What do you do if you're an entrepreneur starting a new business and need to make key financial decisions? (2024)

I make key financial decisions for my business. I start by creating a detailed business plan that outlines my goals and financial projections. This plan guides my budgeting process, where I set aside funds for startup costs and ongoing expenses. I also research different financing options, such as loans or seeking investors, to determine the best fit for my business. Keeping a close eye on expenses and revenue is crucial, as it allows me to make adjustments as needed. Lastly, I seek advice from a financial advisor or mentor to ensure I make informed decisions.

It's important that you define your needs in terms of must haves, good to have, short term, and long term. The "must haves" are things that you require to have in order to operationalize your business. This is often things like computers, CRM systems, etc. The "nice to have" are needs that would make your life easier but are not must haves. This is often a new offices, new mobile phones, etc. The other definition is a time based definition - there's some needs that need to be met immediately, and some that need to be met at a later date because they depend on the trajectory of the business. The "long term" needs are mostly tied to scaling up the business. Lastly, map out all these needs in a 2X2 matrix to visualize your needs.

I see financial forecasting not just as a tool, but as a strategic weapon in entrepreneurship. Turn data into a story that forecasts where your business can head, identifying potential pitfalls and opportunities before they surface. This foresight empowers informed decisions, from budgeting to investing. But here’s the kicker: it’s not set in stone. Like the market, your forecasts must evolve. Stay agile, update your predictions with fresh data, and pivot when necessary. Embrace this dynamic approach to manage the complexities of financing and growth.

Being able to develop a business case is very important when starting a business. This is where you will use data (in the form of actuals or forecast) to make decisions around growth opportunities, investments, and revenue streams. In my experience, it's important to capture the key assumptions driving your forecasts, as well as the key risks to your finances. These two sets of information will help you quickly react and recast your finances when the market changes and/or a risk materializes.

As a CFO friend used to tell me: "Cash is King".When you are a small company it's tempting to focus on profitability or even revenue. But if a lot of the work is self-financed then the most important financial metric is your free cash flow. Thus, it's important that you understand all the factors affecting your cash flow, that you regularly measure free cash flow, that you regularly project free cash flow, and that you have leading indicators.

For entrepreneurs launching a startup, mastering cash flow is paramount. Start by creating a comprehensive cash flow forecast, outlining expected income and expenses. Monitor receivables and payables diligently to ensure timely payments and maintain healthy liquidity. Implement cost-saving measures and negotiate favorable terms with suppliers. Utilize digital tools for real-time tracking of cash flow patterns. Establish an emergency fund for unforeseen expenses. Regularly review cash flow statements to identify trends and make informed decisions. Effective cash flow management ensures stability, enables growth opportunities, and fortifies the financial foundation of your new venture.

In my experience, it's easy get carried away with costs because they are "deductible" and we think we will eventually get revenue to cover the costs. However, frugality is the key to building a cash rich and profitable business. This frugality should be present from day one to manage both large and small expenses and costs.

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When starting a new business, focus on understanding your target market deeplyInvest in market research to grasp customer needs to optimise financially product development, ensuring your offerings resonate with your audiencePrioritize the customer experience in every financial decision, from product design to customer serviceBudget for customer acquisition and retention strategies, such as marketing and loyalty programsKeep a tight control on expenses without compromising on qualityInvest in technology that enhances customer interactionMake data-driven decisions by regularly analyzing customer behavior and financial metricsEnsure a portion of your budget is reserved for innovation and adapting to changing customer needs

For entrepreneurs launching a new venture, securing financing is a pivotal step in achieving business goals. Begin by evaluating different financing options such as loans, investors, or crowdfunding platforms. Develop a compelling business plan to present to potential lenders or investors, highlighting growth potential and profitability. Strengthen your creditworthiness by maintaining a good credit score and a solid financial track record. Consider government grants or startup incubators for additional support. Thoroughly research and compare terms and interest rates to make an informed decision. Securing financing empowers entrepreneurs to fund operations, invest in growth, and realize their entrepreneurial vision.

The top three recommended ways to secure financing for a new business are:Bootstrapping: Using personal savings or assets to fund initial operations.Small Business Loans: Applying for loans from banks or credit unions tailored for small businesses.Angel Investors: Seeking investment from wealthy individuals or groups in exchange for equity.

I can only speak for the US, but it's critical that you understand all the tax implications BEFORE you start your business. It's important that the legal structure of your organization optimizes the tax implications, that your investments and amortizations are all optimized by the tax implication. To a degree, even the payment terms can be optimized for taxation. But all this deep research has to be done up front, because once you start your business and set precedents it will be complicated to change the model.

As a new entrepreneur, understanding taxes is crucial for financial success. Begin by familiarizing yourself with tax obligations specific to your business structure. Consult with a tax advisor to ensure compliance with local, state, and federal tax laws. Keep accurate records of income, expenses, and deductions to simplify tax filing processes. Explore tax credits and deductions available to small businesses to minimize tax liabilities. Stay informed about tax deadlines and changes in tax regulations. Understanding taxes allows entrepreneurs to optimize tax strategies, reduce tax burdens, and maintain financial health for their new venture.

Hire a good CFO with 15/20 years experience minimum across Cost Accounting, Cash Flow Management and Fund Raising who will provide immediate and long term financial goals

Given my financial background, this is simple- Understand the basics of finance—like invoicing, cash flow, and profitability—is crucial at the start. These fundamentals allow you to maintain a healthy business operation. As you scale, the complexity increases so hire a competent accountant so as they can navigate the intricacies of payroll, taxes, and deductions, freeing you to focus on growth and strategy. Always keep learning and stay proactive about your financial health. Again have a long term and short term financial plan.