Cash Flow

Shepreneurs, Here is How You Can Effectively Manage Your Startup's Cashflow

If the going go goes wrong, within no time your hard work will tumble down the floor
Shepreneurs, Here is How You Can Effectively Manage Your Startup's Cashflow
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Entrepreneur Staff
Senior Correspondent, Entrepreneur India
3 min read

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Running a venture is not an easy job as a female entrepreneur. Apart from continuously fighting biases within and outside the organization, you as an entrepreneur have also deal with entrepreneurial challenges.

As an entrepreneur, one of the key issues you need to manage is your venture’s cash flow. If the going go goes wrong, within no time your hard work will tumble down the floor.

So, here is a piece of advice to keep in mind to effectively lay down a financial management plan.

Ploy

While you start your own company, chances are that you don’t have a CFO or even an accounting manager to manage your cash flows. Hence, planning is the key to maintaining a healthy cash flow.

Take an example of Vidushi Daga, CEO & Co-Founder, Clone Futura and WhizJuniors who prefers planning the requirements of funds for expansions one year in advance.

“This gives us a good window to raise funds through the right instrument and safeguard our ownership in the company,” she shared.

Even Neha Gandhi, Director, Stovekraft thoughts match with that of Daga.

She believes it extremely important to prepare projections for different timelines and constantly work toward improving the accuracy of these projections.

“As a consumer product company, inventory management is at the core of efficient cash flow management for our business. The most ideal way to manage inventory is, of course, to increase the speed at which you turn materials and not allow goods to age beyond realisable value,” Gandhi pointed out.

Monitor

It also important to try and monitor your financial resource as closely as you can. This will help you understand if you’re creating the right cash flow for your business and if not, make some required changes.

Neha Malhotra, Product Management Head, MyyShopp suggests other sherpeners to monitor how much money is spent in a month or quarter to help determine the amount to be set aside in the cash reserve — and where to trim if you need to cut costs

“Prioritising expenses will help have a clear understanding of expenses including payroll, inventory, legal, marketing etc. It is important to review the budget before making any major purchases for any business,” she added.

Know Your Cost

One of the other important aspects of managing your finances is knowing your fixed cost and recurring cost. This helps you to understand when to splurge and when to stay tight.

“Only add people when you have the business otherwise, absorbing fixed cost would be difficult in short run and the company would get into cash flow mismatch problem and sometimes may lead to the closure of the business,” Daga added.

Clear Stream of Income

Apart from setting up multiple sources of income, you have to ensure it steady and regular.

Which is why Ankita Sheth, Co-Founder - Vista Rooms recommends you to ask your existing customers to pre-authorize checks so that banks can draw against their accounts or simply activate the online payment option.

And if required don’t shy away from tightening your credit requirements.

“The key to having a seamless operation is to research beforehand to determine the risk of extending credit to your partners.  You should also check references to avoid last-minute complications,” she noted.

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