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Millennial Startups: Can You Handle Business Finance?


There are two statistics that matter the most when it comes to millennials and finance. First of all, as many as 72 percent of all millennials are confident that they can achieve their financial goals, unfortunately, only 47 percent of them actually know what they should do when it comes to investment. The problem with this lies in the fact that, when it comes to the issue of business finance, knowledge matters far more than confidence.

Ideally, a millennial entrepreneur would have both of these weapons on their side, so here are several things that they should know about business finance.

Source of initial capital.

The first thing you need to know about business finance is the fact that the source of initial capital sometimes makes all the difference. Most commonly, startups are financed by loans (most often by friends and family), angel investors, venture capital or crowdfunding. Other options are startup accelerators and local economic development organizations. Just remember that every time you take money from someone you’re making a certain commitment and it is this commitment that might have an impact on the future course of your enterprise. Sometimes, keeping equity in your company is more important than starting your entrepreneurial career debt-free.

Living the lifestyle.

Another problem that a lot of millennial entrepreneurs have with business finance is the fact that they’re living a lifestyle that they can’t afford. There are a lot of problems with this, seeing as how every single dollar counts in the early stages of your business. Even when your business becomes profitable, you need to consider redirecting some of this profit back towards your business. A successful business is the one that burns cash, while a successful entrepreneur is the one who avoids doing so. Speaking of which…

Burning cash.

As an entrepreneur, you’ll have to learn when it’s crucial that you burn money. Giving bonuses to your team, getting new equipment, ordering supplies in bulk and improving your infrastructure are all worthy goals and causes. Alongside with the lease on your office space and your team salaries, these are your most important operational expenses. For this to work, you need to have a healthy cash flow, which is often a goal that eludes many inexperienced entrepreneurs. Also, being profitable and having a healthy cash flow are not one and the same thing and the sooner you realize this, the better your chances are.

Finance advisor.

Perhaps the single most important piece of advice on this topic is the fact that you just can’t do it all on your own. Keep in mind that an average Australian startup outsources a couple of vital functions. Most commonly, they outsource their IT support, HR and customer service but they almost always outsource their accounting, as well. Having someone to give you an expert’s opinion is just as important as having someone to help you fill in your tax report. Furthermore, when looking for someone to fill this advisory role, it’s usually for the best to look for local help (due to the in-depth knowledge of state tax laws and regulations). Therefore, startups based in NSW should probably look for finance advisors in Sydney, rather than expanding their search further.

Taking it easy.

It might take a while for your startup to become profitable enough, which is why quitting your day job might not be the best course of action early on. Moreover, your business might need additional financing and your day job might turn out to be a suitable source of income. You also need to understand that chances of failure aren’t that low, which is why having this extra safety net might be a good idea. Speaking of which…


The last thing worth mentioning is the fact that if things go south, you need to have a course of action planned out for this particular occasion. Declaring bankruptcy isn’t the end of the world. In fact, even Walt Disney went bankrupt at one point (in 1921), whereas titan of industry Henry Ford went bankrupt twice. In order to prepare for this event both mentally and logistically, you need to learn a thing or two about three different types of bankruptcy for startups – Chapter 7, Chapter 11 and Chapter 13. Each of them has their own set of rules and circumstances and it’s always good to know your options.

By taking these six steps into consideration, you’ll already have much better odds at making it in the business world. Keep in mind that while financial prowess isn’t all you need in the business world, it’s the key ingredient that makes all the rest comes together.


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