8 financial tips for multinational startups to survive the competition

Starting a multinational startup may seem like a dream come true, but trust me, it’s no cakewalk. It takes years of blood, sweat, and tears to turn that idea into reality. Despite the allure of being your own boss and achieving success on your own terms, the reality of the situation is far from being a bed of roses.  

In today’s cutthroat business environment, competition and innovation are at an all-time high. As a startup, it’s only natural to struggle with a tight budget and limited resources. The key to keeping your business afloat is being savvy with your finances.  

To get started, here are a few helpful tips to keep track of your costs and optimise your spending. 

1. Set up financial goals 

Some people might tell you to jump right into action as soon as you’ve figured out what you want to do. But here’s the thing: it’s not just about taking action, it’s also about setting targets and goals for yourself. 

You know how you set financial goals as a New Year’s resolution at the beginning of the year, right? Well, you should do the same for your business. Think of it like creating a vision board for what you want to achieve this year. Be specific, be daring, and set both long-term and short-term goals for your business. 

Maybe your goal is to move past the seed phase or land your first customer. Or perhaps you have a revenue target in mind that you want to reach by the end of the year. Whatever it is, having these goals will give you direction and motivation. 

But here’s the important part: once you’ve set your goals, make sure to communicate them to your team. Alignment is key! Everyone needs to be on the same page and working towards the shared goal. So, don’t forget to share your vision and rally the troops. Together, you can make those goals a reality! 

2. Monitor cash flow in every country 

Starting a business is no cakewalk, and one of the main reasons why startups fail is simply running out of money. It’s not easy managing a business across different countries. With multinational transactions, cash is flowing in and out from various regions all at once. So, it’s crucial to keep track of where that money is going, how long it will sustain you, how much more you’ll need when it runs out, and what you’ll achieve by spending it. 

Now, let’s talk about how to secure funding without giving up equity. You have a couple of options here: grants or debt. Grants are essentially free money that you can apply for based on specific criteria. Debt, on the other hand, involves borrowing money that you’ll need to pay back with interest. 

To ensure your financial health, it’s vital to maintain a record of all your cash transactions. If you neglect this aspect, you could jeopardise your entire startup by running out of funds sooner than you expect. Consider using accounting software or hiring an accountant (if you can afford it) to help you stay on top of your finances.  

Additionally, having a lawyer on board can be beneficial for handling legal and financial matters, allowing you to focus on growing and scaling your business.  

Remember, without cash flow, there is no business. No matter how brilliant your idea is, if you run out of money, you could be facing the end of the road. Establishing a budget and sticking to it will be your saving grace. 

3. Limit your fixed expenses 

Hey there! When you’re starting your journey in a new country, it’s important to take control of your fixed expenses. Until your business hits breakeven, it’s a smart move to keep these expenses as low as possible. After all, we know you have limited capital, right? 

Rather than splurging on fancy offices in multiple countries or pricey business trips, it’s better to be cautious with your resources. If you spend too much on these luxuries, you’ll find yourself with limited capital to invest in the areas that truly matter to your business. In the early stages, generating revenue should be your top priority. It’s all about reaching that day when you can finally afford the best amenities! 

To get started, let’s identify the fixed costs. Here are some examples: 

Cost of Goods Sold (COGS): 

• Material Costs: This includes the expenses for foam, plastic casing, PCB, sensors, and other electronic components. 
• Manufacturing Costs: These are the costs associated with assembling the wearable, such as labour, manufacturing setup, and tooling. 
• Testing Costs: Covering the expenses for testing the functionality, safety, and quality of the product. 
• Packaging Costs: Including the costs of packaging materials and packaging labour. 
• Research and Development (R&D): These costs include research and development activities aimed at innovation and product or service enhancement. 
• Design Costs: These are expenses related to product design, engineering, and prototyping. 
• Certification Costs: Covering the expenses for obtaining necessary certifications for electronic products. 
• IP Costs: These are the costs associated with intellectual property, like patents or trademarks. 

Operational Expenses: 

• Personnel: This includes salaries, benefits, and other compensation for your team. 
• Overhead Costs: Covering rent, utilities, office supplies, and other general administrative expenses. 

Marketing and Sales: 

• Marketing Costs: These are the expenses for marketing campaigns, PR, website development, and so on. 
• Sales Costs: Covering the expenses related to sales activities, like retail partnerships or online sales platforms. 

Distribution and Logistics: 

• Freight and Shipping Costs: These are the costs for transporting the product to warehouses, retailers, or directly to consumers. 
• Warehousing Costs: Covering the expenses for storing inventory. 

After-Sale Support and Warranty: 

• Customer Support Costs: These expenses include providing customer service. 
• Warranty Costs: Covering the expenses for returns, repairs, or replacements under warranty. 

Lastly, don’t forget to allocate a portion of your budget for any unforeseen expenses that may come up. It’s always good to have some extra funds set aside just in case! 

4. Understand the regulations  

When you’re looking to expand your business into a new country, it’s crucial to understand the regulations that govern that place. You’ll want to familiarise yourself with the laws and rules of the country you plan to operate in.

Here’s the deal: some governments are all for foreign investment and create favourable conditions, while others may impose high taxes on foreign businesses that directly compete with local products. So, it’s important to consider the taxation and compliance standards to determine if expanding into that country is a good fit for your business. Stay informed and make sure to do your homework on the regulations before taking the leap! 

5. Evaluate the business prospect of the expansion 

It’s important for startups to not limit themselves to just one area of business or a single market. You know the saying, “Don’t keep all your eggs in one basket”, right? Well, it applies here too. Diversifying your business can help spread the risk and offer a wider range of products or services to your customers. 

But here’s the thing: before you jump into expanding into new, unexplored territories, make sure to evaluate the business prospects and feasibility of your proposed plans. Keep in mind that outcomes can vary across different boundaries due to factors like economic conditions, political climates, and cultural environments. So, take the time to assess the potential success of your expansion in each specific location. It’s all about making informed decisions and setting yourself up for success in new horizons! 

6. Prepare yourself for the worst 

The business world is full of twists and turns, and even if a project appraisal report deems your idea highly feasible, there’s always a chance it might not work out as expected in a specific country. That’s why it’s smart to have a plan ‘B’ ready for emergency situations. If things go south, don’t be afraid to pull out of a failed business.  

Explore alternative options like micro-investments if you have some extra capital sitting in your bank account or consider reselling assets if you’ve depleted most of your resources. Another option is utilising third-party online companies to advertise and conduct business. 

7. Hire professionals for managing business overseas 

As your business expands and becomes more successful, dealing with operations across different countries can become quite complex and lead to higher administrative costs. 

Here’s the deal: instead of relying on individuals constantly flying back and forth, it’s a smart move to delegate these responsibilities to a professional team that you can trust. This team should have the skills and expertise to add real value to your business. 

By doing this, you not only ensure smoother global operations but also justify the salaries paid to these managers. After all, it makes more sense to invest in their expertise rather than constantly shelling out money for frequent travel costs incurred by the owners. 

Now, if you want to stay updated and connected on the go, technology is your best friend. Tools like Slack, WhatsApp, Zoom, and more can help you bridge the distance and keep communication flowing. 

And when it comes to travelling locally, it’s important to have a specific purpose in mind. Make every trip count and focus on achieving your goals. Time is precious, so use it wisely! 

8. Maintain creditworthiness 

Banks and investors typically hesitate to lend funds unless you have a good brand reputation in the market. This can be especially challenging for startups venturing into new countries for the first time.  

However, you can work on building your creditworthiness by obtaining a credit rating from a renowned agency and networking with reputable individuals in the country. These steps can go a long way in establishing trust and credibility in the eyes of potential lenders and investors. 

Before you go… 

For startups and young businesses, navigating through various uncertainties is a constant challenge. However, amidst these challenges, the unwavering belief in survival and the continuous effort to balance costs and reinvest profits remain unchanged. 

Allow Instarem to streamline your business payments and alleviate some of these burdens. With their services, you can expect a simplified and efficient payment process, enabling seamless transactions for both incoming and outgoing payments. Moreover, Instarem offers the added advantage of facilitating payments in multiple currencies, providing flexibility to accommodate global business operations. 

If you want to know more about how you can get better rates, faster transfers and more efficient money management,  sign up for your free Instarem account today.