Financial tips for start-up companies
PKF Francis Clark’s Hollie Gibson shares seven top tips to help every new business avoid common cashflow pitfalls
The earliest days of any start-up company are not only the most exciting, but also, the most critical.
The decisions you make and the direction in which you steer things from day-one will play a pivotal role in determining the long-term success of the business you’re looking to make big news of.
Of course, it doesn’t take a genius to figure out that finances tend to be one of the most pressing concerns of all for those getting to grips with new start-up ventures.
You don’t have much cash to fall back on, you are currently selling a great deal and there are plenty of expenses to deal with, so keeping the ship afloat on a day-to-day basis is a tricky job to say the least.
So with this in mind, PKF Francis Clark’s highly experienced business advisers have put together just a few of the most important financial tips for start-up companies to consider:
1 – Simple accountancy
First and foremost, you need an accounting system in place but, at this particular time it needs to be a very simple system with no unnecessary frills. Get hold of a decent piece of software that’s either exceptionally cheap or free of charge and save the complex, more intensive accountancy for a later date.
2 – Be strict, be timely
Now is most certainly not the kind of time during which you should be allowing backlogs and bottlenecks to occur with respect to both incoming and outgoing payments. If there’s something that should be paid by a certain date, don’t even think about overstepping the mark. And if there are those that have outstanding balances owed to you, be as strict as necessary to ensure they are likewise paid on time.
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3 – Forecast finances
Create a detailed financial forecast with regard to exactly how much you expect to spend and make across each respective department. It’s important to break down both expenses and income rather than grouping them altogether as this is the only way of keeping track of strengths, weaknesses and where changes must be made.
4 – Banking buddies
The early stages of a new business are definitely the best time to begin making friends with financial services and banks. Take the time to shop around to find yourself the best possible banking partners out there, after which you should look to forge strong and beneficial relationships via a good degree of mutual effort and commitment.
5 – Minimise team expenses
The last thing you want to do is find yourself in a situation where you are spending far too much time and money hiring and firing on a near-constant basis. Instead, it’s a much better idea to build a true skeleton team of workers that only just cover all bases, offering additional hours where needed and running things on a casual/part-time basis if required.
6 – Learn the tax code
Another horrendously unfortunate hole to find yourself in is that of unwittingly making all manner of mistakes with regard to taxation and summarily ending up in a whole lot of trouble…and expensive trouble at that. You really should have got to grips with your tax obligations before getting things off the ground – don’t leave it until it’s too late.
7 – Consider funding options
Last, but not least, don’t fall into the trap of assuming that just because you are struggling to get by, this means you absolutely must seek outside funding. Getting by is getting by and the less debt you find yourself in, the better. That being said, there comes a time and a place when a little help really is needed and when this does happen, it’s important to consider everything from crowdfunding to government grants to private loans from family and friends and of course, standard small business loans.
We hope these tips provide some financial guidance to enable your start-up to prosper and grow.