an accurate balance sheet, you will have no idea what might be hindering your growth from a financial standpoint.
3. Don’t keep all your eggs in the same basket
While you make money from your business, always remember not to keep all your eggs in the same basket. Businesses have to make investment decisions every day, but the most important investments come early in the business. Startups should create a data-driven process. Furthermore, they must have the ability to accurately track those investments. The overall goal of investing should be to lower risk as much as possible. Don’t rely on a single source of income and invest the returns from your business in still other ventures in order to enhance your financial portfolio.
4. Learn and promote better financial management techniques
The one fact that drives any business is that those who are the best at managing money seem to achieve the highest level of success. Data-driven statistical models created through financial research are a great money management tool used by the most successful of entrepreneurs. One must take a comprehensive look at a business’s short and long-term financial goals. This is important for small businesses looking to move up to the next level.
5. Always pursue Growth
Growth is different for different people and businesses. But nevertheless one must always pursue to grow. Businesses that actively seek growth are much more likely to find it. One of the primary reasons why a business seeks growth is to experience a boost in profit. Business research is vital in this area. Ratios are used to determine the pace of a business. Sustainable growth requires the right amount of research along with the right action.