How can startups measure their financial fitness?

New businesses will have certain aspects of their operations down to a tee. When it comes to devising fresh ideas and generally getting innovative, smaller enterprises at the beginning of their lifecycles are likely to have a little more freedom than their bigger peers.

However, research from Intuit suggested that they are left severely lacking in one particular area – financial savviness.

In fact, the figures collated by the software provider show that as many as 44 new Australian businesses close their doors every single day. Moreover, close to a third (32 per cent) of all startups that go on to fail do so because of financial mismanagement.

So, what can startups do to ensure they are fighting fit financially?

Build awareness

A further notable statistic from the Intuit research revolves around small business and startup owners believing they were in control of finances, despite evidence to the contrary. Around 12 per cent of the company's sample explained that they had a strong grasp of their business's capital, yet only 18 per cent of those went on to pass Intuit's financial fitness test.

Consequently, one of the biggest hurdles to get over as a startup is the practice of putting personal pride to one side. While getting into a positive position without exterior influences is one thing, company finances should be an area where help is welcomed, not shunned.

As many as 44 new businesses close their doors every single day.

Devise a routine

Further research on financial fitness, this time from ANZ, found the best way to ensure capital stays in the best of health tomorrow, is by making plans today. It doesn't necessarily matter how big or small the changes the company makes are, as long as they're planned with the long-term in mind.

In the case of start-ups, having a protracted timeline to hand can prove invaluable. In practice, this should mean that the business will be able to survive, and ideally thrive, across a number of months and years.

Moreover, making sure important dates are remembered when it comes to financing, such as any tax or audit deadlines, will make the general maintenance of company finances that much easier.  

At the end of the day, startup businesses will always have it tough when going up against bigger rivals, especially in the time soon after their first few months of business. While financial fitness is generally difficult to perfect, seeking help and getting it right as soon as possible is a must.

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