Must be the money

4 financial concerns to keep in mind when launching a startup

Every penny counts when you're starting a company. Getty Images

You have been working on a new creative technology idea for months, an idea that will solve a problem or make a current process even better. Your innovative idea is ready for the next step, and you, in turn, are prepared to begin your tech startup. Building a company can be stressful and exhausting, but also exhilarating and rewarding. As you begin your product launch, keep these financial tips in mind when starting out.

Consider your funding
Determine how much funding you can use from your personal accounts to jumpstart your business. By investing some of your own money into your company, you show good faith in your business plan and product. This method is appealing to investors because it shows you have a long-term commitment to the company. Next, determine how much you will need from other sources and what those other sources should be. Potential options of funding in addition to traditional bank loans are venture capitalists, angel investors, government grants, and support from business incubators.

Determine your budget
An essential step of starting up is concluding how much funding you need to get started. Establishing a realistic budget is crucial. It can make the difference between having a successful business or joining the 50 percent of small businesses that fail in the first four years. The hiring of employees, leasing office space or lab space, purchasing office equipment, paying for insurance (health and liability) and providing yourself a salary are all items that need to be included in your budget.

Unanticipated extra costs occur from time to time, so overestimate your expenses. Underestimating expenses can sink your startup. Ensure your business is solvent by preparing your budget for more. Additionally, keep in mind different types of expenses, and budget accordingly. For example, you may have one-time costs and on-going costs or fixed costs and variable costs.

Cash flow
According to a U.S. Bank Study, 82 percent of businesses that fail do so because of cash flow problems. Managing your cash flow is crucial to success. Without positive cash flow, you are not able to pay your employees, rent, or taxes. Having profits does not necessarily mean you have positive cash flow. Keep ongoing cash flow work sheets to ensure you have the cash you need to continue on a successful path.

Managing for life
As mentioned earlier, make sure you pay yourself something. It does not have to be a big salary in the beginning, but you need to eat. Additionally, you need to save for emergencies. An old rule of thumb states that an emergency fund should consist of three to six months' worth of expenses. As a result, an emergency fund can make the months where business is slow, or between projects, more sustainable.

Meanwhile, it is a good idea to separate your personal and business banking accounts. Doing so will allow you to stay more organized and help tracking and managing expenses easier. Additionally, separate accounts may be beneficial when paying taxes. Consult a tax professional for additional guidance on taxes. Finally, do not forget to save for your retirement. While it is important to focus on your new business, do not neglect to take care of your personal financial health.

With proper planning and continued financial monitoring, starting your own tech business can be done well and bring years of career satisfaction.

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Joseph Radzwill is senior vice president and a financial adviser with the wealth management division of Morgan Stanley in Houston.

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Building Houston

 
 

Everest will sell products from more than 1,000 U.S. manufacturers. Photo courtesy of Everest

Houston businessman Bill Voss has forever found his zen through his lifelong passion for the great outdoors, but there’s one aspect that was making him positively furious: the shopping.

Burned out with driving to brick-and-mortar stores, standing in long lines, and dealing with dreaded returns, Voss turned his necessity into invention and launched Everest.com, a new shopping/lifestyle marketplace and community platform that links active-minded customers to more than 1,000 U.S.-based merchants and retailers.

By utilizing what it describes as “state of the art” artificial intelligence, the company aims to create the largest marketplace on earth for the outdoor recreation community, covering activities such as hiking, camping, biking, rock climbing, winter sports, water sports, team sports, fishing, hunting, kayaking, rafting, and road and trail running.

Voss’ timing is sound: Current industry estimates suggest consumers spend $700 billion in outdoor recreation, with less than 20 percent of those sales transacted online. Towards that end, Voss plans to increase his sellers to 10,000 by 2023.

Everest members can also enjoy perks through a program dubbed Caliber, which provides its members with several exclusive benefits including free shipping, advance sales, travel benefits, big discounts on gear, and — a plus these days — discounts on fuel. Voss notes that the site’s core values are pushing U.S.-made products and giving back; Everest will have nonprofit and conservation partners.

CultureMap caught up with the active Voss on the heels of his Everest launch.

CultureMap: Congratulations on the launch. Essentially, have you created an Amazon for the outdoors crowd — but with a sense of community, too?

Bill Voss: We started Everest.com to create the first online marketplace with the sole focus of offering outdoor enthusiasts retail goods for purchase from merchants across the country who offer domestically made goods.

In our experience, people who love the outdoors also appreciate the concept of community. At Everest, we want to bolster that community by giving local businesses a wider sales reach, contributing to local and national charitable organizations, and asking everyone in our community to share the story of their “Everest.”

We’re taking a fairly segmented market and bringing it together into one community-focused ecosystem. We call that ecosystem Everest.


CM: What Houston spots have most inspired you? And have you visited Everest yet?

BV: I’m a fisherman at heart. I have been fishing the Gulf of Mexico since I could hold a fishing rod. There is nothing I’d rather do than spend a whole day on the water casting, trolling, or remembering many epic fights reeling in a big one.

So naturally, I love Galveston, Kemah, etc. and being so close to the Gulf is a huge reason why I love Houston. The city itself may be a major metropolitan area, but it is full of so many parks and recreation areas that are great to walk through when you need to escape the sounds of the city for a bit— which Houston really doesn’t get enough credit or exposure for.

Houston has an amazing outdoor community with so many choices to support it — it’s hard to pick just one activity that ranks number one.

I do have plans to visit Everest actually! I am arranging a trip with two brothers that have made it to the top more than anyone else and they assure me it will be an amazing trip.

CM: Clearly, you’re an avid outdoorsman. Is it correct to say that Everest was inspired by frustration and hassle of bouncing to other sites and stores?

BV: Exactly! I found myself doing just that and it’s infuriating. I’d be visiting multiple stores, going through multiple checkouts, and waiting on multiple boxes to arrive — and sometimes dealing with multiple return scenarios. So, I set out to fix it — for all of us.

I grew up fishing, spending hours on the water with my dad. To me that’s one of the best parts of any outdoor activity, the quality time spent with the people you love. I don’t think you get the same experience if you’re sitting around a tv screen together, and you certainly don’t get it if you’re spending hours on your computer trying to track down the perfect beginner fishing rod for your daughter. Time is precious, and the endless toil of gear compilation eats into those few available hours we have to spend together.

By aggregating thousands of outdoor brands and gear retailers and centralizing them into one marketplace, we’re allowing our users to hop on, find everything they need, and check out easily. We’re just getting started but, within the next two years, we hope to add even more sellers and products along with more community offerings.

Being out on the water showing my kids how to bait a hook or how to find a school of fish, those are the memories I hope they take with them. With Everest, it has been important to me to help make those kinds of experiences easily attainable for everyone and the people they love.

CM: Speaking of other stores, do you plan to go head-to-head with the REIs and Sun and Skis of the world? Or Amazon?

BV: I get this question all the time and I love it. As to the first two, definitely not. We’re a marketplace, we’re here to help companies like REI and Sun and Ski, who can participate as sellers and reach new customers.

The difference is that our members can pick up everything they need, from multiple retailers, in one cart, with one easy checkout option. Many of the big names already spotlight and sell products on Amazon — they can do the same with Everest. We are a community of like-minded outdoor loving enthusiasts that have been looking for a niche marketplace to serve all of us.

Think of what Chewy did in the pet industry — we are doing the same thing for those that love the outdoors. Amazon has to be everything to everybody. We don’t, and we don’t want to.

CM: Do you see Everest ever creating brick-and-mortar stores?

BV: Wonderful question. The beauty of Everest is we are still a young company with options to consider. But remember, one of the main tenets of Everest is supporting our sellers. We are not looking to get into a situation where we are competing directly with them.

However, we’d love to one day open a shop selling Everest sweatshirts and swag in downtown Houston. It would be so fulfilling to see the outdoor community wearing Everest branded clothing and putting Everest stickers on their gear in the future.

The bottom line is, we are sprinting as hard as we can in hopes of waking up one day as a true disruptor, household name, and eternal brand.

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This article originally ran on CultureMap.

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