So, you are thinking about starting your own business, Let’s go through the most common financial slip-ups.
Unfortunately, 90% of start-ups fail, and this is generally due to poor financial management, whether you’re starting a side hustle or are planning on a multimillion turnover enterprise, it is really important to get it set up correctly from day one. Here are some pointers to keep your finances in shape.
Gut Feeling vs. Numbers Game
Trusting your instincts is a good rule of thumb, but relying solely on hunches for financial matters can be a bit like navigating in the fog. It’s vital to keep an eye on your earnings, expenses, and cash flow. Small money mishaps, if ignored, can grow into giant issues. We recommend getting set up with a good bookkeeping software from day 1 there are loads out there that offer a free trial, but don’t get sucked in with low price for a set period offer, make sure you are going with the one you find the easiest to use and that will grow in line with your business as it can be costly to switch down the line.
DIY Accounting
Sure, you’re capable, you wouldn’t be starting a business if not, but tackling both the business and the accounts can lead to overwhelm and costly mistakes. Consider bringing in financial help sooner rather than later. Hiring a professional accountant allows you to focus on growth. You don’t need to look at hiring a whole team, start by seeking help by outsourcing your taxes or setting up quarterly meetings with a financial expert who can help you.
Budgeting
Think of budgets as your financial life vests. A clear budget lets you adjust if your business needs more funding and helps you make prudent choices. Without a clear budget in place, it is easy for the finances to run away with you and before you know it you are spending more than you are earning, with no plan to rectify.
A place for everything and everything in its place
Disorganised receipts and mismatched accounts can turn your finances into chaos. Keep your accounts in order by balancing your accounts regularly and attaching your receipts, most accounting software’s have this functionality, if not get some files set up on your computer. When you regularly reconcile your finances with your bank records you have true business visibility and know exactly where you are.
Target market
Having a successful business means understanding your customers’ needs. Knowing your market helps you set prices, reach your audience, and stand out from the competition. Consider these:
– Where’s your spot in the market?
– How do your offerings serve your customers’ needs?
– What value do your products/services bring?
– Who else is doing what you are doing – how are you different?
Stay clear of pricing pitfalls by studying your market well.
Quality over Quantity when it comes to staff
Staffing is generally the biggest cost in any business, so choose the timings correctly, bringing too many staff on too soon can be a real financial drain and may hurt your business. It might even create problems for morale and productivity, more so if you need to lay people off down the line.
Hiring the wrong people can also have a huge impact, if they don’t share your values and the dream that you are creating then they can do a lot of damage. Take your time in choosing staff to avoid any unexpected issues.
Expenses
Keep close tabs on your spending to avoid surprises. Underestimating your cash flow can leave you in a real mess. Create a clear picture of your monthly expenses and adjust as needed to keep your finances on track. Remember that all of those shiny new apps that promise to help, and those coaches promising the earth cost money, be sure you know that you can afford it before you say yes.
So, here are some of the most common financial pitfalls to dodge in your start-up adventure. Remember, even the best businesses can hit hard times, but if you are on top of your numbers you can see this coming and put plans in place to rectify before things get too bad.
Always staying one step ahead is how the 10% survive!