In the current economic climate every business start-up needs to be aware of financial efficiency and how this can have a big impact on future success. Making sure you keep a close eye on the purse strings starts even before the business is founded and needs to continue well into the life-cycle of the venture.

Early Research Reaps Dividends

Many people going into business for the first time pay scant attention to market rates and the level of competition they will experience. They have a good idea for their business but they fail to do adequate research to see if they can generate enough income to get them through the start-up phase. This is why so many businesses go bust early on and obviously it is something you will want to avoid.

Even if you have a business idea it is wise to look around and see what other people have done in your field. Consider the wealth of sound small business ideas that already exist and then think about how you will set yourself apart. Will you compete on price, originality or service and what will your unique selling proposition be? A company which thrives will always establish early on their business concept; company mission; and both long and short term objectives. It is these key decisions made at the outset which will guard your business against potential financial vulnerabilities as you progress.  

Accounts Are Not an Afterthought

There are many ways to establish a business and various forms of legal entity: sole trader, partnership, umbrella or limited company amongst them. Whichever choice you make keeping accurate records is a vital part of the process. At year end, when you need to do your tax return, you don’t want to be chasing around for receipts from three months earlier or finding that your personal accounts are mixed in with those of the business.

Therefore, set up a dedicated bank account for your business and get training on bookkeeping or preferably hire a professional to do your accounts. It is important to know what expenses you can claim when you do your tax return and so getting expert advice on this at the start can save a substantial amount of money.

Be Open to Investment

It is not always necessary to struggle on alone in your business when an injection of capital could make the difference between success and failure. Whilst many start-ups shy away from investment there are numerous options available. There is the traditional bank loan but this may come with high levels of interest which might do your business more harm than good. Alternatively you could look to the possibility of whether your business is a fit for any government, European Union, local council or charity grant. These are not easy to win, but neither are they impossible, so it is worth investigating.   You should also look into the angel investor option. Angel investors are often willing to offer some level of mentorship to help your business grow as well as a cash investment. Finally, there is always the option of reaching out to family to see if they are willing to join you in your new venture, either as investors or silent partners. Naturally with any investment you will want to weigh up the pros and cons and make sure you aren’t over committing yourself. However, it isn’t worth rejecting the idea of investment out of hand as it may well bring many benefits to you in the first year or two of your business.

Financial efficiency is a delicate balance between giving your business the scope to grow whilst still keeping a tight rein on expenditure. If you gain a strong understanding of the market in which you operate it will help you to set your prices, establish your position as a market leader and ride out the vulnerable early years of your business.