Welcome to the first posting in our advice column here at Tech Trailblazers. Entitled “Don’t do that, do this!”, we will attempt to give you the assistance you need to keep your startup on track.
Today we have the pleasure of introducing Darren Upson, VP Small Business Europe of Soldo. The firm specializes in automating and organizing company spend, so who better to talk about handling that most important of topics, your finances.
- Hear no evil, see no evil, speak no evil. Whatever your circumstances don’t forget to track your spending. Doing so will lead to financial awareness. If you don’t know where your money is going or how you spend it, how will you accurately evaluate your business model and keep within budget?
- Don’t assume that what’s coming in is yours to keep. It may seem obvious but so many startups get into trouble when the tax bill arrives so don’t forget about the tax man and set aside some money for him immediately.
- Don’t procrastinate on financial planning. You want to control your cash flow, not have it control you. Short-term gratification could cost you in the long run so rise to the challenge and get it done! However if you don’t know the ins and outs of your cash flow intimately from the start, planning is harder than it sounds.
- Set a clear budget and ensure everyone in your team knows what it is. The best approach is to include both a short-term month-to-month plan for at least one year and then a long-term, quarter-to-quarter plan of a minimum of three years. Make sure you budget both the income statement and balance sheet too, that way you’ll be aware of the potential cash-flow needs for your entire operation, not just for income and expenses.
- Set spending limits and adhere to them. This is integral to setting your monthly budgets as you’ll know that your employees can or can’t spend over a certain amount a month. It will also provide you with the oversight needed to allocate money accordingly to expenses such as office supplies and travel whilst keeping the rest of your budget free for other bills. A great way of managing this is by providing each employee with
their own company card with individual spending limits. This also avoids a major gripe that many employees have with having to use their own cash to pay for company expenses and then wait too long to be reimbursed.
- Reassess your business model regularly and identify where money is being spent. Circumstances change, often beyond your control, for example, the economic climate may change, and with it taxes or regulations, all impacting your ability to achieve sales targets.
- Use financial technology to help you. It used to be the privilege of the corporate elite but now many cost-effective solutions are available that are well within the startup/SME budget. (ED: here comes the plug, but it’s a useful one so I’ll allow it) One example is the multi-user spending account by Soldo – it enables you to define budgets ahead of time with Soldo Mastercard prepaid cards. Distribute to team members and you can oversee transactions the moment they take place. The result is instant insight into company spending.