Keep control over finances in your startup!
Friday, January 10, 2020
"Make sure there is not too little difference between your own and market prices. Always look for your costs, always play only with the money you can lose and go step by step," adviced Nina Dremelj from AlpVent on workshop to selected startups from Start:up Alpe-Adria acceleration program.
Here we share some of Nina's advice to help you better control and manage finances.
Keep control over the cash flow, which shows you how much money you have available and you can spend. This is really crucial, especially to startups. Therefore, do exact plan how you will spend money and buy only things you really need. And plan very well when the money will come to your account and when you need to pay with it your costs.
Keep control over the cash flow
If you aren't a financial person, Nina suggests to get right at the beginning on board a financial expert, not only accountant. Usually, financial experts have wider picture and can help you with corporate financial planning and advice.
Get financial expert on board
Planing is very important. You need a business plan and a 5-year strategy that keeps changing. As company and the market is growing, developing, so should be changing and developing also a strategy. Use Canvas all the time, so that you have everything on one place.
Plan your business
Start with reporting from the day one, so that you will be able to see where you are moving, including e.g. number of customers, revenues, costs… Build reporting system - internal for yourslef and external for accounting and investors. And chase the breakeven point, when you will finally start making plus.
Build reporting system
Set good pricing model
Define very well the costs and create pricing model according to costs. Don't underestimate the costs in the value chain. For example, if you offer software, you need to calculate also costs for maintainance and further development of this software.
Value chain should be really good set, so that you earn money. Make sure there is not too little difference between own and market prices. Nina shared with us some factors that are used on the market. For cosmetics, the factor is approximately 5, meaning that the market price should be at least 5 times higher than your own price to cover costs of distributors and that you still earn some money as well. If your own price is 10 eur, you should sell this product for at least 50 eur on the market. For software this factor is 2,5.
When conquering markets, Nina suggets to go country by country. Don't go the whole world at once because you can easily lose control.
Go step by step
And always validate the market! Do you know when can you say: "Yes, the market is validated, I can sell this product on market."? When you have 10-15 B2B or 150 B2C customers paying to you.
Now, it's your turn. Do your homework and get ready for having your finances, costs and cash flow under control.