You’re planning on starting a new business. Congratulations! This is an exciting time for any entrepreneur, whether you’re a seasoned business owner or a rookie start-up.
However, one of the first things you’ll need to do is start thinking about the financial impact of setting a new business – after all, you don’t want your personal and professional finances to overlap, right?
So, you may want to start right away, positively certain that you’re going to turn a profit, but first…
Think about the overheads
Consider the initial overheads first. How much will your premises cost to rent, and what up-front fees are there? What equipment will you need to function? It’s no good being an IT firm with one lousy iPad (and even that has a shattered screen).
Once you know your initial out-lays, turn your mind to those on-going costs your new business will incur. This includes forecasting the wage bill, maintaining your premises and all the energy you’ll need to power your business.
Know your options
Starting a business always comes with a cost. As such, you need to know what financial options are available to you. Most start-ups look to their bank to provide loans – but research which banks, and which products, will best serve your financial needs.
On the other hand, you may wish to raise capital through other means, such as from venture capitalists and angel investors. Either way, you’ll need to ensure your business plan is rock-solid and water-tight.
Get tax-happy from the start
One of the biggest failings of many start-ups is the failure to get their taxes in order right away. You know it needs to get done, but you’re so busy getting the business in order that you haven’t had time…
Which is fine until the deadline rolls around and your service slips because you’re frantically scrolling through spreadsheets while on the phone to the tax-man.
Even if you’re self-employed, you may find it’s beneficial to hire a professional accountant (another outlay!) who can properly register your business with officials. And you’ll want to implement a culture of good financial house-keeping and record-keeping from the moment you start trading.
Tell people you’re out there
You’re a new business. That means, outside of your friends and relatives, no-one has a clue who you are or what you do. Time to consider how much all your marketing materials will cost to raise awareness of your brand.
Thanks to digital platforms like Facebook and YouTube, it’s easy to start promoting your start-up to a very exact audience based on factors such as age or location – and it can also be a fairly cost-effective move. In addition to your online promotion, you may find that event marketing or direct mail will yield results.
Whatever happens, just don’t spend money on marketing that no-one will see or isn’t relevant to them. Choose your marketing channels using market research to go precisely where your audience is.
Control your expansion
Some start-ups, particularly in the digital field, have a tendency to absolute explode onto the scene. That’s great – but it can also be dangerous.
Companies seeking growth plough more money back into the business (that’s good), but spend it on the wrong things (that’s bad). Be honest, does your business need that new, larger office on the docks – or is it just an unnecessary, show-boating expense?
Another factor of growth is recruitment. As you begin to sell more and more, you’ll need more staff to maintain the quality of your product or service. But at the same time, you don’t want the wage bill to spiral out of control. It’s a tricky balancing act for new businesses.
In short: Use hard data to determine the direction of your business.