It is imperative to follow fundamental rules and keep certain key considerations in mind to avoid facing financial issues that may lead to bankruptcy.

Starting your own business is one of the most exciting decisions you can take. But it is imperative to follow fundamental rules and keep certain key considerations in mind to avoid facing financial issues that may lead to bankruptcy. Here are five factors to keep in mind when managing your finances as a startup:

1. Set a clear plan of action

To succeed, your project must set out a plan of action explaining all details, including clear rules and regulations, governing the workflow and explaining the work method. Based on a good comprehensive business plan, a company will be able to make smart decisions related to location, pricing, and investment. Without a good business plan, there will be no bank loans, and no one will invest their money in the intended project.

Furthermore, do not hesitate to spend a little extra money to make sure that the basics are legally covered. If you do not know all the legal and financial duties for your project, you will end up in trouble, and it is usually less expensive to seek legal and accounting advice prior to the occurrence of any difficulty.

2. Focus on the quality of products/ services (and market interest as well)

A product or service is the basis of any business. However, if the quality of the product or service provided is less than the expectations of the customers, or if there is another product in the market that is better and more cost-effective, it will not be purchased by many. Develop a strong and authentic product or service, maintain your existing customers, and focus on targeting more.R

3. Give due consideration to money collection and cashflows

Cash flow is the engine fuel for the business to push it forward. At the beginning of your company’s project, some customers may offer to buy your product, whether by debt, or forward sale, or installments, and you may probably give in in order to retain them. However, if you are not able to collect it in the future for any reason, this debt may be the reason for the failure of your project. For this reason, make sure to rely on cash sales, especially during the first few months of the project. Once successful, you can allow for more flexible and lenient sale terms to some of your good and trusted customers.

Whilst the reasons behind the failure of many companies are varied, ranging from lack of market interest to internal conflicts over strategy or execution, the most common reasons are financial struggles and bankruptcies. Thus, it is important not to neglect any of the aforesaid essential principles.