It’s Professor QuickBooks here again with some advice on getting a new business off the ground. We at QuickBooks are fully aware that starting a small business can be extremely rewarding and there is research which proves that satisfaction levels of owners, managers and employees in small firms are much higher than those of larger firms. However, we also understand that starting a business can be challenging, with research figures showing that one in three new businesses fail in their first three years.
Here are a couple of steps that you can take to protect yourself as far as possible from early-stage hurdles.
1. Create an effective business plan.
Your business will struggle to succeed without a business plan, and you’ll certainly need one if you hope to secure a business loan from a bank or funding from investors. A business plan is the road map for your business that will set out your staffing, marketing, sales and product/service strategy, and having one will greatly increase your chance of success.
2. Manage the money.
One of the main reasons many early-stage businesses fail is because of poor financial management. You must have control and understanding of your business finances in order to make informed decisions and take the right action. Research from EasyBiz QuickBooks’ international counterpart, Intuit, found that businesses are five times more likely to feel confident about their finances if they are using accounting software to keep track of their business as opposed to spreadsheets or pen and paper.
3. Get a routine.
There is never a dull moment when you’re running a business, and never more so than when you first start up. In these hectic times, it is easy to forego the ‘basics’ such as admin, the reviewing of suppliers and looking at tax but these are essential ‘routine’ business practices that can make or break your business. Use the power of the routine to keep your business healthy – schedule in regular time to tackle those important but easy-to-put-off financial tasks.
4. Understand your customers.
Marketing is absolutely essential to getting your new business off the ground. However, a shotgun approach will see you wasting money for little return. A marketing plan will help you focus your limited resources (time and money) on your best prospects (your most profitable customers) to ensure your business prospers. It’s equally important to pinpoint customers who are good (and bad!) for your cashflow. There’s no point slogging away for customers who pay very late or, worse, don’t pay at all. With accounting software, you can see at a glance who always pays on time and who is usually late, as well as who your most profitable customers are.
5. Get expert help.
Skimping on an accountant is a false economy – they usually pay for themselves in the savings they make for your business due to their financial knowhow and they’ll also help you take the stress out of issues such as managing compliance and deciding what is the right business structure for you. As a manager, you also need to think about the best use of your time in general. Yes, you could do your own bookkeeping but would you be more productive focusing on your area of expertise? It can be hard to let go but outsourcing can help you achieve a lot more and stay sane.
These are just some of the practices that you can adopt to help you survive that daunting first year in business, but these are great basics that every business should continue to adhere to whether small, medium or large – just starting out or established. QuickBooks is proud to offer software packages that can assist with this process aiding growth and success for start-up’s and growing businesses alike.