Small Business Saturday Blog

Actionable Financial Advice for Startups

Wednesday, March 25 at 11:09Finance | Start-Up Support

If you’re a budding entrepreneur with aspirations of starting your own business, there are a number of things that you’ll need to consider before embarking on a new venture. The most important of which is the finance needed to set up a business and to make it work.

Below we have outlined the areas of finance that you’ll need to keep in mind when setting up a new business, the financial aspects of running a business, as well as the finances associated with hiring employees.

Starting out

One of the common causes for the failure of new businesses is the simple fact that they run out of money. In order to avoid finding yourself in this predicament it’s imperative that you make financial planning a priority when making the decision to start your own business.

Start by creating a plan that covers the first 12 months of your business (this is often the hardest time). Focus on financial projections and forecast the expenses of setting up the business, any ongoing costs (office rental, IT, HR, etc.) and the time it will take to recoup this capital. You need to be aware of the resources needed to stay afloat if things don’t go to plan, as well as having the resources available to pay suppliers.

Before starting out on a new business venture you should have visibility over your available resources as well as a clear picture of the money needed to make the startup work (even if the business doesn’t at first!). Plan your budget and stick to it.

Running the business

Financial planning is integral when setting up a new business, but nothing will prepare you for experience when employees, paperwork and customers are thrown into the mix. You may have a solid plan and budget, but that means nothing if you don’t track the money coming in and going out of the business.

In order to account for your money, establish a simple accounting system. It is vital that you start doing this from the day you start your business. You need to record all of your financial information so that it’s readily available if it’s ever requested to be seen by banks or investors, as well as being in order when it comes to doing your taxes.

There are a great many businesses that manage their own accounts, but not every entrepreneurs circumstances are the same. If you ever experience difficulties when it comes to handling and recording your finances, seek advice from a financial advisor, and if your budget can accommodate you could also invest in the services of a bookkeeper or an accountant.

Managing your team

There are a number of ways to save money when you first start a business, from making savings by working from home or renting shared office space, but another way to save is to keep your team both scalable and flexible. Rather than hiring people to perform each task needed for your business to function, try using freelancers who can do the work as and when it’s needed. This is a viable way of overspending on staff as your business finds its feet.

Once you do start building your team, you will need to get them on the payroll. There are a number of free and paid-for payroll software solutions that are recognised by the HMRC. On the topic of payroll, don’t forget to pay yourself. It’s a slippery slope when you decide to forego paying yourself in order to concentrate all funds back into the business. Even if it’s just a little, make sure you get paid a salary.

We hope that this has provided you with actionable advice when it comes to the finances of setting up and managing a new business.

Author Bio: Stephen Verber specialises in corporate finance and heads up the forensic accounting department at Alexander & Co. Stephen is also a member of The Academy of Experts.

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