5 Tips To Manage Financial Stressors For First-Time Founders

Some of the biggest challenges entrepreneurs face are financial in nature: the inability to meet financial demands, lack of sufficient funds, and confusion over how to allocate funds effectively. So, how can first-time founders manage their financial stressors? 

Over time, millions of entrepreneurs experience intense stress as their finances spiral out of control. From the market's needs to the personal expenses, management costs, and business development demands, the list never ends! 

Having your finances in order and studying your business truly matters because you won’t even have a business without effective use of your capital. Therefore, proper financial knowledge and education will define your career path. 

This article will discuss five tips on avoiding financial burdens as first-time founders.

1- Structure a robust plan

Entrepreneurs aspire to have a less stressful future financially, and with the right plan, eventually, they do. Setting your overall plan or scheme is simply not enough on its own. You should also focus on prioritizing the future goals and achievements that support your end result. It is not about having money in the future, but about learning how to save more money. For example, lowering costs, reducing debts, and learning to maintain a flowing cash budget truly sets you up to attain higher profits. 

2- Set apart your personal & business balances

As an entrepreneur, you should always have a well-structured plan in which every check, payment, and income should be cashed out or transferred from the appropriate account. To avoid the underlying confusion of doing so, separating business and personal finances is your key. This multi-step process is essential for tax, personal security, and organizational reasons. It helps minimize the risk of using your personal finances to back any entrepreneurial venture, and have a savings account to use for personal scopes.

3- Study your business

Know the numbers that matter in your business! Some of these numbers include your monthly and annual profits and losses, accounts payable and receivable,  balance sheet, number of clients and proposals, and customer acquisition costs. As a first-time founder, many things could slip your mind. Make sure to keep track of the expenses and revenue to ensure a higher profit. Also, bookkeeping is an important asset in your entrepreneurial journey. It helps organize and keep track of your business’ financial data. Lucky for us many softwares now exist that help make this easy  like Zoho Books or Wave, just to name a couple.

4- Prioritize saving

The more money you save, the more financial freedom you will have! Saving happens when you find ways to lower and reduce your costs, and simultaneously preserve your business’ success. For example, look for companies and businesses that could provide you with the lowest prices for adequate service, enhance your resources, and cut unnecessary costs. 

At the beginning of your entrepreneurial journey, forget about "looking the part". Make sure your funds only go to what is essential for the initial operation of your business while you test the market. Do not get distracted by spending money on things that make you look more established if you're not ready for it yet. A good example of a bad financial decision to make is to invest in an office (rent expense) before there is a need and when operating from home is still just as effective.

5- Seek professional advice

First-time founders should seek relevant knowledge and advice that best suits their business. Your unique business experience also needs unique methods to achieve the business's goals.  When seeking advice, make sure you get the correct answers from a trusted financial advisor because their knowledge and skills will come in handy! 

This isn't a paradox. Professional advice does incur costs, but we're not recommending you hire a business coach here right out the bat, but rather approach mentors you admire and whose work and experience speak to your ambitions.

Remember that you can achieve everything you set your mind to, but even higher goals will appear on your horizon with relevant knowledge and skills!  Start building your financial literacy today!