16 Jan 2023
There is so much to think about when starting a new business. In order to give yourself the best chance of success, it’s important to implement good habits and best practices from day one. As a new business owner, it can feel like your attention is being pulled in a million different directions which is why we’ve created this guide to help simplify things. Here are four essential tips for entrepreneurs starting a new business.
1. Prioritise Learning
You can never learn too much and the more you learn, the faster your business will grow.
Of course, we’re not recommending taking course after course and never implementing what you learn; shelf help never got anyone anywhere. However, it’s important to learn from and follow in the footsteps of those who have gone before you. Coaching and mentoring programs can save you a huge amount of time and enable you to fast track your business to success.
Your customers represent a very valuable source of learning, too. By having conversations with them, you can get a clearer understanding of their problems and fears, and thus provide an effective solution.
2. Stop Making Excuses
What’s the difference between people who talk endlessly about starting something and those who actually get up and do it?
There is never a perfect time to do anything and there will always be a reason not to, whether it’s time, children or a fear of failure. These are very real obstacles but you’ll never achieve anything if you let these things get in your way. If you want your new business to succeed, you need to stop making excuses and focus on finding solutions. Think ahead and solve these problems before they impact your progress.
3. Sell Paracetamol
We don’t mean this literally, but as stated above, it’s important to get an understanding of your customer’s pains and then prescribe the solution.
Think of it as selling paracetamol instead of vitamins. Yes, vitamins can be a preventative measure and help people achieve their health goals but paracetamol cures the pains they are suffering right now. We all know which one most people would reach for when suffering from a headache.
Don’t think so much about what you’re selling but focus on the problem that you are solving. This will enable you to create a powerful marketing strategy that really appeals to your ideal customer.
3. Track Expenses from Day One
We cannot overstate this enough. Not only does tracking your expenses help to minimise your tax bill and keep your business compliant, it also provides critical financial data that will prove invaluable in terms of cash flow projections and financial planning. This will help you to choose the right payment terms for your business, make investments at the right moment and grow at a steady rate whilst mitigating the risk of overstretching yourself.
We know that bookkeeping is not your favourite task, which is why we recommend using cloud software such as Xero to make the process as fast and painless as possible. These platforms make it easy to manage your invoices, track your payments and organise your financial records, meaning that it’s more likely you will actually do it rather than putting it off indefinitely.
Summary
Of course, there are a million details to deal with when starting a new business but by using the above tips as guiding principles, you can give yourself the best chance of success. Striving to learn more and refusing to make excuses are both important parts of cultivating a growth mindset, whilst focusing on selling pain-killing solutions will prove invaluable when it comes to creating an informed and accurate marketing strategy. Finally, it’s of the utmost importance that you track your expenses from day one to avoid making a stressful (and expensive) mess of your books and ensure that you are able to leverage your financial data to create a stronger and more profitable business.
Book a free consultation here, to discuss your needs and learn how we can assist you.
11 Jan 2023
Are you a small business owner? If so, then you know how important it is to keep your finances in order. After all, your business’s success depends on it.
But what you may not realize is that your accounting also has a huge impact on the fate of your enterprise.
Good accounting is essential for small businesses in order to make sound financial decisions, track progress, and plan for the future. It also helps you to save money and avoid costly mistakes.
Let’s take a more in depth look at why getting your accounting right is essential for small business success.
#1 – Financial Stability
The first and most important reason why good accounting is essential for small businesses is financial stability.
Without accurate financial statements, it’s impossible to know how much money your business is making or losing. This information is crucial for making sound financial decisions and ensuring that your business is on track.
If you don’t know which direction your business is going in, you’ll quickly crash and burn.
#2 – Greater Efficiency
Another reason good accounting is essential for small businesses is that it can help you run your business more efficiently.
With accurate financial statements, you can track your spending and better manage your cash flow. This information is crucial for making sure that your business has the funds it needs to operate smoothly.
Good accounting can also help you find areas where your business is wasting money so that you can cut costs and improve your bottom line.
Not only this, but your accountant can help you to identify your most valuable customers or clients and target them with your marketing efforts. This can lead to improved customer retention, more sales and ultimately a leaner business model.
#3 – Peace of Mind
Running a small business can be stressful, and there are many things you need to keep a close eye on.
Good accounting can help take some of the stress out of running your business by giving you the peace of mind that comes with knowing your finances are in order.
Don’t underestimate the importance of a strong mindset in running a successful small business. When you’re not worried about your finances, you can focus on other aspects of your business and make better decisions overall.
#4 – Better Decision Making
Finally, good accounting is essential for small businesses because it gives you the clarity you need to make informed decisions about your business.
With accurate financial statements, you can see where your business is succeeding and where it needs improvement. This information is crucial for making sound strategic decisions about the future of your business.
Good accounting can help you avoid costly mistakes and make smart decisions that will help your business grow.
In fact, good accounting is absolutely essential when preparing for business growth because it gives you the information you need to make informed decisions about investing, hiring, and expansion.
Growth often requires you to spend more than you’re bringing in, and good accounting can help you plan for this so that you don’t put your business at risk. The right accountant or advisor will help you to properly manage your cash flow and make accurate predictions so that you can grow your business at a steady, sustainable and successful rate.
Final Thoughts
Small business owners should not underestimate the role of great accounting in the success of their business.
Accurate financial statements and careful record keeping are crucial for making sound financial decisions, tracking progress, and planning for the future.
More than that, knowing that your accounts are in order offers peace of mind and allows you to make timely and profitable decisions with clarity and confidence.
Remember, running a business should ultimately be enjoyable, and it’s very difficult to achieve this goal when finances are a constant source of stress. Investing in a quality accountant to help you relieve this burden might just be the best business decision you’ll ever make.
Book a free consultation here, to discuss your needs and learn how we can assist you.
9 Jan 2023
Starting your own business is incredibly exciting, but there are many practical considerations to take into account. One of the most important questions to ask is: how much money do you need to get started?
The sum you will need depends on a number of factors, from the type of business you’re planning to start, to your personal financial situation. But there are some general guidelines you can follow.
The truth is that starting a business can be a very costly endeavour. There are a lot of things you need to take into account when starting a business, such as the cost of materials, the cost of rent or mortgage payments, the cost of advertising, staff salaries… the list goes on.
Let’s take a closer look at some of the main costs associated with starting a business, so you can get an idea of how much money you’ll need to get started.
Startup Costs
The first, and perhaps most important, cost you need to consider is the cost of your startup. This includes the cost of any materials or equipment you need to get started, as well as the cost of renting or buying a space for your business.
If you’re planning to start a manufacturing business, for example, you’ll need to factor in the cost of machinery and equipment. If you’re starting a retail business, you’ll need to factor in the cost of rent, as well as the cost of shelves and other fixtures.
Of course, the amount you’ll need to spend on your startup will depend on the size and scope of your business. A small, home-based business is going to cost far less to start than a large, brick-and-mortar business.
Don’t forget to account for some “wiggle room” because you’ll almost always end up spending more than you originally budgeted for your startup.
Personal Financial Situation
Your personal financial situation is another important factor to consider when determining how much money you need to start a business.
If you have a lot of personal debt, for example, you’ll need to factor that into your calculations. The same is true if you’re supporting a family on a single income.
In general, it’s advisable to have at least six months’ worth of living expenses saved up before you start a business. This will give you a cushion to fall back on if things don’t go as planned.
Operating Costs
It’s one thing to start a business and quite another to stay in business. Once you’ve got your business up and running, you need to consider the ongoing costs of operating your business.
These costs can include things like rent or mortgage payments, utilities, insurance, inventory, marketing and advertising, and salaries.
Again, the amount you’ll need to budget for operating costs will depend on the size and scope of your business.
It’s always best to overestimate, rather than underestimate, the amount of money you’ll need to keep your business running smoothly. It’s better to have some cash left over at the end of the month than to be in the red!
Financing Options
Once you have a better idea of the costs associated with starting and running a business, you may be wondering how you’re going to finance your venture.
It’s okay if you don’t have all the money you need sitting in your bank account right now. There are a number of financing options available to business owners, including loans, lines of credit, and investment capital.
The best way to finance your business will depend on a number of factors, including your personal financial situation, the amount of money you need to raise, and your ability to repay any debts you take on.
Speak to an Accountant or Financial Advisor
Before you make any major decisions about starting a business, it’s a good idea to speak to an accountant or financial advisor. They can help you understand the ins and outs of starting a business, as well as the tax implications of owning your own business.
They can also help you create a realistic budget and forecast for your business. This is an important step in ensuring that you have the financial resources you need to get your business off the ground.
An accountant or financial advisor can also help you to approach creditors and investors by preparing a professional business plan and financial projections. This can give you a better chance of securing the financing you need to start your business.
Final Thoughts
Going into business for yourself is an exciting and challenging undertaking. There’s a lot to think about, and it’s important to be prepared both financially and emotionally for the journey ahead.
The most important thing is to do your research and make sure you have a solid plan in place before you take the plunge. Speaking to a professional accountant or financial advisor will make all the difference in ensuring that your business is set up for success.
Book a free consultation here, to discuss your needs and learn how we can assist you.
5 Jan 2023
Times are tough right now. The cost of living and doing business is rising rapidly, there are labour shortages, and real incomes are falling, leaving consumers with less disposable income. All of this makes for a difficult economic environment in which to do business, but it’s not all doom and gloom. There are ways to weather the storm and come out the other side even stronger. Here are three key recession survival tips for small business owners.
#1 – Focus on Cash Reserves
We’ve said it before and we’ll say it again: cash is king.
No matter how well things are going, it’s always important to keep a very close eye on your cash reserves and cash flow. You could be turning a huge profit and still run out of cash, which could ultimately lead to your business folding.
During a recession, it’s even more important to focus on cash flow and make sure you have enough to weather any potential storms. Cash is fuel in your tank – without it, you can’t keep driving.
Having enough cash in the bank gives you the freedom to make strategic decisions, invest in your business, and weather any short-term storms.
Building up your cash reserves will also help you to stay sane, because you won’t go to bed every night worrying about running out of money.
Ideally, you should have enough to cover you for six months in a worst-case scenario – i.e., if all of your streams of revenue completely dry up.
#2 – Focus on Making Your Customers Happy
Happy customers equate to repeat business and referrals, both of which are fantastic news for your bottom line.
When times are tough, people are pickier with their money and they’ll be quick to take their business elsewhere if they’re not happy. This is why it’s so important to focus on making your customers happy.
You need to deliver an excellent experience from start to finish. Your customers should feel welcomed, valued, and listened to. If they’re not happy, you need to find out why and put things right.
Increase touch points with your customers, so you can build up a rapport and get feedback. This could be anything from regular check-ins to survey cards in packaging. It’s also important to let them know what’s going on with your business. If you’re making changes or facing challenges, they’ll appreciate the transparency.
#3 – Work Out What Generates the Most Profit – and Do More of That
This one seems obvious, but it’s often overlooked. In a recession, you need to focus on the areas of your business that generate the most profit, and double down on these.
A big part of knowing your numbers is knowing exactly what makes you money. If you’re not clear on this, it’s time to sit down with your accountant or financial advisor and identify your key profit drivers.
Once you know what these are, you can start to focus on them and do more of the things that make you more money.
Of course, you might have a product that’s selling really well but isn’t generating much profit. Alternatively, you might have a smaller product that doesn’t sell in big numbers but is highly profitable. In this case, you need to start pushing the latter to drive up profits.
Of course, this doesn’t mean you should stop selling your low-margin items if they’re popular enough to generate significant profit due to a high sales volume. But it does mean you should focus more on your high-margin items to really drive up profits.
Final Thoughts
Small businesses can survive and thrive in a recession by focusing on cash reserves, making customers happy, and knowing what generates the most profit. These three tips are essential for small business owners who want to make it through these tough times.
Book a free consultation here, to discuss your needs and learn how we can assist you.
3 Jan 2022
Setting goals for your business is an important step in making sure it thrives. While some people might think this is a simple task, it can be more complicated than you may think. This guide will walk you through the process of setting goals and provide tips on how to make them actionable, achievable and measurable.
Why Are Business Goals So Important?
Business goals and objectives are important and should be established for a number of reasons. If you don’t define what success looks like, the chances are that your business will never achieve it. You need goals to measure growth by comparing them from year to year or month to month. If you’re not seeing the results that coincide with your expectations, then it’s either time to adjust your goals or get to the bottom of why you cannot meet them. Goals are also important because it shows that you’re organized and have a plan in place, which is especially helpful when raising capital for growth. It lets potential investors know what milestones to expect throughout the process of investing into your business. Goals keep you and your team focused, and provide a clear benchmark against which to measure your success. Clear goals enable you to prioritise the most important tasks and focus on the things that matter most.
Step 1: Identify Key Areas Of Focus
First things first. What are the top areas you want to focus on in your business? Of course, this depends on your unique business and industry, but some examples to consider include:
● Improve customer service ● Reduce costs by 10% ● Grow sales volume by 20% ● Be the first mover in your industry with a new product or service offering ● Increase employee satisfaction to 75% ● Improve customer retention rate by 5% ● Reduce company debt and interest expense below a certain threshold, e.g. £40,000 ● Increase profit margin by 10% ● Reduce time required for product or service production by 12%
Step 2: Set SMART Goals
In order for your goals to be effective, you need them to meet a specific criteria. They must be SMART. This means:
● Specific – very clear and easy-to-understand. ● Measurable – determined by the numbers or data. ● Achievable – your goals must be realistic, or else you are simply setting yourself up for failure. ● Relevant – each goal should be pertinent and directly beneficial to your business. ● Time-bound – the deadlines must be clear and reasonable.
“Increasing profit margins” is not a good goal because it’s far too vague. However, “increasing our profits by 10% in the next 12 months by reducing costs and increasing efficiency” is an example of a SMART goal.
Step 3: Set a Timeline
Your goals need to have a timeframe. This is important because it helps you think about which resources are required, how much time your goals will take and what milestones must be reached along the way. For example, you won’t increase your profits by 10% overnight – it will happen in much smaller increments. Therefore, you should set milestones that will be reached along the way. For example, you might aim to increase profits by 4% by the end of Q1. Then, you can adjust your goals against real-time progress.
Step 4: Review Your Goals Regularly
It is crucial that you regularly review your goals to ensure they are still relevant and helpful. You may find that the market has changed, or that new opportunities have emerged based on customer feedback which would alter some of your original plans – this means it’s time for an update. Maintaining four or five year goals is a good idea, but you should also create one-year and quarterly plans to ensure your business stays on track.
Step 5: Accurately Track Your Goals
You cannot measure progress unless you are measuring against something specific – that’s where SMART goals come in. You need to establish metrics and benchmarks against which you can measure your progress. This way, it’s easier for everyone to see whether they’re on track towards achieving the goal and when adjustments need to be made.
Final Thoughts
Clear goals provide a clear direction for your business and keep everyone on the same page, working towards achieving something that is meaningful and beneficial to all. They can be used as an effective tool when pitching to investors or potential partners to give an idea of how the business will progress over time.
No matter how well your business is doing, there are always areas for improvement and new heights to reach. Setting goals is the first step on the journey to success..
3 Nov 2021
A healthy cash flow is essential to the success of your small business, and it’s important to regularly review your strengths and weaknesses in this area. One of the most important things to look at is your cash flow habits so that you can identify areas of improvement and protect the financial health of your business. Cash is the fuel that drives your business forward and so a healthy cash flow is the key to steady and sustainable growth.
1) Shoddy Bookkeeping
Be honest: how often do you really set aside time to update your records and organise receipts? Lax bookkeeping creates a number of problems when it comes to cash flow. For one thing, if you haven’t updated your books lately then you’re using outdated information to inform your action, which could negatively impact your results or lead to nasty surprises. On top of this, you need accurate financial records in order to identify and prepare for cash flow shortages ahead of time. Furthermore, you should regularly compare your progress over set periods of time to get a better understanding of how your business is doing. Finally, bad bookkeeping can result in missed tax deductions and an unnecessarily large tax bill, which then leads to a diminished cash reserve.
2) No Contingency Plan
You may not enjoy thinking about the worst case scenario for your business, but you still need to prepare for it. It’s important to regularly put money aside and build up a cash reserve that acts as a buffer. This will prove enormously helpful when unforeseen expenses occur or disaster strikes. Ideally, you should have enough to cover your costs for 3-6 months in a worst-case scenario. Furthermore, you should secure credit whilst the going is good. Arrange a business credit card to smooth over short term cash flow issues, although you shouldn’t rely on this for long-term borrowing. However, the interest free period on a credit card gives you some breathing space in case a client is a week or two late to pay you or an unforeseen expense arises. You should also arrange a line of credit. This is a preset borrowing limit, meaning that, like a credit card, you do not pay any interest until you actually use it. A line of credit typically has a lower interest rate than a business credit card, but there is no interest-free period. It is repaid in increments, like a traditional bank loan.
3) Overspending
Needless to say, overspending is very bad news for your cash flow. It’s important to keep a close eye on your spending and track every penny – you’d be surprised how quickly costs can mount up. However, overspending may not be down to recklessness on your part. It could be that you’re paying suppliers or vendors too much when there is a better deal to be had elsewhere. This is why it’s important to benchmark your existing suppliers and shop around to see if you can save money elsewhere.
4) Generous Payment Terms
Getting paid quickly is one of the best ways to protect your cash flow. However, many businesses extend overly generous payment terms based on conditions that no longer apply. Decades ago, invoices were sent in the post and could take days to arrive. Payment was usually made by cheques which again, had to be sent back and forth and would then take days to clear. Nowadays, however, invoices are sent via email and can arrive in a matter of seconds. In fact, if you use accounting software to automate your invoicing process for recurring clients, you don’t even need to lift a finger to send an invoice. Furthermore, any issues with the invoice received can be addressed quickly and fixed almost instantly. In addition, electronic payments make it faster and easier than ever for your customers to pay you. Therefore, 30, 60 and 90 day payment terms are often overly generous and unnecessarily delay you from accessing your hard earned money.
5) Being Too Lenient A report by Intuit QuickBooks found, on average, that small and medium sized UK businesses spend over one week per year chasing late payments. This represents a huge drain on time and resources. Therefore, it may be a good idea to introduce late payment fees to recompense you for this and encourage clients to pay you on time in the future. You might also consider outsourcing credit control to an external company that has the resources and expertise to secure your payments as soon as possible.
Summary
By breaking the above bad cash flow habits and implementing positive ones instead, you can protect the financial health of your business and make sure that cash flow issues do not interfere with your growth. By staying on top of bookkeeping, getting a hold on your spending and creating a contingency plan, you can identify and prepare for any shortages that lay ahead. Meanwhile, tightening up your payment terms and being stricter about deadlines can help you to get paid faster and stop wasting time and money dealing with late payments. Together, these improvements can totally transform your cash flow situation and put you in greater control of your finances.
