Startups are a unique product of today’s integration of high-end technology into every part of business, and the 90 percent failure rate for this type of company has deterred only a few from giving it a try. The focus of most startups is to build a viable product or service as quickly as possible with limited resources. The day of investors handing over millions to anyone with an idea is now over, so startups today need at least a framework of a way to make income before expecting outside help. So how can a startup push through the most difficult first few months or years and avoid big financial mistakes that sink the ship? These four tips, along with a good business insurance policy, will definitely help.
Keep Better Records
With so many different challenges to draw your attention during the heady first days of a startup, it’s easy to forget the basics like tracking your spending. Yet when it comes time to get funding from investors or go public, you’ll need clear records showing your expenditures so everyone knows what to expect. You can’t just rely on bank account statements, either, since many exchanges are made in cash or for future percentages of the profits. Even what you spend to get business insurance needs to be recorded clearly, preferably in some kind of bookkeeping software, from the very first dollar you spend on your idea.
Remember Consumable Costs
Many business costs, such as business insurance, are easy to remember to track and account for because they arrive in the form of convenient monthly or annual bills. But what about the snacks you buy for your team, the business dinners you use to thank your mentors, and even the ink in the printers? Forgetting to account for all the little consumable costs that go into running a healthy startup can leave you budgeting too little and dipping into your own pockets to cover the rest. You can’t bankrupt yourself to keep your company afloat when a budget can reveal what’s eating up so much of your funding.
Treat Your Human Capital Best
How does pushing your team of dedicated employees too hard lead to financial disaster? Steady progress toward your product or service launch can suddenly be thrown of track by a mass loss of your team. When no one’s getting enough sleep and you’re putting too much pressure on the human element of the startup, no amount of investor funding or personal wealth can keep everything on track and avoid a crash. Downtime can cost you thousands of dollars a week when you’re on a tight schedule, but low cost business insurance can compensate you for downtime if you set up your policies correctly.
Finally, there’s so much about the business world that you can only learn by working with others with more experience in your industry. Many business owners with established empires are happy to spend some of their time mentoring entrepreneurs who have a lot of energy and a good idea. Instead of settling for just one mentor, look for a variety of older professionals with different skills you need. For example, you might find a drop shipping mentor, a marketing mentor, and a mentor with experience in running a non-profit organization. Since most startups are designed with more creativity than your average small business, you’ll likely need the help of multiple mentors to achieve your unique goals.
Don’t take on every business liability personally. Freeway Insurance has all the best small business insurance options to fit your budgets and the needs of your startup. Give us a call here at Freeway Insurance by dialing 800-777-5620 to compare insurance rates and get more information.