Starting a businesses is a brave thing to do but you have to be realistic. Entrepreneurs are often full of ideas but if you don’t pay attention to the nuts and bolts of being in business your company could fail before your product or service has had chance to reach its full potential
Figures from the Office of National Statistics show that one in three businesses fail in their first three years of business. Here are some of the issues to avoid to try and make sure you don’t become one of them.
Don’t forget to check out the end of this post for the opportunity to get some face-to-face help too.
Not managing the money
This is a big one and is one of the major reasons that new businesses go under. For many new business owners, managing their ﬁnances is one of the most difﬁcult and challenging aspects of starting up.
The reality is that managing your ﬁnances efﬁciently is as important as winning new clients when it comes to keeping a young business ticking over. Spend more money than you make and you’ll fail, regardless of how brilliant or busy the business is. Knowing what’s coming in and what’s going out remain the absolute fundamentals in running a successful venture.
Andre Campbell of Enfuse Youth, a successful youth education service dedicated to making young people enthusiastic about the career options available to them, is quoted in Intuit’s recently published Three year Glitch report as saing: “Financial discipline is a must when starting out; you have to be willing to sacriﬁce in the short term in order to reap the beneﬁts further down the track.”
Once you get a good money management system in place, you’ll minimise the time you need to spend on your accounting and maximise how long you can spend on other areas of your business or even, shock horror, life outside of work!
Failure to plan
It’s obvious that you’ll want to jump straight in there and get going with your businesses but things spin out of control for some start-ups because they haven’t planned things out adequately.
Before you dive in, a basic business plan, along with profit & loss projections and a cashflow forecast can help you get an accurate picture of what’s required to get you where you need to be.
In the recent Three Year Glitch report, Robert Welch, founder of smallcarBIGCITY, the vintage Mini Cooper tour company that launched in 2009, advised that planning should come with a big scoop of realism. He said: “Double your predicted costs and halve your predicted turnover in your business plan; accurate forecasting and analysis of your costs are fundamental.”
Overestimating the impact
This brings us on to the next key point. The saying goes that pessimists are never disappointed. Whilst you should have every faith in your product or service, cautious predictions are unlikely to do you any harm at all – anything extra is then a bonus.
Too many entrepreneurs fail quickly because they exaggerate the likely impact of their product or service. If you catch yourself thinking: “If I can just capture one per cent of the market…”, stop yourself and imagine what would happen if you got zero per cent in your ﬁrst year.
Free financial fitness workshops
As part of Global Entrepreneurship Week this week, Intuit, makers of QuickBooks small business accounting software, will be running Financial Fitness workshops, offering practical training designed to help small business owners get organised and on top of their finances from the start.
• Why managing your finances is important
• The basics of bookkeeping
• Improving cash flow
• Handling Tax and VAT
• Tips to save time and get financially fit
Can’t make it?
Don’t worry – Intuit has announced a nationwide series of business boot camps which will support the new Finance Fitness campaign announced by Vince Cable last week.
Intuit will run events in six cities across the UK, assisted by the new government campaign to get SMEs the advice and guidance they need to access and manage finance.The cities will be announced on 17 November so watch this space.