No matter our walks of life, most of us have at least one thing in common; we all want to increase our finances. As such, the majority of us embark on saving where we can. But, that’s where the similarities end, because we all set about building wealth for different reasons. For some, money is about security. They want their savings purely for the knowledge of having them. That way, they can rest easy they’ll be able to weather every storm. Other people have distinct goals in mind when starting their financial journeys. It might be that you have a Porsche in mind, or, what we’re looking at today, you want to start a business.
Not long ago, this seemed like an impossible goal for the majority of us. After all, business was for the big elite, and we never stood a chance at making a go of things alone. But, recent years have seen a distinct shift in attitude. Now, a startup business is accessible to most. But, in all that time, one thing hasn’t changed; you still need substantial money behind you to start here. That applies, even with all the business loans now available. In fact, some loan companies won’t even hand you any money unless you’re willing to invest at least some yourself. What’s more, you can never have TOO much when it comes to starting a company.
In fact, financial problems are one of the leading reasons just over 50% of startups fail in their first four years. And, you need to get on top here if you don’t want to become another percentage point in that statistic. So, don’t think you’re good to go because you have money in the bank and an idea you’re passionate about. You also need to prioritize your spending the way you would in any other walk of life. And, we’re going to look at a numbered list of the order your priorities should follow.
#1 – Product
There can be no denying that your product NEEDS to be the priority on your list. Without this, there is no company to fail in the first place. So, as soon as you have the money in your pocket, you need to start planning prototype products you can show to investors and clients. These may take a chunk from your initial budget, but you’ll struggle to make any money without one. Get this right, and you could fund the rest of your enterprise through investor deals based on that prototype.
It’s also crucial that you gain some idea of your overall product costs here. After all, you won’t have any clue about the money you need until you do this. And, when you’re approaching investors, you need to have figures in mind. Not only will you look unprofessional without, but you could soon find yourself in financial trouble if your overlay exceeds your expectations. And, of course, once you do get the right investment, you need to start buying materials. Only then can you begin to sell and see the money back.
#2 – Marketing
All good so far, but at this stage, you’re creating products into the abyss. Aside from those initial investors, no one knows what you’re doing, and no one cares. And, that’s no way to create sales. Hence why marketing should be your second priority. You have the products sitting and waiting, and at the moment, they’re just suspended finance. You need to get the ball rolling by getting your product seen in the right places. That means developing online campaigns, paying for posters, and even creating television campaigns if possible. You should also make use of paid marketing on social media platforms, and SEO on search engines. While this may be a slower process, putting your money here will soon start to pay off. And, when your efforts draw a few loyal customers your way, you can then enjoy free marketing, such as word of mouth. You could even send out something like a free logo tote with each purchase. That would then allow you to make use of free advertising benefits. Either way, the initial expense is necessary to start the avalanche which will lead to your success.
#3 – Protection
When a regular amount of money starts coming in, you may want to jump straight to employment. But, there’s a crucial step before you get that far, and that’s protection for your company. Most notably, you need to put business insurance in place. This is a protective measure for both you and your employees, and it stands to save you a lot of money down the line. Not only will this protect you from your increasing customer base, but it’ll also ensure you don’t fall foul to employee lawsuits. Obviously, you need to follow all employment rules regardless. But, employment is never a smooth road. You can ensure grievances will come your way if you leave yourself open. So, make sure it doesn’t happen by researching details about insurance policies available to you, and getting the best protection possible. While the benefits from this may take a while to become known, you would soon feel the sting if you didn’t make this a priority. After all, a massive lawsuit would be enough to run your small company into the ground. If that happened, all your financial efforts until now would be for nothing.
#4 – Employment
With the correct precautions in place, you can finally turn your attention to employment. In many ways, this is where you’ll start to see some real money rolling in. After all, up until now, you’ve been operating with limited capabilities. As such, there’s been a cap on your profits. But, employees can lift that cap and make the sky the limit. All you need to do is pay for the privilege. Obviously, this expense is slightly different to the others mentioned. Rather than paying out large lump sums, you’re going to need to pay staff either weekly or monthly. And, that can be daunting. But, if you’ve tackled matters in the right way, you should easily be in a position to cope with this. The trick to balancing income and expense here is to take team members on one at a time. That way, you’ll have time to assess and adjust your finances each time. It’s also essential that your current employment doesn’t exceed the demand for your product. It may be that you have to jump back and double your marketing efforts before you can go all out here. While employees do stand to make the big bucks, that isn’t going to happen if the work isn’t there. If it is, though, there’s no reason you can’t get started on this sharpish.
# 5 – Development and expansion
Last but by no means least on this list is development and expansion. This is what you’ve been bursting to get to after taking care of priority one. But, rest assured that you won’t make this work if you skip ahead on the other points mentioned. Once you’ve taken care of the above, though, you can finally get stuck in here.
In some ways, you started expanding the moment you employed staff. But, with the increased income that step affords you, you can take this even further. For one, that means expanding your business space to suit your extended team. Again, this can seem like a severe drain on your finances. But, with a larger area, your production capabilities will increase yet again. And, that opens the door for even more profit. Before you know, that larger space could pay for itself.
And, your expense here doesn’t stop there, either. You also want to get to work on product development. In many ways, this means going back to the first priority of all, and developing more prototypes. It may also mean investing in a team designated to the development of ideas. Without taking this step, you’ll struggle to go further with your company. What’s more, customers could soon get bored with what you offer. And, if that happens, the finances you have coming in will quickly dry up. After all, each customer will only need to make one purchase from you if you don’t develop and expand what you offer. And, once you’ve got some solid ideas in place, you can go back to the start of this priority cycle, using your finances from the first time around to fuel each step.
A final word
As you can see, one priority here leads to another and can keep your business circular and prosperous. But, as soon as you attempt to skip steps and jump ahead, your finances could quickly crumble. So, be patient, and always come back to a list like this. It may seem like the long-game, and in many ways it is. But, you know what they say; slow and steady wins the race. And, never is that truer than when it comes to financing your business.