With a record number of new businesses founded in the UK in 2013, the past couple of years have been the beginning of a new era for entrepreneurs and SMEs.
However, starting up a business is not as easy as some startups make it look. Many promising new businesses fail, and it may take a few years before you’re company achieves a reliable level of financial security.
Ensure your idea is certifiably exceptional
If you’re going to be relying on a bank loan, or any other kind of external funding to get your startup up and running, you’re going to need a business plan. It will also need to be exceptional.
Before you begin to set about turning your entrepreneurial dream into a reality, spend some time drawing up your business plan. Assess whether or not the business idea is truly viable. Even an amazing idea does not guarantee a profitable business, especially if you have not identified your target market or any rival businesses.
Give due consideration to the specifics of your business. Take into account your target market, your startup’s viable cash flow and any potential market risks. A thorough business plan will not only help with external funding but will also provide a solid understanding of what it is you want to achieve and the timeframes of each goal.
Assess the startup costs
The first year is going to be the hardest for your business, but it has the potential to be very rewarding. It’s likely that you’re going to have to invest a considerable amount of cash into your burgeoning enterprise before you begin to see any kind of return.
Office space and hardware, such as phones and computers, are essential but may come with financial drawbacks. It might seem like a good idea to have a dedicated meeting space, but ensuring that it’s properly furnished for all kinds of business needs can be very costly.
As technical event production experts Perception have said, AV equipment is a crucial feature for any modern boardroom but the significant investment will only be worth it if you know precisely what you’ll need. Therefore, only purchase the most necessary equipment that your business can afford.
By opting for a virtual office your startup will benefit from an address befitting of an established and successful enterprise, but without the expensive overheads. Some virtual office providers, like i2 Office, will also supply access to business lounges and meeting rooms if you rent a virtual office with them.
Keep your books well balanced
Once you’re up and running with your new business it’s imperative that you keep on top of your accounts. Keep detailed records of the amount of money you have coming into your business and exactly how much your business is spending per month so that you know you are not overspending.
You only have to look as far as the supermarket giant Tesco for a startling reminder of the potential repercussions your startup could face if you don’t keep your books well balanced.
According to the London accounting firm 3 Wise Bears having an accurate idea of your current and estimated future finances will help to reduce the impact of any unforeseen challenges.
Although you may be able to keep on top of your accounting in the early days of your business, as your startup grows you will almost certainly need to hire an accountant to keep your paperwork organised and your taxes and cash flow in order.
Grow your business with your revenue
Although it’s important to make sure that your business is built on a strong financial base, one of the biggest mistakes a startup can make is to stick with the same business model.Your startup can only grow if your business plan adapts to any changes in your revenue. To do that you might benefit from the expertise of a financial advisor.
‘A reputable financial planner will be able to help you determine what your initial outlay should be, as well as advising you on how you should change it if and when your small business becomes decidedly less so’ explains Lee Robertson, CEO of the London-based wealth management firm Investment Quorum.
So whilst no startup is guaranteed financial success, bearing these factors in mind will help yours get off to the best possible start while managing its growth and potential.