21 September 2018
Long gone are the days where startups were bound to the likes of Silicon Valley. Thanks to great support initiatives across Essex offering business advice, funding, and grants, starting your own business has become more of an attainable reality than ever before.
But whether you’re a budding entrepreneur or an experienced professional, taking that first ambitious step towards getting your business off the ground can be one that’s met in equal parts of excitement and anxiety.
If there’s one thing that will push the switch off your “light bulb” moment, it’s the thought of how you will deal with your finances along the way.
So, we wondered: if you could ask someone that has “been there done that” – a founder of a startup – what one financial tip would they share with others? What are the greatest business lessons they have learned?
As follows, in this post we share advice from several founders of startup companies and enterprises that responded to us. As chartered certified accountants, we offer our own expert thoughts and insights as commentary.
Outsource for business finance consultancy at the start
“Concentrating on expansion is key, and outsourcing allows you to do just that.”
– Managing Director, marketing startup
Indeed, asking for help with your finances from the start is nothing to be ashamed of, and on the contrary, it means you can focus on other aspects of your business that are important.
Outsourcing to an expert who can assess your finance requirements at the beginning not only means you can better establish your financial situation and determine your budget for business planning, but can also help you to set up essential foundations, such as internal accounting systems. Of course, that wouldn’t be just any someone – but someone you can trust.
Having a local chartered certified accountant, such as our team here at TBL, means you’ll have that security and reassurance.
Establishing your financial situation and requirements at the start should give you a more solid understanding of your immediate business plan.
Be aware of the difference between employee pay and profit margins
“I wish I understood the difference between profit and salary before I started my business and how to account for both when determining the sale price.”
– Founder, catering startup
You may also need other hands on deck to get your company off the ground. To survive as in business, you need to earn more money than you are spending.
So, before hastily hiring and signing definitive contracts, you should plan to ensure these arrangements will fall in line with the structure of your business (ie. sole trader, partnership, limited company), and – if projected – your first round or profit forecasts.
Maintaining a relationship with your accountant means you can be better advised on staffing requirements before you dot the I’s and cross the T’s.
Manage your business expectations and goals realistically
“Your break-even point allows you to set much more achievable benchmarks and that makes for a happier business, allows you to track growth, and be reasonable in your ambitions.”
– Founder, fashion startup
Cash flow projections, budgets, and trading forecasts can be tricky to formulate in the early stages of your startup, and so having a financial business consultant at the start will help you manage your expectations and set up realistic goals. But as the wheels on your business are set in motion, it is crucial to have someone keeping a close eye on how your finances and cash flow are panning out. Having a chartered certified accountant by your side throughout the first phase of your business means your accounts are being continuously assessed, and that your “break-even point” is better identified. For example, we can offer continual strategic plans to maximise your business profits.
The marketplace is always changing
“Consider how the seasons and weather will impact your sales – once you’ve considered how the seasons/weather will impact your business try not to be too disappointed when sales do slow down!”
– Founder & CEO, confectionary startup
Starting up a new business is bound to be a bumpy ride, but the truth for many is that it will never be entirely smooth. With today’s ever-changing marketplace, and new competitors and products emerging day-to-day, startups must expect the unexpected.
So, companies and businesses need to be adaptable to change, and certainly trying to stay on top of your sector’s trends and keeping an eye on the competitive landscape is fundamental. At the same time, it is key there is a continual assessment of business strategy and budget, and professional advice to help you deal with any hiccups along the way.
No matter where you are in your startup journey, TBL can help you. We serve ambitious start-ups from every sector. We help solve problems and advise on investment, strategy, regulation, and compliance.