The financial aspect of a business could be the most headache-inducing part of the business. It can cause you a lot of heartache and sleepless nights if not appropriately managed. So, when you are starting a business, you must take business finance very seriously and hold some pertinent discussions concerning it.
You must hold relevant conversations on loans and other fund-raising options, along with payment terms and plans. For example, suppose you think about business loan options like ITIN loans that do not require social security numbers. In that case, you need to discuss this with relevant staff in your organization. Click here to read more about ITIN loans.
Here are the most crucial financial talks that you must hold.
Talk #1: Current Financial Scenario
The most crucial financial discussion to have is the discussion on your business’s current financial situation. Here are some questions:
What are your current revenue and your profit?
What are your trade receivables and trade payables?
How much are you paying to service your current loans?
How much do you have left to pay off loans?
What can you do to improve the business’s current financial situation?
Must ask these questions and other ones about the business’s current financial outlook. This helps you make important decisions that can propel the business forward or turn the tide of things around.
Talk #2: Funding options
Every small business requires one form of funding or the other. The funding could come from personal savings, ITIN loans, loans from family and friends, business grants, venture capitals, angel funds, business credit cards, merchant cash advances, working capital loans, crowdfunding sites, and more.
Each funding option has its pros, cons, interest rates, hidden fees, and other peculiarities. Before opting for a funding option, you must hold a salient conversation with all relevant stakeholders on the funding options to make a good decision.
Talk #3: Financial projections
You need to meet periodically to discuss your financial projections and expectations for the future or, more specifically, for the next month or next quarter. This helps you with setting goals and the allocation of resources. It also allows you to ensure that you are keeping up with your business mission and vision. Be as realistic as possible with your projections.
Talk #4: What is our preferred exit strategy?
Are you running a tech or financial startup with the potential for exit or acquisition by a larger company? You should have an exit plan and a financial valuation for your startup. Your financial associates should partake in this discussion.
Talk #5: Profit-sharing strategy
Your business must have a profit-sharing strategy that all relevant stakeholders must agree to. Every stakeholder is in the industry for profit or other benefits. This is a good discussion that must occur before the business starts and when the business is running. You must also talk about bonuses, allowances, and potential increases in the future.
How to hold financial talks with your other business associates
Be as calm and as collected as possible. Know your figures and prepare them beforehand. If possible, have charts and PowerPoint presentations prepared to simplify and clarify things. Make yourself easy to understand, and don’t try to overwhelm or confuse others. Let everyone know their importance and what you need them for in accomplishing each financial goal. Also, avoid pointing fingers at people.
Talk about the financial metrics for the past periods and relate them to future financial projections. Be realistic and humane with your expectations and projections. Listen to feedback, and don’t be a know-it-all.
These are the fundamental financial issues on running a business that a new business associate must discuss. You can’t ignore any of this lest you risk your business failing.