How Can Start-Up Companies Save Costs And Manage Cash Flow?

Cash is king, how do we manage it?

Let's start with a comparative financial statement. There are three main types: balance sheet, profit and loss account and cash flow statement.

The balance sheet can be understood literally; the profit and loss account is the result of increasing revenue and expenditure and reducing the cost of revenue is the profit; the cash flow statement provides information about the inflow and outflow of cash and cash equivalents within a certain period of time.

It helps managers understand the quality of net income, the ability to acquire and use cash, the ability to pay debt principal and interest and dividends, and predict future cash flows.

These three forms are closely linked. Net profit is reflected in the balance sheet through retained earnings and profit distribution. Net profit is adjusted through cash and non cash related adjustments, and the net cash flow of operating cash is obtained. Cash flow reflects the change of Monetary Fund in the balance sheet.

Let me give you an example. The most cost of start-up companies is wages, and wages are the amount of cash in assets, which has become a cost in the profit statement. You pay different salaries for different departments.

First, look at the cash flow of start-up business activities.

The cash of an enterprise is never enough. You have to do much more than you have now. How can you reduce your cash outlay? You need to do a lot of things with very little money.

The following are several ways of throttling:

First, equity or option payment.

During the period from 1993 to 2000, I worked in Silicon Valley.

Why did many of Silicon Valley's companies succeed at that time? Because all employees were basically shareholders of the company. Many engineers had lower cash income than others, but they largely hoped that the company would give them options or equity.

The advantage is that the interests of the company and the interests of the employees are closely tied up, which can stimulate everyone's enthusiasm and initiative and reduce the cash outlay.

This is very important for startups.

I remember before.

NetEase, they are all exchanging resources, and now some enterprises are exchanging some advertising resources with their own services.

I remember that in Silicon Valley, like rent, lawyer fees, advertising fees, you can use your stake to buy these services.

The recent case of cooperation between Jingdong and Tencent is a typical case of using equity to replace all kinds of data and services.

These non cash replacement can save your cash outflow.

Third, strategic cooperation.

I have a client. One of his actions is to follow.

Cooperation.

He has the service that the operator needs, and the operators have a large number of customers who want to serve better. They are very expensive to develop their customers or develop the services they want.

What is the strategic cooperation? It is to bind him to the operators, provide his services to the customers through the operators, and divide them into operators.

I think this is a typical strategic cooperation, saving a lot of market and customer costs.

Fourth, lease and purchase.

The development of any enterprise is inseparable from some fixed inputs.

For example, many game companies, when they are just beginning to operate online games, often choose to rent servers or computer rooms.

The advantage is that you invest less in the earlier stage, you rent it by month, and the disadvantage is higher cost.

Therefore, many times, when the enterprise develops to a certain scale, it will choose to purchase the server itself.

When to start from leasing to purchase, this is also based on the development of the enterprise and the cash flow of enterprises.

If cash flow is sufficient, it may be more cost-effective to choose to buy; if you are at the beginning of a lot of uncertainty, do not know if it can not be done, then the lease will be more reasonable.

Fifth, full time and part-time.

Part time job is characterized by low cost, but it can not guarantee high efficiency.

The characteristic of full-time is not only the salary will increase, but also other incidental expenses will increase, for example, you give him office, give him computer, etc.

Startups usually do not have enough money to satisfy this.

So when you don't know if you need a full-time job, part-time job is a good choice.

Next is the cash flow of corporate financing activities.

Where should I go to finance? Many times I may not have a choice. It is fortunate to be able to get into capital.

But when you have a choice, investors are mainly divided into two categories, one is strategic investors, and the other two are financial investors.

Strategic investors will spend more time communicating with you. Most early businesses need this strategic investment. When financial investors are relatively late, when the risk is low, the rate of return they demand is not so high.

The rate of return is linked to the risk rate. When the investment risk is not very high, it shows that the enterprise has grown relatively steady.

So what kind of investors to choose is actually related to the stage of the business.

Strategic investors invest more companies and know more about all aspects. They can help you find the right people, give you strategic advice, put forward the key questions, and inspire you to think.