Establishing a multinational startup isn’t as easy as it sounds. It takes years of labour and pain to give the concept a concrete form. While the thought of self-earned success is fascinating, turning it into reality is easier said than done. No matter how good the idea is, in the end, it’s tough to survive in this era of competition and innovation. As a startup, the budget is always tight and hands are short. The only way to ensure survival is being smart about your finances. Here are some valuable tips to keep tabs on your finances and cut down on unnecessary spends.
1. Set Up Financial Goals
Begin with developing Specific, Measurable, Attainable, Relevant and Timely (SMART) objectives. These daily, weekly, monthly or yearly objectives should be accompanied with appropriate milestones to take stock of the progress made and to detect deviations at an early stage. These goals and objectives will provide a blueprint for the rest of the entrepreneurial journey and should thus, be set up with utmost thought and care. Note that you cannot build a multi-million dollar company overnight, and establishing unrealistic goals will be nothing less than taking shots in the dark.
2. Limit Your Fixed Expenses
Control your fixed expenses while establishing yourself in a new country. Unless the business hits breakeven, it is wise to keep fixed expenses as low as possible. You have limited capital, don’t you? Spending it on lavish offices in multiple countries or expensive business trips will drain the resources leaving you with limited capital for investment in important areas that actually matter to the business. In the beginning, earning revenue should be of paramount importance for any startup in order to be able to see the day where you can actually afford to have the best of amenities.
3. Monitor Cash Flow In Every Country
Most startups go kaput for a number of reasons, but one is more common than others — running out of money. Managing business in different countries can be highly challenging. Multinational transactions mean that you have cash coming in from and going out to different regions simultaneously. Not maintaining a track record of cash transactions can be detrimental to the startup as a whole and you might soon run out of funds if timely action is not taken. Use a software or hire an accountant (if you can) that will help you stay on top of things. No matter how good your idea is, if you run out of money, you are possibly done for good. Establish a budget and stick to it.
4. Understand The Regulations
It is important to update yourself with the regulation of the country you to intend to grow your business in. Get the hang of the laws of the country you plan to operate in. Some governments encourage foreign investment while some levy high taxes on foreign businesses that offer direct competition to domestic products. The taxation and compliance standards need to be taken into account to determine the suitability of expansion.
5. Evaluate The Business Prospect Of The Expansion As Well
A startup cannot survive if it works in one area of business or stays in one market alone. Never keep all your eggs in one basket; diversify to spread risk and at the same time offer variety to customers. However, before expanding into newer, unexplored horizons, don’t forget to ascertain the feasibility of the proposed business plans since outcomes may be different across boundaries depending on the level of the economic, political and cultural environment.
6. Prepare Yourself For The Worst
The business environment is highly dynamic and uncertain, and while a project appraisal report might conclude an idea to be highly feasible, there is a chance that it might not work in a particular country. It is always better to have a plan ‘B’ ready for emergency situations. If things go south, don’t be afraid to pull out of a failed business. Consider alternative options such as micro-investment, in case there is idle capital lying in your bank account and reselling if you’ve depleted majority of the resources. Third party online companies can also be used to advertise and conduct business.
7. Hire Professionals For Managing Business Overseas
A flourishing business will make management complex and increase administrative costs for the startup. A group of individuals in the host country cannot keep on shuttling between different countries to look after the business. Delegating the role to a professional team that is trustworthy and at the same time capable of adding value to the business plays a key role in the success of the business. Not only will the global operations be managed more effectively, but the salaries paid to the managers for their services will also be justified against the frequent travelling costs undertaken by the owners.
8. Maintain Creditworthiness
Banks and other investors will not lend you funds unless you have a good brand reputation in the market. This can be tricky for startups, especially in newer countries where they are foraying for the first time. Credit rating from a world-renowned agency and networking with reputed individuals from the country can help in this regard.
Disclaimer: This post is for informational purposes only. You should consult a legal or financial expert for your individual needs.