It is hard to think of a startup that has survived more than five years without a glitch. And as the long-time financial expert in a multinational firm John Cusack points out, only one-third of new businesses make it to their 10th year. If you want to know a single measure of these businesses success, here it is: having a well-devised financial strategy. Today, those startups include dozens of famously successful insurance companies, delivery techs and service firms. The result is that a few thousand dollars invested are worth multi-millions.
The key to a business’s growth is having adequate financial planning at every step of the way. And because finance plays a crucial role in everything you do in the business, you need to tread carefully. Some of the steps you can take include, but not limited to:
1. Finding the Balance
If you have learned one thing from other businesses, it is that there is a clear-cut rule in establishing a value proposition by setting prices for products or service. Why do customers prefer one business over another? One of the major reasons is the price. Data suggests that businesses that have set their prices to a reasonable or low level have a considerable chance of gaining new customers and retaining existing ones.
There are complex factors that determine a price for an item in any business. And setting the price is not at all random. It is based on overhead cost. More to the point, when prices are low, customers are attracted to the business naturally. So, if you want to succeed, do what other successful businesses have done before – offer a price match.
2. Identifying Fund Source
You got into business with the intention of making money. To make money, you need to invest some – for labour, materials, equipment and service among many other things. To find money, you will have to first identify its source. Some of these sources include personal savings, investors, loans, invoice finance and shares. The greatest indicator for a business that would one day strongly hold itself and appreciate in value is the number of funding source it has accumulated over the years. The more the number of these sources, the more likely customers and clients are able to feel confident in doing business with you.
3. Identifying Revenue Streams
Many businesses tend to identify more than one revenue streams along the way in order to sustain. What revenue stream does your business have that could make it more profitable? For example, if you are a renovation company, you can also add a wing to take care of cosmetic enhancement of buildings such as painting, cabinet making and decor work. This could be lucrative in the long run especially when you are catering to the same community and have built credibility all through these years. Similarly, if you are offering plumbing service, the odds that you will see orders for both interior and exterior issues coming your way are high. You just have to adapt to the new addition and let money come to you.
4. Focusing On Your Strengths
It is important that you focus on your strengths rather than on your weakness when running a business. Businesses that have been successful in the past reflect a similar trend when it comes to attention to details. For instance, for companies that are located in more affluent areas, the return on investment tends to be higher and more stable. In less desirable locations, doing business is not just risky but more volatile as well. All this irrespective of the size or type of the company.
So, when it comes to business ownership, these examples show one way in which location matters. Similarly, businesses that lack competitors tend to thrive in its field due to more demand and no one else to supply. In essence, you need to reorient your financial strategies that will suit your strengths and build your credibility from there.
5. Investing On Employees
Employees are the backbone of any company. Before you go any further, you should note that employees are hired to fit the inappropriate area of your venture. Some focus on helping the business grow, while others focus on serving customers. Hiring people who are motivated and inspired by the virtue of your business is a must. Finding the best employee is much more complicated than just looking at the interview results. Best employees bring countless other qualities and value into the business that can affect your bottom line.
Last but not least, financial strategies are not a one-size-fits-all thing. Every business has its own needs, budget, advantages and drawbacks. There are a lot of other things to take into consideration as well. Your business should make decisions based on those data to create a personalised financial plan.