Get the Financial Planning Right
You got a game plan for a great startup; you also have the resources to run your brand new business setup in Dubai. But there could be one needle, which could puncture your entire plan — Financial Planning.
Risk taking is always great but every risk should be backed by your financial plan. So what one needs is a robust financial plan in order to cover you all the time, especially during challenging economical conditions, when there could be possibilities of running out of money.
Investors will not even take a second look at your proposal if your financial panning is poor. They need to know how you will spend their money if they decide to invest in your business in Dubai.
Here is a small run down
When you start your financial planning, you need to be realistic and prudent, otherwise your hard work will not pay off. If you are designing your financial plan alone, you need to have a strong sense of foresight in order to get your numbers right.
Always Start Small
Small steps in the business world, always lead you to successful giant strides. Everyone began small and that is how they are successful today. Starting small always gives you an experience of testing the waters.
Forecasting Costs
This is would be your first principle when you start planning your finances. Put your passions and dreams aside and start writing down your anticipated costs.
First Year Projections
For any company formation in Dubai, UAE the first year projections of any startups will always incur huge costs and at the same time it will give you the experience on how you need to put the account books in order each year and plan for the new fiscal year. Usually the first year projections is a bit higher than the rest of the years, because apart from recurring costs such as rents, salaries, office automation, you also have one time registration cost along with the cost for license. The renewal fees of the license are comparatively less in the following years. Underestimating any costs can prove disastrous for your project. If you plan to setup a company in a UAE Freezone, you need to present your financial plan as part of your business plan to the free zone authority.
Revenue Projection
This can be a little tricky and you need to exercise a lot of prudence and realism here. Yes your business idea is great and has good potential revenue capacity. But you must be careful not to exaggerate your revenue projection.
Cash Flow Projection
The flip side of writing down your costs is to project your cash flow management. This is one of the most critical aspects of your financial plan. You need to understand every movement of your cash. Vigilance is one of the key factors to successful cash flow management. Irresponsible borrowing and lending can simply choke your cash flow management. If your cash flow is blocked, it could spell serious trouble for yourinvestment in Dubai.
Unanticipated Costs
Always keep some significant reserves for unanticipated costs. This will prevent disturbances of other budgets, which already have been pre-allocated.
Credit Card Loans = Danger
One of the big mistakes start-ups do is to take loans on their credit cards. This opens the doors to a lot of unwanted trouble. One of the thumb rule is never take loans of your credit cards, especially because of the compound interest it carries and hidden charges.
Experts always suggest its best to startup your business with the least amount of loans, because it puts less pressure on you and your business.
Seeking Professional Advice
Not all of us are financial wizzes, and if you are not a financial wiz do not hesitate to seek professional advice. It is always good business sense to seek advice especially on this issue, from the experts. Most financial pundits are ever ready to share tips on financial planning.
