This might not be what you want to hear, but starting your business is, in many ways, the easiest part of being an entrepreneur. After all the struggles you had getting financial support, finding suppliers, and reaching your market, you now have to keep your business going, and become a success. But don’t worry, to help you do this, we’ve come up with some tips:
1. You can never learn enough
If you learn nothing else from this article, I urge you to learn that you can never learn enough! In other words, educate yourself on all financial matters and keep educating yourself as you go along. Find out how to budget, find out about the best bank products, find out about stocks and shares – anything you think could be useful, will be useful!
Hopefully, this article will kick-start your education, but there is much more to learn! There are all kinds of resources that can help you do this. You can look around and find your own, but here is a list of three that we recommend:
2. Keep Your Personal Finances Separate from Your Business
When you are self-employed, it can be very tempting to mix your personal finances with that of your business. It can feel more convenient, particularly if you used a lot of your own money and savings to start your business. But, this will cause huge problems in the future when you try to sort out your bookkeeping and taxes.
The key aspect of keeping your personal and business finances separate is to make sure you have separate bank and credit card accounts. This means you will be able to see what your revenue, expenditure, profit, and all your other key indicators are at a glance, and this is very useful for recording, and understanding, how well your business is doing. You don’t want any nasty shocks!
3. Hire a professional bookkeeper
Another great tip, which will help you stay on top of your finances, is to hire a professional. They will prevent you from making any mistakes, but, most of all, will save you tonnes of stressful hours of sifting through paperwork. This may not be possible for every business because it does, obviously, cost money, but, even if it is not currently possible, you should prioritise this as your next financial goal. They are great because you can also learn from them through your journey to become a financial genius.
When you are looking for a bookkeeper, the first thing you will want to look for is someone you trust. It can be difficult to do this on sight, however, so don’t be afraid to move-on and try out another bookkeeper or firm if you find the relationship with your first choice isn’t working out. Some people prefer a close relationship with one, specific, bookkeeper, who they know well by name. Whereas, others are happy with a reputable, but large, firm. It really depends on your personal preference and situation which bookkeeper you settle on. However, the one piece of advice that I would recommend is to go fairly local. With the rise of the internet, many argue that you could hire bookkeepers anywhere in the world. But, this often requires significant effort on your part to scan, or send, large amounts of documentation, and it can mean you don’t have easy access to your own documentation. If you choose to work with someone who is just down the road – dropping off, and picking up, files becomes significantly easier.
4. Make a Budget and Plan for the Future
You probably feel like you already did this when you started your business, as a great budget is really the only way to convince financiers to back you – they won’t trust just anyone with their money, after all. Unfortunately, this first budget isn’t enough, and it’s about time you make a new one (and then another, and another, and another…).
A good business will work at constantly adapting its budget to suit its circumstances. This means reviewing your budgets on a regular basis. You don’t need to make more than four a year (one per financial quarter), and even this may be too much if your circumstances aren’t changing often. But you need to be aware of how you plan to spend your money to be as sustainable as possible. After a while, you may get used to a regular cycle of ups and downs, such as increased orders at Christmas, but, in all honesty, if you are aiming for a constantly improving business, it may be in your best interest to hope that you don’t.
If your business is constantly growing and developing, like most people hope theirs will, then you will need to continue this practice of budgeting, and re-budgeting, all throughout your career. Who knows? You may be budgeting for £50,000 per annum of supplies today, but, in ten years’ time, you might need four times as much, just to keep up demand!
5. Make mistakes!
The last piece of advice I have for you is to make mistakes and, more importantly, plan for it! I can almost guarantee you that you will budget incorrectly at some point or another. Maybe you mistake a temporary increase in demand for sustained growth, and budget for too much stock? Or, maybe you need to hire more people than you planned for? No matter what the mistake, the earlier you make them, the better, and the more you plan for them, the less of a problem they will be.
Try setting aside money every quarter and put it into a ‘Emergency Fund’, and then hope you don’t have to use it. Once the emergency happens, you will be cushioned from any problems, and you can learn from the mistake and add this to all future budgets. Don’t ever stop doing this, even if you become a very successful ‘expert’. Like your budgets, hopefully your business will continue expanding and changing, which means the problems and mistakes that you may face will also change. Today, you may be facing a crisis over an order of hundreds of units of stock; in 10 years, you may be facing working with international markets who need thousands!