By Sharon Brown
Starting a business can be very intimidating if the right guidance and tools are not available. While every entrepreneur goes through a learning curve, not many business owners come out victorious at the end of the learning tenure. They often commit mistakes that cause the company to shut down due to operational inefficiency or lack of funds to continue.
This might sound surprising, but most failed startups attribute similar reasons for their shutting down, and most of these reasons can be easily avoided if the right knowledge is available. From robust accounting system to quick access to credit during emergencies, knowing what your business needs can ensure long term performance of your company. Here are five essential things that can help you insulate your business from these common mistakes and hurdles.
1. Automated Accounting System
Managing cash flow is one of the biggest concerns for any growing enterprise. Especially in case of startups, where owners don’t necessarily have enough skilled resources to handle the accounts, a strong and dependable accounting system is essential. Investing in a robust automated accounting software can help eliminate many problems associated with faulty accounting and record keeping.
There are many expert software systems available in the market these days, and can be installed on most computers with ease. These automated accounting systems are very efficient, easy to use, and are highly affordable. Many business automation tools also offer integrated solutions across the organization, including sales, payroll management, operations automation and more. With a little research and guidance, you can easily find a system that offers maximum benefits for your business.
2. Integrated Invoicing Tool
Despite being the feeding operation of any business, invoicing rarely gets the attention and precautions it requires. Most startups are busy chasing new clients and delivering services, leaving invoicing and record keeping to last moment. This means you often forget small deliveries in between projects, or send an incorrect invoice that drives the client away. A huge number of startups associate lack of a dependable invoicing system to their shutting down.
This is why it is a smart idea to not only carefully think over your billing policy, but also bring in an integrated invoicing tool for your business. These invoicing tools come with features that allow you to easily record and bill the services you are offering to your clients. From billing the clients in time to keeping a track of your invoices, an efficient tool will definitely help you increase your efficiency and ensure reliable recording.
3. Comprehensive Insurance Policy
If your startup requires any type of machinery, risk-intensive labor or transport of goods, insuring it against possible losses can help you secure your investment. While many entrepreneurs argue that a growing business cannot afford to pay insurance premiums in its initial stage, they fail to realize the immense benefits an insurance plan can offer.
Depending upon the nature of your business, investing in insurance can be a smart idea. You can either opt for separate insurance plans that cover individual elements of your business or look for an all-encompassing general insurance that offers maximum risk coverage to your start-up.
4. Dependable Savings Plan
Very often, entrepreneurs are quick to spend all their earnings. The idea of “startups don’t make money initially” also prompts the founders to keep on spending by adding more features and tools to their businesses. Although expansion is important, having some liquid reserve for emergencies can help you maintain the operations of your business for a long time.
While your startup might not be generating much revenue currently, it is important to implement a savings plan to ensure growth. Fixed percentage of revenues kept as savings go a long way in keeping your business activities afloat.
5. Access to Short-Term Loans
Despite all attempts to save and manage funds efficiently, businesses at times run into cash crunch. Delay in invoice clearance and bank transfer regulations can create a virtual drought of money. Whether it is the insufficiency to continue basic operations or paying off a vendor invoice, startups often need short term loans to manage their payments.
As an entrepreneur, make sure that you have the option of availing short-term credit to handle such unforeseen situations. There are many private lenders offering short term payday loans for personal or business purposes. Make sure to pay back the loan as soon as your invoices are cleared to avoid the situation of increased debt.