How to Grow Your Start-up Financially

If you’ve just launched a brand new business, you could be forgiven for thinking that the odds are against you. After all, an estimated 96% of all businesses fail within 10 years, as a combination of industry challenges and market forces restrict the portents for organic and sustainable growth.

More specifically, the inability of business to grow financially usually triggers a terminal decline. This is a key area for you to focus on as an entrepreneur, as you look to create a secure and agile business model that can evolve in line with economic and consumer trends

In this post, we’ll look at practical ways in which you can grow your start-up financially and achieve long-term commercial success.

1. Learn from the Successes of Other Start-ups

They say that entrepreneurs should think outside of the box, and this is definitely true when looking to learn from the successes of other start-ups. The key is to focus on different types of firm and business model, as this compels you to look outside of your own industry and develop brand new ideas for expanding your venture.

Firms such as WH Ireland offer universal lessons to start-ups, for example, as this article highlights. In recent times, this burgeoning company has been forced to respond to regulatory adversity and create a more agile business model, and this type of proactive thinking is crucial to the long-term success of start-up.

Similarly, the firm has also recently expanded into its homeland in the north of England, helping it to reduce operational costs and target a growth marketplace. This highlights the importance of creative thinking, and how it can be applied effectively by entrepreneurs.

2. Reduce the Debt Burden in Your Business

 To launch your start-up, you may need some financial assistance from third parties. While some brands may choose to secure a bank loan or offer equity in exchange for funds from an investor, these options can create long-term cycles of debt within the firm and also dilute your stake as an owner.

But can you really fund your venture while also minimising long-term debt? The short answer as yes, as modern financing options allow you to leverage assets such as accounts receivable to generate short-term and unsecured capital. Through this approach, you can essentially sell confirmed invoices to third party investors, enabling you to optimise your cash flow at any given time.

This is simply repaid when the client settles their invoice, ending the debt cycle and helping you to retain as much equity as possible within your business.

3. Focus on Profit not Turnover

There is an old saying which suggests that while turnover is vanity, profit is sanity. This is a tried and tested piece of wisdom, but it’s worth repeating as so many ventures fall foul of this. 

Even if you’re able to increase your companies turnover incrementally each year, this usually means that your cost bases will also need to increase to meet this additional demand. So, if your costs rise at a disproportionate rate to your turnover, you’ll ultimately lose money and be unable to scale your business over time. 

You should therefore focus solely on the profitability of your start-up, as you look to manage costs and optimise margins incrementally each year. This is the key to long-term growth, regardless of which industry or market your business operates in.