Financial advice for new entrepreneurs
From Prashant Sawant, Co- Founder, Catalyst Wealth
For entrepreneurs, when it comes to financing, there is a lot of advice on what should be done and what not! There are various difficulties that an entrepreneur has to face while running a business for the first time. There may be a lot of information but there might also be a few gaps. To take the business to the next level of growth, entrepreneurs will have to make smart choices, especially financial decisions that work with the ethos of the company.
A list of some crucial financial steps that new entrepreneurs must know:
1. Know your account statements:
It’s very critical for new entrepreneurs to completely know where and how the money is going. Following conservative measures is the key to understanding your expense pattern. Doing expenses for high-end office materials would be a poor choice at the beginning of the business. Entrepreneurs have to make critical decisions on expenses like building the product, acquiring new customers, talent acquisition, etc. Entrepreneurs need to take this into account while planning their yearly and quarterly budgets.
2. Maintaining your credit score:
You will need a solid credit score that would help to back you up during the developing stage of your business. Investors find it a risky proposition to shell out seed funds for a new venture, which does not have a good credit rating. It also turns out to be of great help for determining the loan eligibility for a new business.
3. Research on tax:
It is very important for a new entrepreneur to know about the taxation system. There is a lot of tax that they would have to pay. One should do proper research and know which taxes are there in their state, city, or country. You need to keep money aside from your budget for taxes.
4. Choosing investors:
Investors are considered a great asset for a business. Investors not only provide funding to grow the business but also, open up their network for expanding the customer base and taking the business trajectory to the next level of growth. Therefore, it is very important to have the right investor to invest in your business.
5. Seeking help from a professional
It is important to seek professional help when due necessary. Take the help of a financial adviser while planning the financial aspect of the business. RoI can be reinvested in the business to further grow the latter. Excess funds can be parked in different asset classes as per business requirements. With the help of an adviser, funds can be easily moved, parked, and re-invested for business.