We have approached a variety of successful startup CEOs and asked them to share their experiences of business finance, from difficulties to lessons learned, as well as their advice for new startups.
So before you take the plunge, if you are looking to start or grow a new business, take on board these learnings from successful startups who have learned from experience.
Did you experience any financial difficulties when you first set up the business and how did you overcome them?
Bertie Stephens, the CEO and co-founder of online shopping service Flubit, said: “We were fortunate from the beginning that we had backers and investors that believed in the business and they have supported us financially to get us where we are today.
“We obviously had to convince existing and new investors that Flubit has a credible business plan and that we have significant revenue channels open to us but by investing our money in the right areas we’ve been able to develop our technology and grow our team in a sensible and sustainable way”.
For Jeff Lynn, CEO of crowdfunding business Seedrs, financial difficulty should always be expected when starting a business. “ We were constantly raising capital and never quite knew where our next slug of cash would come from. But we pushed through, in part because I think we had a strong vision that investors bought into, and in part through simple perseverance,” he said.
“For a high-growth business like ours, the key is getting friends, family, angel and crowd investors to believe in your upside and want to buy of piece of it, and that’s exactly what we did.”
“Learn to live lean as well as the business operating lean. Learning the various funding options early on and not taking out debt also helped,” said Jude Ower, founder and CEO of Playmob, which assists companies in creating ‘in-game giving’ for their video games.
“Things will always take longer and funds always run out quicker so knowing what you could save on while not impacting the business too much is also a useful exercise to undertake regularly. And keeping the team in the know of the situation – if everyone knows what is going on, especially when it gets bumpy, there will be more support as opposed to keeping uncomfortable facts covered up.”
What is the most important financial lesson have you learned so far?
According to Stephens: “It sounds obvious but cash flow is critical for any business but especially for a growing startup. It’s vital to keep a firm hand on your finances and know exactly where you are and where you are going to be on a daily, weekly and monthly basis.”
Supporting that, Lynn added: It’s a well-known one, but cash is king. Few things frustrate me more than accountants trying to come up with clever ways of capitalising assets or otherwise move things around in a financial statement when you’re a very early-stage business. For our first few years, I only looked at one number: how much cash did we have in the bank. It was only as we started to scale that other types of financial metrics started to matter.”
Ower agreed as she said: “Learning to work from a cashflow daily. It is not good enough to work just from an accounting system, P&L or balance sheet, these are all needed, but working from a cash flow daily will help you really monitor and control spend and income.
“Who could you invoice quicker or which creditors could be paid the following month? When you are working on a shoestring budget this is the most vital exercise a startup could do. Being in control of your cashflow daily will lessen any anxiety and help to catch nasty situations before they happen!”
Read on to see what final piece of financial advice the three entrepreneurs have for fellow startups.
Image via Shutterstock.
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