- 12 Startup Pitfalls to Avoid - August 17, 2015
- 7 Savvy Planning Strategies For Business Owners - July 29, 2015
- Reduce Expenses Without Sacrificing Service Quality - July 9, 2015
Common Mistakes of Startup Budgets
Even though startups are meant to focus on the creative work, they cannot escape that one thing, which always comes up whenever we talk about business: financial management. A good startup budget plan is in this case practically a deal breaker – not only because it plays a crucial role in keeping a start-up solvent, but also due to its importance in investor seeking.
Before planning your budget and handing it over to those that might be interested in financing your idea, it’s worth to take a moment and rethink your financial strategy in order to use your prospective funds as efficiently as possible. Here’s a selection of some of the most common mistakes start-ups make when planning their budgets.
Not Having a Start-up Budget at All
This sounds a bit crazy, but it still happens – the creatives, who have great ideas and look for ways to implement them, sometimes find it hard to discuss their projects from the financial point of view. When talking with investors, start-ups simply must know how much money they will need and how to allocate it – otherwise, they might expect much trouble in the future.
Underestimating the Costs
When planning a startup budget, some costs might get underestimated, other – completely forgotten. This kind of lapse in judgment might even jeopardize the future of a start-up. When planning the budget, we simply must take the totality of situation into account. If we’d like to hire a marketing specialist, for instance, our estimated costs must include not only his salary, but also all the equipment he’ll require to do his job: a desk, a laptop, licenses and proper software.
Overestimating the Profits
A revenue analysis is an important part of every startup budget plan, even though it rarely corresponds to the reality of a business. The most common mistakes start-ups make in this area are: forgetting about the seasonality of business, overlooking the possibility of customer resignation and assuming an overly expansive monthly revenue growth.
No Marketing Budget
No marketing means less or no clients at all. Period. Now, the wonders of our digital era might convince us that a marketing strategy is an unnecessary cost – after all, we can manage our social media channels just fine. But the reality of the business will soon verify this belief. Generally, the rule of thumb for creating a marketing budget is 5% of the projected annual revenues, but every marketing budget should be cut to fit the requirements of the business in question.
The Question of Salary
This is a hard one – start-up creators might believe that their esteemed role guarantees a high salary, but in reality, it’s the creative who should be the first ones to renounce from it in order to help their creation grow. If you’re a start-up creator and you’re planning to enjoy every bit of your extremely high salary, think twice. Consider this from the perspective of your investor – you’ll get the money immediately, while he will need to wait for years until the business brings profits.
If you’re planning to start a new business or if you already are a small business owner, head to http://www.savvysme.com.au/ for the latest business news and advice.
Originally posted on LionessMagazine.com