What is the key to financial success for a new business? It’s all about good planning, good advice and keeping your eye on the ball.
Setting up a business is an exciting time but it’s often a very steep learning curve, when you suddenly have to get your head round all sorts of admin, marketing, sales, HR and financial issues. It can be tempting to skip over some of the planning in your enthusiasm to start trading but it’s important to set firm foundations for your business and get expert advice, as you’ll reap the rewards later on.
From a financial perspective, the following key areas will not only get your business off to a good start but put it in a strong position to prosper long term.
There are some important decisions and plans to make early on, including choosing the most suitable structure for your business (sole trader, Ltd company etc.). As well as having a clear business plan in place, you’ll need to prepare a financial plan and budget for the year ahead, identifying any funding you may need and exploring funding options and providers. A cashflow forecast should be a priority, to ensure you don’t run out of cash before you get going or just as your business is starting to take off, and will be essential when talking to funders.
New businesses can often trip up when it comes to other tasks which may not be particularly exciting but still require meticulous attention. Registering for VAT and PAYE; calculating and submitting the appropriate returns on time; preparing for auto-enrolment and digital tax; and setting up your bookkeeping and payment processes; are just some of the other essentials which you’ll need to consider.
In our experience the most important part of ensuring the success of any business is the ongoing monitoring and analysis of your business performance. This includes:
This is an area where young businesses can particularly benefit from the right external expertise. As your business grows, you are likely to have less time to devote to proactive financial management so getting support with this task can have a big impact on the health of your business. It will also mean you are up to date with the constantly evolving financial landscape and changes to regulation, such as the introduction of digital tax returns, auto enrolment, the national living wage etc.
At Playfair Partnerships, we work with a wide range of start-ups from the initial idea, through the important first year and beyond. For advice on starting and growing your business, please get in touch