Kelly Baker, Founder of startup success Edible Blooms shares her top 4 pieces of Financial Advice for startups:
1. Know your cash flow cycle – when will you get paid by customers and when you are required to pay your suppliers. For example if your payment terms are 7 days and you have 30 days credit with suppliers this is a positive cash flow cycle. However, many start ups are required to pay COD until a supplier has confidence in your ability to pay accounts on terms so your cash flow cycle often starts in the negative. This requires a level of working capital that you must be equipped to handle. Cash is king in every business, particularly in the start up and growth phases of your business.
2. Over-estimate your start up costs – I, like many other new start ups, often under-estimate your fixed costs of establishing your business. My advice is to double whatever you estimate your fixed costs will be and you’ll be in the ball park. My Mum gave me this tip when I was preparing my business plan for Edible Blooms and she was right (there’s another tip – listen to your Mum, she is often right!).
3. If you need any credit facilities for your business, you’ll either need to provide equity (ie your home) as a financial security or have them established prior to starting up. For example, if you have a personal credit card you may need to use this for your business until you have a minimum of 12 months financial track record behind you.
4. Investigate any grants available to assist you. Although I wasn’t able to source any for my business, I know of others who have had success in this area. Particularly if you plan to export I believe there is funding available.