As an entrepreneur, starting a new business venture is a really exciting time, but along with the thrill there are also many challenges to be faced and overcome. The ability to manage your finances effectively is absolutely vital if you are to avoid the usual mistakes that are so easy to make, but impact negatively upon your businesses success.
The following tips will help you to swerve and avoid some of the most common financial mistakes that are made by entrepreneurs.
–Seek Expert Advice From An Accountant
Limited funds early on make this step a tempting one to avoid, but having up to date advice from an expert right from the start puts you on the right path and will more often than not save you money in the long run.
You would be hard pressed to find an accountant who charges for an initial consultation, this first meeting ought to be free, so why not make the most of it? You will then have the opportunity to get the answers to any questions you have and pick up loads of great advice.
Neil Houghton Accounting in the Bristol area of the South West of England can guide you through these crucial early stages using their experience to help you along.
–Check How Much It Will Cost
Find out about the cost of an accountancy service for your new business. This way your accountant will make sure you set your business up correctly, your books will be kept in order, you will pay the right amount of tax and put in claims for any expenses you are entitled to. All of these areas will be taken care of whilst you focus on running and developing your new business.
–Keep You’re Personal And Business Finances Completely Separate
This is a must. Keeping everything separate will reduce and avoid the risk of severe headaches later on and help you to manage everything from taxes to bills in an organised and logical way. This is a good point to discuss with the accountant in your free initial consultation!
In addition to the unnecessary stress it can cause, unravelling complex financial records later on can be both time consuming and expensive.
–Set Aside Your Own Funds
Set up costs vary a huge amount from one business to the next, but in addition to your start up costs you will also need a sufficient amount of savings to see you through the early days. A contingency fund will help you in the event of any unexpected costs cropping up and you will also need to make sure you have funds set aside for the taxman at the end of the financial year.
Unless your business starts making a profit early on, you could easily get into a financial pickle and come unstuck without a safety cushion of funds to fall back on.
–Walk First, Run Later
In the absence of a huge budget, it makes sense to invest step by step, prioritising the essentials first. Early overinvestment in the things you want for your business rather than the things it really needs, could quite easily cripple you financially before you have even got your business off the ground.
You may not be reliant on financial backing at the outset but who knows what you might need in the future. Before you know it, you could find yourself in a position where you urgently need a cash injection to take your business to the next level and expand.
If you already have old debts, make it a priority to get them repaid as quickly as possible, because any outstanding debt in your name will reduce the likelihood of you being accepted for a new loan.
Keeping your personal finances in shape is every bit as important as keeping your businesses finances in shape, so be sure to pay yourself a regular wage as soon as you possibly can, rather than ploughing every bit of profit straight back into your business.