Building Your Business From Scratch: Efficient Solutions To Overcome Financial Needs

It takes more than an innovative business idea and enthusiasm to build a successful business from scratch. You’ll require a ready market, management skills, an efficient marketing model, and capital to converting your passion into a profitable business.

Raising capital to start a business has proven to be a major challenge to most entrepreneurs. There are traditional and innovative funding sources that can help you build your business from scratch. As an entrepreneur, you’ll need to exploit the financial resources at your disposal, from personal savings to quick sources of funds such as merchant cash advance.

Everyday Financial Needs You Face When Starting A Business

Building a business from scratch is one of the most difficult experiences you could face, particularly managing the finances. Nearly half of small businesses close down due to a lack of funds. Let’s look at some of the financial challenges that entrepreneurs face.

1-. Managing cash flow

Start-ups commonly struggle with limited or erratic cash flows to cover their operational expenses and grow the business. You risk grounding to a halt if you’re not in charge of your cash flows and can’t tell where your money is coming from and where it’s going. If you run out of funds, you risk closure.

2-. Tracking and monitoring your expenses

As you start operating as a new business, there will be numerous expenses that need to be settled. Tracking these expenses is essential to managing your cash flows and preparing your tax returns when they’re due. Hire a professional to monitor and keep your books. If you can’t afford one, make use of accounting software to keep your expenses in check.

3-. Failure to work with a budget

Failing to plan is planning to fail. You can’t run your business spontaneously, hoping that somehow your collections will be sufficient to cover your running expenses. If that’s you, then you’re likely to make up the statistics of 90% of start-ups that fail.

4-. Raising insufficient capital

Reasons may vary, but small businesses do not always get the funding they apply for. Whether it’s a request for debt-financing or equity financing, many fail to raise adequate capital to meet their start-up budgets and withstand unexpected shocks in the market.

A limited capital base often impedes the growth of many start-ups as they’re unable to explore new opportunities, hire new talent, and expand into new markets.

5-. Not preparing for unexpected expenses

Even with the best plans, the unexpected still happens. A small business that’s tight on liquidity will falter when hit with unforeseen expenses such as unexpected delays in payments, a sudden breakdown of equipment or machinery, sickness, or natural disasters. 

6-. Other financial struggles that small business start-ups face

  • Commingling personal and business finances
  • Poor marketing strategies
  • Failure to pay bills on time
  • Excessive debt
  • Tax compliance issues

How To Face Economic Challenges In New Businesses

  1. Define clear financial goals for your business; establish measurable financial goals that will keep you on track.
  2. Work with a budget to keep your expenses in check; adjust your budget regularly whenever there are changes in your operating environment.
  3. Keep your fixed expenses low when you start operations by limiting spending on non-essentials; this ensures your capital is channeled to sustaining and growing the business.
  4. Build up your cash reserves for a rainy day; grow your savings in a separate account by automatically sweeping excess funds from your main operational account whenever you’ve had good sales.
  5. Shore up your capital so that you’re strategically positioned for growth and to capitalize on arising opportunities; by updating your business plans and financial books and improving your credit score. You’ll stand an excellent chance to attract investors or secure a loan or a merchant cash advance from your merchant.
  6. Review your marketing strategies to ensure they’re effective at reaching your target market.

Tips For Business Owners To Manage Their Finances

  • Keep your job in the initial stages of the business to maintain an additional source of funds for the business.
  • Open and operate a separate business account so as not to commingle your finances.
  • Ensure you pay yourself to keep you motivated to run the business.

Conclusion

Starting a business and keeping it going isn’t a feat for the faint-hearted. You may run out of cash and crush to a halt when you’ve invested all you had and more. Explore efficient cash flow solutions such as a merchant cash advance to access the cash you need to keep your business going.