When it comes to starting a new business, it’s very easy to get caught up in details and ignore the fundamentals. With so much to think about, from your company name to the products you’re going to sell and how you’re going to market your business, it’s not surprising.
One mistake that a lot of people make is to neglect the financial side of running a business. The last thing you want is to find out six months from now that you’re in debt, or worse—in trouble with the taxman. With this in mind, below are some financial tips to help ensure that your new business is a success.
Don’t underestimate the value of
Being able to precisely project the deliverables, revenue, and profit of your business over a period of years is impossible. Because of this, a lot of business owners simply see financial projections as guesswork and therefore of little value. However, particularly if you’re going to seek any sort of external funding, financial projections are vital.
Projections will not only give any potential investors more confidence by showing that you have a clear plan for your business and its growth, but also provide you with a roadmap for success and clear goals to aim towards.
It might be tempting to pour all your funding into one area of your business, particularly a “fun” or immediately rewarding one such as product development or marketing, but this isn’t a wise approach. Budgeting effectively means putting money into the areas of your business that require it, without overspending in one particular area.
You should also ensure that you have a healthy reserve of money available at all times in case any new business opportunities arise—or, more likely, you have to deal with an unexpected problem.
Don’t be afraid to seek professional advice
Seeking professional financial advice can help a great deal, both in the short term and the future. If you’re overwhelmed by all the financial considerations of starting your own business, a professional will be able to steer you in the right direction and take some of the burdens off your shoulders. An advisor can also help you steer clear of tax pitfalls and spot potential budget issues before they arise.
Consider all funding options
New businesses have more options than ever when it comes to raising funds. Depending on the type of business you’re looking to start, you might consider seeking investment via crowdfunding sites. It’s worth pointing out, however, that though this approach is less outlandish than it used to be, the types of projects that usually attract a lot of funding on these sites are for novel products that aren’t currently on the market.
Of course, this leaves the traditional forms of raising funds: Getting loans, and seeking investors. Your ability to secure investment, either from a bank or investors, will depend largely on the figures you have available so always ensure your books are up to date and you have financial projections that are based on solid data.
It’s easy to get overwhelmed by the financial side of your new business, particularly if you’re really revved up about your product idea, or lack a background in accounting. New Year’s resolutions, however, exist for a reason; why not make this the year you get to grips with your company financials?