If you’re starting or plan to start your own business there are many things that you have to consider and give your full attention. Making an argument for the most important, however, are finances. Without financial planning, your operation will fail, no matter how great a business idea you had in the first place. Here are Big Red Cloud’s top 5 tips on financial advice for starting your business and succeeding.
1. Business Plan
You shouldn’t really be starting a business without one of these. This is your road map for success but only if you do it correctly. Not only should it include details of your offering and your competitors, the financial elements of the plan are the most important. This shows you by the numbers how your business will survive and hopefully grow in the first few years. Make sure that your financial projections are realistic and plan for the worst case scenario. If you do this, you’ll be ready for how tough things could get for your operation.
2. Consult an Accountant
You pay accountants more than bookkeepers for a reason. They are qualified not only to produce and return your accounts but also to offer financial counsel to you as the business owner. It is also their job to provide critical financial information to you, from your accounts, so that you can make the best decisions possible for your business. When starting up or facing an important monetary decision, your accountant should be near the top of your phone book. If they shy away or just won’t provide this type of service for you go and find yourself one who will.
3. Business & Pleasure
The very first thing you should do when you set up a business is open a dedicated bank account for the enterprise. There are so many things wrong with using your own bank account for both your business and your personal life, not least of which is keeping track of business revenues. Those revenues you generate early on become the life blood of your business, its cash flow, allowing you to operate. Keeping track of paying suppliers can be a nightmare to, especially for the likes of insurance which you may already have a personal policy for.
4. Personal Cash Flow
When you’ve set up your operation it is important that you not only keep track of your business cash flow but of your personal cash flow as well. As touched on by the point above, opening a business account is the first step. However you need to make sure that you are paying yourself a salary from your business. There is no point in skipping that to save the business as if you a struggling financially it’s likely that your start up will follow. Setting out how much you are going to pay yourself for each month will save you taking ad hoc drawings from the business to pay for your personal life on the go.
5. Review
In the early days, reviewing your businesses financial performance metrics can’t be done enough to make sure that you’re on the path to sustainable success. This can be tough, given the time pressure when you’re trying to handle everything else that the business world throws at you. However, putting this off for a month can see the landscape change drastically without you having any knowledge of it. The most important thing for any small or medium size business is cash flow. You should review how long it takes you to invoice your clients and how long it then takes to get paid. Profit margins and large expenses can also be reviewed. The key is to review them so that you have the information you need to make your business a success.
Big Red Cloud is an online accounting software for small businesses that can help your operation succeed. We’re an unlimited provided with included 24/7 support and anywhere, anytime access. If you’re interested, find out more about our accounting software here.
