No one is surprised to hear fruitful entrepreneurs possess insights that lend powerful advantage when making key business decisions. What is surprising is a willingness to share them. Engaging two prevailing women in the investment-meets-startup space, we enquired what their golden nuggets of advice were when it comes to managing finances in relation to entrepreneurial ventures. Key takeaways from both: a ‘cash is king’ mentality really can’t be overstated, nor can running a lean, flexible team devoid of internal politics and unjustified roles (in other words, always look in-house first).
By way of background, Donna NguyenPhuoc is the co-founder of SPARQ Technology Investors Society, an investor-only forum that offers family offices, venture funds, HNW individuals and angel investors unique insights into HK and Asia’s new wave of technology and innovation. Since 2011, Donna has been actively involved in technology startup investment and in her experience, she suggests the following are critical to effective wealth management:
1. Know Your Own Business
When it comes to your finances, sometimes one can look but not see. Ensure you are abreast of all numbers and truly understand what they mean. If for whatever reason you don’t see cohesion or grasp them, remember there is nothing wrong with asking for help from friends or professional advisors.
2. The Best Financing is Revenue
Focus on driving your business to a profitable point using the capital you currently have, instead of trying to raise external funds. This additional focus could eventuate into a distraction that takes away from the actual running of your day to day business.
3. Have Enough Capital
Guaranteeing enough cash to carry your business to the point where it gets traction is critical. One of the more common reasons an entrepreneurial venture fails related back to running out of cash. When forming business plans, ensure you have enough initial fundings, instead of relying on projected revenue which may not arrive as fast as originally expected.
4. Do It Yourself
Before engaging (expensive) service providers, try to carry out tasks in-house or yourself. A next potential step could be to look to friends and associates who are accountants, lawyers or tax advisors. Buy them a coffee and ask for their advice as exhaustively as possible before seeking the advice of professionals.
Another powerhouse figure and established authority on the matter of wealth management is Teresa Teague. Teresa was at Goldman for 20 years in Investment Banking (M&A Advisory and Corporate Finance) between New York, London, and for the last eight years has been in Hong Kong. Her drive and desire to engage in something more entrepreneurial has led to what will be, as of November 2016, TTB Partners. TTB Partners caters to the increasing segment of wealthy Chinese wanting to diversify assets and investments offshore, and filling the gap for Western partners to navigate Chinese capital flows and vice versa. Her advice for entrepreneurs:
1. Run Lean
Be prudent with capital and start-up expenses and invest in key resources like people and required structure. The key objective should be to maximise shareholder returns. We wanted to focus very much on our clients – and the grandeur of the office or expense account is not high priority.
2. Cash Is King
Focus on conserving capital but manage early stage cash flow carefully. The best idea and intentions can be thwarted if early stage cash runs out. Plan very carefully the first 24-36 months spending pattern and always take a haircut so if all works out you can be surprised on the upside.
3. Think Flexibly
The business model that myself and Jon began with 18 months ago is slightly different than where we are today. This point is especially relevant to Asia where markets and trends can change so rapidly. Found the business on a core base but be very laterally flexible on execution.
4. Treat Initial Investors Like Gold
Always err on the side of over-communicate, and be incredibly thoughtful about investment in your venture from their angle. Are you delivering to them what they want? Keep them regularly informed and always listen to their feedback.