How to Survive Your First Financial Year in Business
Updated: Jun 4, 2020
You’ve had a vision of your perfect business, you’ve got the skills to deliver, and the enthusiasm to break from the 9-5 and branch out on your own, but have you considered the financial aspects of a new start-up? Many businesses fail in their first year, and few will survive to year five — scary statistics.
How can you ensure your business exceeds expectations and celebrates its sixth, seventh, eighth anniversary?
There are a few simple steps you can follow to build your business from the ground up and see it thrive financially. The importance of accountancy is often overlooked in the excitement of getting your business started. Still, the Cube Accounting team have a few tips to help you focus on the finances:
Do your research – speak to other entrepreneurs within your industry and ask for advice on expenditure and peak financial periods. Make sure you’re up to date on business terms such as profit and loss and cash flow. What is your business worth? What do your competitors' annual reports look like? Be prepared.
Set your budgets – Companies House is a great place to start if you’re new to the business world and need guidance. Failing to pay your suppliers and lenders due to poor cash flow can be avoided by setting budgets and keeping a close eye your expenditure.
Be organised – creating a beneficial habit of regularly checking your accounts, filing your receipts, and keeping a close eye on your day to day financial dealings will help avoid difficulties, or enable you to minimise the impact of them. If you have any tax liabilities to pay, you will have given yourself the maximum amount of time to pay the bill, taking the fear and overwhelm out of a financial situation.
Employ an accountant – our clients can confirm the significance of hiring a qualified accountancy firm who can help you set budgets, forecasts, funding, and guarantee you don’t fall into tax arrears. It’s worth noting that the cost of an accountant can often be found in savings made by following their advice.
You must understand your numbers if you hope for longevity, as every business needs to have a basic grasp of financial aspects such as managing cash flow. That initial passion for starting a business won’t sustain you in the long run, and you must ensure you have a sound business plan. Putting in good accountancy practices from the onset, together with the support of an excellent accountant, will give you and your business the best opportunity to survive and thrive.