Startup Culture – 5 Tips On Handling Investments For Startups

investment

Startup culture is booming. Everyone wants to be an entrepreneur.Getting a investor to invest in your idea is a first step. But how to manage the investment? How one should make the most out of it? Here are a few tips which are helpful to new entrepreneurs in handling their investment:

1. DO NOT PUT EVERYTHING AT ONCE:

Young entrepreneur tend to be focused on growth with a long range mindset. After all, everyone wants to think ‘Big’. Thinking big means to think on a larger note, this kind of thinking in finances can be your worst enemy. For example, a tech startup engaged a firm for business planning services. The startup had a great product with lots of potential, and one it launched- the business was immediately making money. On paper the owners were millionaires. But why the startup did visited the firm. Because the reality was they were rich on paper but broke in the bank. They had no cash!

This situation arose due to their mismanagement of profits. They invested ‘everything͛’ back into a new venture.

2. FINANCIAL MENTOR:

Don’t do it alone. There are many people out there who think that they need to have to ‘have money’ to work with an advisor. There are financial firms which work with clients at each stage of the game. With a startup; you embark on something that impacts not only you but futures of many. Every business starts with an idea and requires some money. Money is not everything but it means a lot! If used properly, it can be a critical tool to turn your vision into reality.Financial mentors will give you an idea of areas in which you can earn most profit. Save some money and make sure you got someone great to help on financial matters.

3. MAINTAIN AN EMERGENCY CASH FUND:

As per the standard rule of thumb, one must possess three to six months of emergency cash in hand. Well in actual you need a bigger cushion of cash than this. Especially, if you have no other income source. Instead of three four months, save enough for a year at least. You don’t want yourself to financially crunch, when you want to dedicate yourself for the startup. Having a strong financial foundation in place is the key for both a successful entrepreneur and a startup. The biggest startup a company has is the entrepreneur. Cut your personal expenses and save for yourself. If you can, better hold on your day job.

4. DON’T MERGE YOUR ASSETS:

Keep business and personal expenses separate. Any money you spend on business related expenses; it should be deductible from the business income. Everything should remain separated whether you are selling out small sums of money or making a significant financial investment.

5. DIVERSIFY THE INVESTMENTS:

If you are taking on the high risk of starting a business, keep your investments conservative. Diversifying between a range of asset class including stocks, real estate, commodities, bonds and cash reduces overall risk. Entrepreneurs need to be mindful about loading up on investments in their area of expertise.

CONCLUSION:

The above given methods will surely reduce the risk and will help you gain the most out of your investment. Doing a startup is a full time job. You need to dedicate yourself fully to it to make it successful. Along with your determination these methods will prove fruitful to you in handling your cash and investment.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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