So, you want to start a business? You’ve had that light bulb moment, that epiphany, where you see yourself running your own business, with no bosses – apart from your demanding customers of course. You lie awake at night working out strategies, building your website in your head, considering social media pages.
Launching a business is incredibly exciting, but you need to pause and think, and here I’ll explain why.
Starting any new business is hard work and financially demanding. Okay, granted, you have the capacity for hard work or you wouldn’t consider it but you must think carefully about the finances of the business. You need to precisely work out start-up and ongoing costs: the website, salaries, premises, insurance, product development, marketing strategies etc. Ask yourself, when you’ve calculated, can I afford this? If the answer is yes, great, start that business, if no, where are you going to turn to fulfil this dream? Can you finance it from savings, personal investments? Can you cover the worst-case scenario of not making a profit for 12 months or more? If so, get on with it! If, however, you have an investment shortfall, should you look for private investors in your start-up business? Do you have friends or family who are prepared to invest in you or should you look to higher-profile investors?
Think long and hard about your finance options
When you hit the ground running, your business, whether it’s online or offline, is launched with a marketing fanfare, what happens then to your management of finance? You may be locked up in successfully leading the new business and have a myriad of demands placed on you. This is where you need to think about outsourcing – outsourcing your financial affairs. You could employ an accountancy firm, like Early Growth, who will number crunch for you and be an objective pair of eyes for your business and its success or you could subcontract out your number work – this is increasingly common in businesses – online firms often outsource work on a retainer or one off payments. A company such as pocketaccounts.co.uk can be a great help in easing the burden of financial administration.
Remember, the idea of business is to make money for you. It can work but many new start-ups can run into difficulties and this is often due to poor financial planning. Keep your eye on outgoing costs and incoming revenue constantly – so you don’t lie awake at night, wondering where it all went wrong. Using a financial reporting software is one technique to ensure that this does not happen. Using such platforms allows you to keep track of all of your earnings and expenditures.
To sum up, calculate the set-up costs of your new business, with accurate calculations on a spreadsheet, seek advice from others in your field, or from specialist start-up companies who can help you with financial and business planning. Balance these set up costs against your investment capital. Can you finance it; will you need help from others? Finally, think carefully about ongoing financial management when your business is up and running. Starting a business is incredibly exciting and you will succeed if the right financial foundations are in place.
