My advice to someone starting a business takes account of all the failures I have observed over the years as a practising management accountant. Running a business exposes you to new challenges and often to extreme competition. (Think of the effects of Trip Advisor/Social Media on restaurants.)
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When starting a business you must be able to provide products or services to your customer that are better, cheaper, or more unique than they can get elsewhere.
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Be crystal clear as to what will attract customers to your door and how you plan to tell them about it.
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If you employ more than 4 people, make sure you have monthly accounts from the beginning. Learn to do them yourself or, better still, get a professional to provide them. If you don’t you are flying blind in a fog. You need to be aware of what cash you are generating or losing (and why) before it is too late and serious damage is done. Focus on this. A business is not a hobby.
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You can only fix the things you know about. Important indicators could be Gross profit as a %age of sales and labour cost as a %age of sales and how they trend each month.
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If you expect to bleed cash in the early stages, make sure you have enough funds in place.
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Passing the VAT threshold (£85k) and having to register is a massive financial shock to B2C business. Be prepared. (No problem if B2B).
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Use the best, most up to date tools and technology to run your business. Keep the quality of admin high but the cost low. Automation is key.
If you want to find out more about Baxterworld, free free to contact us using the information on our website. Our office is open 9-5 from Monday to Friday, give us a call for a quick chat.
Ray Baxter www.baxterworld.com