This is the first of a series of four blog posts highlighting key practices for successfully launching a start-up business.   Each of the four blog posts will tackle a different functional aspect of launching a start-up:  Finances, Human Resources, Operations and Marketing.

FINANCES

Managing the finances of a start-up entails spending money on what is essential and nothing more, to optimize the chance of attracting money from investors before initial funds are depleted.

Some business owners are able to decrease the up-front financing needed by launching a reduced version of  their product, or a so-called Minimum Viable Product.  This may have a lot of merit for a web-based service, where consumers are used to being offered both free and premium (i.e., freemium) versions of the same service.  However, in the world of packaged foods there may only be one chance to get it right.  If consumers don’t purchase and enjoy your “minimum viable” food product when it first is presented to them in a store, and those customers do not repurchase, retailers will likely pull it from the shelf as sales falls below their minimal expectations for turnover.  So MVP becomes a risky gamble.

In order to function effectively within your initial start-up funding it is important to have a current and accurate understanding of what you are spending. If budget is available to hire a part-time bookkeeper, then do so, and have him or her formalize how money is spent by creating purchase orders beforehand when that makes sense, and receiving, checking and recording invoices before vendors are paid.  All of these best practices will enable more proactive understanding of where your money is going, and whether spending is being managed within project budgets.

Savvy start-up entrepreneurs try to go with lean staffing at the onset. By getting team members to cover multiple roles when possible an owner can manage risk by committing fewer dollars to staffing until the business successfully achieves  critical early milestones which will unlock further funding. The key is knowing which tasks can be deferred, which can be economically outsourced, and which of your team members have the ability to take on assignments outside their normal area of functional expertise and still accomplish them with excellence.