For most people, running a business is to do with the freedom of being their own boss and the opportunity to make good money, with the potential to make a lot of money in the future.
That means you need to get the financial side of your business in the best shape you can, because if you don’t, then the chances are it will drag you down.
In the beginning
Your initial business plan should examine all your finance options, from the capital you will need to get premises and equipment, to the revenue streams necessary for the business to run smoothly. Starting up is exciting, but you need to be clear about where your initial finance is coming from, and then how you plan to sustain the company’s income so that you can pay bills, rent if appropriate, employees, and, of course, yourself.
You should plan everything in from the beginning because if you don’t, you could find yourself in early trouble with the business going under.
Factor in employees’ pay and benefits, and the costs of any loans for equipment – ensure you have the right technology from the start – and you are in a strong position to produce good sales and results for your company.
Running the finances
It’s important to decide who will be responsible for dealing with the financial side of the company. You may be a hotshot with bookkeeping and accounts, but that doesn’t mean you’ll necessarily have the time to devote to finance when you’re working to increase sales and production and manage your employees. If you stretch yourself too thinly, something may fall through the cracks. A better solution is to outsource non essential tasks.
You may want to employ a manager who will deal with all the company’s financial aspects, and a good and loyal employee who knows what to do with accounts is a valuable asset. However, you need to consider that employee’s costs and whether early on it’s a good use of your funds.
Many small businesses outsource their financial work to contractor accountants who take away the administrative burden of dealing with payroll, taxation, invoicing, and other financial matters. They can prove extremely useful in helping to find investors when you are in a position to grow the business, and can also work with you and departments within the company to set budgets, especially in the early days before sales come in.
It’s always important to keep good relationships with your creditors, and when you bring in accountants, they can help you develop and maintain those relationships by providing clear, transparent management accounts on a regular basis. Good financial management gives you every opportunity to make a real success out of your business. Poor financial management can effectively be the death knell.
A thriving business
You will have a lot to do and think about when you’re running a business, so to help it thrive financially, get professional help when you need it, and devote your energies to moving the business on to the next stage of growth.