When it comes to starting your first business you’re going to want as much money put behind you as possible. As a first business, you’re more than likely going to be a sole trader, which will make you responsible for all of the businesses’ finances, particularly if something ends up going wrong. You will be liable for your entire business, so making sure your finances are managed before you start is vital.
Get Your Debts In Order
Before it comes to starting your first business, you need to make sure that all of your personal debts are manageable.Companies like Peachy provide short term loans, but these tend to be of a high APR%, and although these may help to tie you over, they shouldn’t be used as a long term form of finance. Making sure that either all of your debts are paid off, or that you are in great financial situation that allows you to have your own personal debts, alongside any debt from your business, is extremely important to make sure that you don’t struggle when you start your first business. As a rule of thumb, it can take around a year for a start-up company to break even, so you may have to start relying on your own personal money before you can use any profits that have been made.
Hire An Accountant
If this is your first business, you may want to hire a business accountant who will help you to get your finances in order quickly and efficiently. Although this may be an additional cost at first, an accountant will be able to help you see how viable your business is in the long-run, and can make sure that you’re not overspending. Budgeting, financial analysis, and book keeping are all important parts of having your first business, and any business for that matter, and hiring an accountant really can make all of the difference.
Spend Time Budgeting
When it comes to your first business, you’re going to want to make it as perfect as possible. But this isn’t always friendly with your finances. You need to sit down and spend time budgeting, with or without an accountant, and look at your bottom line and how it can be impacted by capital and operational costs. There is usually a lot more to managing your finances when you start your first business, and you’ll find that a lot of your time will be spent looking at spreadsheets. However, managing this effectively will help you to adjust year or year as your business grows.
Once you have spent some time budgeting, you should try and stay tight-fisted when it comes to keeping your expenses in check. You don’t want to hamper customer satisfaction, but you also don’t want to spend more than you can afford. A business succumbs to two types of costs – fixed and variable. Variable costs is where you have scope for saving money. For example, instead of buying costly software, you should look at cheaper versions that will help you to save some money, while still giving you the same performance.