Wealth Management Rules Every Startup Founder Should UseWritten by InvoiceBerry Team on January 06, 2020
When people hear the term “wealth management,” the automatic assumption is that you’d need to be extremely wealthy to qualify.
This perception is not what wealth management is all about. Anyone can reap the benefits of a sound investment strategy, from the average worker to the savvy entrepreneur. You don’t need to be planning for millions of dollars. Even a modest sum of a few thousand dollars that make up your financial “wealth” will qualify.
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Can Wealth Management Help Startups Succeed?
Startup founders can benefit from incorporating wealth management principles from day one. The main issue with many startups is the lack of money management. Not all fledgling companies are swimming in investment capital, yet even those with a seemingly endless supply of green tend to run out.
The very definition of wealth management gives you an idea of what it is: an investment advisory discipline. Wealth management incorporates financial planning, investment portfolio management, and several aggregated financial services. These financial services come from any mix of financial planners, asset managers, and banks.
Being a startup, you probably don’t need to hire an army of asset managers and financial planners to manage your company’s cash just yet. Remember, wealth management is a “discipline,” and you need a set of rules to instill discipline in your company culture.
What you need are simple wealth management rules that are easy to implement and follow.
Wealth Management Rules for Startups
Startup founders should follow these rules to take their business to the next level. Please note that there’s no substitute for due diligence, such as doing an asset search on new partners or going to an attorney for legal advice.
Limit Your Fixed Expenses
The key to surviving the early stages of a startup is keeping your fixed expenses as low as possible. You don’t need a large, swanky office in the city with a view of the skyline. Operate on a shoestring budget and pour the majority of your capital to grow. Many startups focus on expensive offices and other amenities instead of growth and revenue, which lead to their downfall.
Make Customer Acquisition a Priority
Customers mean everything, and you won’t have a business without them. Focus on acquiring customers and scaling up your operation as needed. Identify and optimize different customer acquisition channels to further lower your costs. The key here is to only focus on the opportunities that pay the most. Testing every possible acquisition channel isn’t feasible when you’re a startup. Once you have success in scaling the channels you use, you’ll have the finances to explore other acquisition channels.
Set Financial Goals
Don’t set vague goals like “I want to run a billion-dollar company.” Break down your financial goals into measurable and attainable ones. Set milestones and establish daily, weekly, and monthly revenue goals so you can stay on track. Constant growth means quantifiable goals, and once you hit all the goals you set out, you’ll have the confidence to raise the bar higher.
Manage Your Cash Flow
Many startups fail for different reasons, but the most common one is running out of money. The key here is that you need to know where the money is coming from and where it’s going – every single dollar. Not staying on top of your cash flow is placing your company in a risky spot. Your great idea will mean nothing if you go bankrupt and hit rock bottom. Watch your money like a hawk, create a budget, and stick to it.
Track All Spending
It’s a given that new businesses will have expenses crawling out of the woodwork. Hiring a full-time accountant to handle your books is a good idea, but it won’t do your budget any favors. You can save hiring one for now and use accounting software to keep your finances in order. Using software or an app can help you manage your cash flow, especially every tax season. If the company is growing, and you’re having a hard time dealing with the books, consider hiring a professional.
Time is Money
Every minute of your time has a dollar sign attached to it. You only get a few hours to work each day, so make these count. Every minute you spend doing something not related to growing your business is time and money wasted.
Don’t Forget to Pay Yourself
All your hard work and dedication will reap future benefits for your startup – that’s a given. However, these won’t help you with your day-to-day needs, such as feeding your family or paying bills. Don’t be a martyr, and make sure you pay yourself enough money to live. Don’t splurge by giving yourself a fat paycheck in the beginning. All you need is enough money to live in comfort so you can stay focused on your startup.
Ben is a Content Director at InfoTracer who takes a wide view from whole system. He authors guides by sharing the best practices and does it the right way!