Tech Strategies for Improving Your Startup’s Financial Health

Though you’ll find plenty of success stories online, the truth is that founding a startup is wrought with challenges. Statistics from Exploding Topics pin the fail rate for these businesses at 90%. One of the biggest reasons startups close within the first five years is poor financial health. Issues like overspending, relying on a single revenue source, and inadequate cash flow management in general will increase your chances of running out of the funds you need to stay in business.

Of course, there are plenty of things you can do to prevent this outcome. You’ll primarily want to improve your financial literacy and overall revenue management to improve your startup success rates. If, like other teens, you’re a digital native, even better—because you can use your tech-savvy background to boost how effective your efforts are.

Wondering where to start? Consider trying these tech strategies to improve your startup’s financial health. 

Take online courses

Thanks to educational websites like Outschool, it’s easier than ever to build your skillsets online. Here, you’ll find relevant courses like “Business, Finance, and Economic Concepts for Teens” and “Small Business Start-Up Class,” both of which contain dedicated lessons that’ll teach you all about how to finance your startup and continuously manage revenue. The best part is that they’re specially designed so teens can easily digest their material. Though held online, many of these courses are even interactive—meaning you can get all your questions answered, too. You can take these on your own time rather than on a strict schedule, so make sure to browse the options available. That way, you’ll be better equipped with the knowledge you need to keep your startup’s finances healthy, even if you’re a younger founder without much business experience. 

Leverage crowdfunding platforms

Though you can always tap investors to fund your startup, it may not be the most accessible or doable option for teen founders like yourself. Fortunately, tech offers yet another solution: online crowdfunding. By appealing to people interested in what your startup does, you’ll do more than just raise money—you’ll boost brand awareness and build a customer base, too! To do this, you can try the crowdfunding platform Kickstarter. We’ve noted that it’s a particularly popular option for startups because the average campaign here earns $7,000. Just make sure your own campaign has a compelling video listing enticing reasons to invest—including cool rewards for backers—so you can easily reap the benefits of this strategy. 

Improve your budgeting skills

After you’ve bulked up your finance chops and gathered enough funds to cover your operational costs, put them both to good use. Take advantage of free budgeting tools like SpenDesk to create a budget and track your expenses. For long-term financial health, make sure you use this software to allocate funds in a way that supports your overarching business goals. If you’re looking to expand a product line, for example, your budget should minimize internal costs. Setting your office up at home instead of a separate space, hiring family members, and opting for social media marketing are some steps you can take to reduce how much you pay for rent and marketing while maximizing tax benefits. You’ll also want to put money toward an emergency fund so your startup can quickly recover from contingencies like refunds and supply chain disruptions. More importantly, stick to your budget! This crucial tip will ultimately improve cash flow management for better startup financial health. 

Streamline revenue recognition

Once your startup begins earning money, you need to accurately track and recognize your revenue. The reason this is crucial for financial health is that doing so will help your startup comply with the necessary accounting regulations and guidelines, including ASC 606 and IFRS 15. This process can be confusing to accomplish on spreadsheets alone, so consider streamlining the task with the right technology. One tool you can try is the revenue recognition software from Softrax. It uses back-end automation to track all your income for you, then instantly aligns it with even the most complex components of ASC 606 and IFRS 15. That means you can easily be more transparent with your financial backers and customers, even if you have limited accounting knowledge. That will encourage their continuous investment and loyalty, ultimately safeguarding your startup’s long-term financial health.

Founding a startup can be challenging, especially if you’re younger—and particularly given the challenges funding such a business entails. Try these tips to overcome those obstacles and ensure your financial health! For more pieces like this, keep Teens Mean Business’ startup articles