Starting a new business - top 5, to get you on a good financial footing.

Given the current circumstances we find ourselves in and the times ahead we feel that a lot of people will be looking to strike out on their own post CV19 and start that new venture they have always longed to try.

We have given a very brief summary of the key issues in regards to financial management that you need to think about and have in place when making the first steps in business. These will give a solid footing to the financial management side of the business on which to build upon.

1. Produce a business plan.

The business plan will show if your ideas have a financial feasibility to be the basis for a successful business and give you what you need from this.

We would always recommend that business plan should cover

a. The market you are in and price analysis.

b. Structure of the business

c. Funding for the business

d. Detailed 12 month forecast / budget

e. Summary budget for between 2 – 5 years.

2. Monitor financial performance – Cash is key!

A number of solid businesses fail in the first few years due to lack of cashflow control. They can be showing a solid profit, but if the cash is not being collected the funds will not be available to pay supplier or yourself. We would recommend building a solid credit control system from day one of your business and build this into MI reporting.

3. Keep clear line between business and personal matters

No matter what legal entity you set up for your planned venture it is vital to keep business and personal expenditure separate from day one. This is even more important if you set up a limited company as this is a separate legal entity from you and as such the money is not yours, but the companies.

4. Keep money aside for tax liabilities

It is key to be aware of any tax liabilities and when they fall due for payment. We would always advise keeping track of what is due and ensuring funds are ready to settle these as they fall due. Depending on your business structure and the method used to take any funds from the business the amount of any tax due each year will vary.

5. Monitor and record all spending

This is important for a number of reasons. First and foremost you need to keep records for tax purposes, but we would suggest that a good system of logging expenses (either Excel or accounting software) will enable less stress at your year end and also reporting mid year to see if you are on track with your business plans.

The above is of course not a comprehensive list of the issues and factors you should be considering, but it does give what we fell are the key ones.

We of course are well placed to assist and advise on any of the above issues and offer a free initial meeting to discuss these, so get in contact today.

Most of all it enjoy it!