When starting a new business, it’s so easy to get carried away with the glamorous side of entrepreneurship such as branding and website design that it’s easy to forget what lies at the heart of a successful business – finance.
Accounting is one of, if not the most, important thing to consider when thinking about starting and maintaining a prosperous business.
Just over 50% of start-up businesses fail in the first year, but don’t let that dishearten you. One of the main reasons why they fail is because business owners didn’t take accounting seriously from the offset.
This is exactly why we’re presenting you with ten tips to help you get on the right track when it comes to getting your business off the ground from a financial point of view.
Hire a professional accountant
This may seem ridiculously obvious but you would be surprised at the number of businesses who go ahead without one, despite the fact they have no accounting knowledge.
It’s hard to manage finances when so many emotions are invested in your business because as the business owner, you are likely to have a slight bias view. There are also so many other reasons why an accountant is beneficial to your start up.
Accountants will handle the stress of day to day finance tasks, know the best ways to save you money, update you with the latest government legislation and prepare you for any potential financial barriers. It will put your mind at ease knowing that you have someone keeping an eye out for any financial problems that could affect your business before it’s too late, problems that you might not have foreseen coming.
Learn the jargon
Even if you hire an accountant, it’s advised to learn the lingo of accountancy in order to be able to fully understand your business. This allows better communication with not only your accountant but also your employees and suppliers. For example, having a brief understanding of annual reports gives you the opportunity to monitor competitors more efficiently.
Don’t be afraid to borrow money
It’s not a sign of weakness or a bad business. Don’t put off major growth opportunities, paying employees, or even yourself because of money restrictions. An accountant can help you seek out smart financing options that are feasible for you from bank loans to crowdfunding.
Establish a business bank account
This will keep your personal and business finances separate, making it a lot easier when it comes to dealing with tax for example. Note that Limited Liability Companies, partnerships and corporations are legally required to do so, but sole proprietors aren’t, although it is highly recommended.
When starting a business, creating and maintaining a budget is vital to success. Budgeting allows you distribute your funds accordingly and reserve funds for emergencies that might arise in the future. It’s important that you plan where all your money is going to go as we all know that money doesn’t go as far as we’d like it to.
Running out of money is one of the most common reasons why many business startups fail, so you need to know where every single pound is coming from and where it’s going.
Investigate import tax
This is all dependant on the model of the business that you are going ahead with, but if you’re looking to import goods from other countries, there will be fees so it’s important to take the time to learn about these and how they might affect your finances.
A good way to get the ball rolling with a new business is to incorporate some financial incentives such as discounts for people who pay early or subscription plans. People are likely to invest more money in your business if they feel like they are getting more for their money.
Establish specific goals
Setting yourself achievable financial goals is important for motivation and growing your business at a consistent pace. It’s no good saying: ‘I want to be a company worth a million pounds’’, you need to set yourself smaller goals in order to motivate you to reach your larger, overall target.
Make use of accounting software
This allows you to have a good grounding in where your business stands financially at all times, therefore, you are likely to make smarter financial decisions. Using a cloud-based software, for example Sage, will also let you access these details from anywhere.
Use the power of negotiation
Don’t be afraid to try and get the costs of materials and projects that you’re investing in as low as possible. You don’t have to become a hard-core haggler but asking the simple question such as: ‘Is that the best you can do?’ could potentially save you some money, which is very valuable when it comes to new businesses. Try not to settle for the first offer.
You might have the best business idea the entire world but without the correct financial planning, the business will eventually sink. Don’t let your business idea become part of a statistic about failing startups.
Whether you’re a small business or an entrepreneur startup, let us help you turn your idea into a rapidly expanding business, like we have done with so many of our other clients.
We understand that it can be a bit of a headache and slightly overwhelming when trying to choose the right accounting firm, so free to fill out our free call back form and we will be in touch with you as soon as possible to discuss the specific ways in which we can help you.