Even seasoned entrepreneurs will tell you taking your startup from a pipe dream to an actualized business can be an overwhelming process — requiring a serious time and financial commitment.
One might have the right idea. One might have the drive. One might even have the initial funding to get one’s startup off the ground. But what really sets an entrepreneur up for long-term success is an ability to plan ahead financially. Aligning one’s finances with one’s business goals – and positioning oneself for growth – are among the most important steps when it comes to spearheading a startup. The following are considerations to ensure one’s startup not only gains wings but is able to take flight.
What’s Your Recipe for Success?
Entrepreneurs jump into a new business venture because they believe in themselves and their idea. While this confidence is a necessary quality for any leader, it can sometimes obscure harder questions that may guide a logical business plan. Methodically laying out a business plan should be any entrepreneur’s priority, as it’s often a pre-condition for being taken seriously by investors. Further, a business plan can help one keep on track of operations and marketing goals during the first stages of development.
Where’s the Cash?
While one might offer a creative idea, a comprehensive business plan and a willingness to put the work in, funding is an important aspect to consider as well. One needs enough to cover the initial costs of one’s business before it becomes profitable or is able to attract additional outside investing. The cash one puts into one’s startup correlates with the money one gets out of it: Securing the necessary funding determines whether the startup has staying power and thrives in a competitive space.
How Hard Are You Willing to Work?
Nothing’s truer than the saying “Every small business is an overnight success, 10 years in the making.” Entrepreneurs must be committed to the business’s success from day one and often make financial sacrifices to fund their business. There is a lot of work that goes in behind the scenes when building a startup from the ground up. It may take years before the business is visible or appreciated by one’s community. It’s easy to become discouraged. Entrepreneurs need to keep that in mind before they commit to a startup, asking themselves, “Are you willing to sacrifice time, energy and money in order to make an idea a reality?”
What Help Do You Need to Succeed?
Expert guidance is essential for effective operations, growth and team building. Lawyers, accountants and financial advisors can help one navigate both opportunities and challenges one’s startup may face, including protecting one’s intellectual property, building and maintaining best business practices and using one’s money effectively. Depending on the industry and business structure, other consultants may be helpful from the onset, including marketers, HR professionals, sales or business development experts, product developers, IT professionals or general business operations advisors. As one’s business evolves, one may hire in-house support or expand relationships with independent contractors to assist with day-to-day operations.
Attracting such partners or staff to one’s new startup, often with an uncertain future, can be a challenge. Active networking, well ahead of when one’s business needs the support, allows one to establish strong relationships to call on when the need arises.
What Role Are You Comfortable Playing?
Entrepreneurs should ask themselves, “What do you truly enjoy about being in business?” A startup isn’t going to become profitable overnight — it takes time and, naturally, the founder’s role will change over the course of the business’s lifetime. The entrepreneur will become a leader of people, rather than simply a doer of work — and this transition requires a sound budget. People will look to the founder for guidance and inspiration, and he or she will need to be ready to take on that responsibility. So, before devoting a big part of one’s life to the startup, one needs to understand how one’s role and responsibilities will evolve as the company develops.
Launching a startup is exciting. But having the right mindset and financial outlook ultimately determines one’s success. Those who make the right money moves now will reap the benefits later.
Lennard van der Feltz, CFP®, MSM, MBA, is a founding partner of Tempe-based Pinnacle Financial Advisors, which assists individuals, families and businesses with financial planning and wealth management. He is a registered representative offering securities through UNITED PLANNERS FINANCIAL SERVICES, Member: FINRA, SIPC. Advisory Services offered through SEROS FINANCIAL, LLC. Pinnacle Financial Advisors, Seros Financial, and United Planners are independent companies.