When you’re getting your startup off the ground, it’s crucial to keep a keen eye on your finances, not just your product and team.

5 Financial Mistakes Startups Make

Even if you’re not a finance expert, understanding and managing your startup’s finances can save you from major pitfalls.

Here are five common financial missteps startups make and tips on how to avoid them:

1. Underestimating Your Cash Burn: Many founders don’t accurately track how much money they spend monthly, leading to running out of cash sooner than expected. It’s essential to make detailed forecasts and update them regularly.

2. Misunderstanding Your Market: If you don’t deeply understand your market, you might price your products or services incorrectly. Start with the market price and work backward to figure out your costs and margins.

3. Hiring Too Fast: Rushing to expand your team can quickly drain your finances. It’s better to grow your team gradually and ensure each hire is absolutely necessary and a good fit.

4. Making Poor Hiring Choices: Rather than only looking for experience, consider potential and fit with your company culture. Also, think about outsourcing roles that are not core to your business, like financial tasks.

5. Handling Finances Without Expertise: If finance isn’t your strength, don’t try to manage it alone—especially as your operations grow. Hiring professional help, even on a part-time or freelance basis, can prevent costly mistakes and free you up to focus on building your business.

These insights highlight the need to balance the drive for growth with sensible financial planning and management. Remember, good financial health signals to investors that your startup is a worthy investment.