1.Source a good financial team
If you do not feel confident in this area it is really important you find people you trust. You will need a bank manager accountant, bookkeeper, financial adviser all of whom need to work together
2. Don’t underestimate set up time and costs
If you think it will take you 3 months to set the business up, allow for 6 months and allow income from another source for 12 months. A lot of businesses fail in the first 12 months due to the lack of cash. Be realistic with your assumptions in your business plan, have you tested the market?
3. Manage cashflow
Cash and liquidity are most important when starting up, but also when looking to grow. Keep an eye on day to day expenditure and keep your own log. Waiting for the bank statement to arrive is not sufficient.
4. Digest information from Business Links and networks
We are not all experts at everything. Use your time effectively to source information regarding those areas that you need to increase your knowledge on. You will very often find there is free advice available. Everybody will want to support you and want you to succeed but they will not know you are there unless you contact them.
5. Diversification in business and personal finances
It is important as your business grows to make sure you diversify and not have all your investments in one asset class. For instance in the early years you may have the majority of your funds invested in the business, as you are able start investing your funds away into other areas to reduce the risk. In your personal finances make sure you are reviewing your portfolio to ensure a good asset mix.
6. Review personal finances regularly
It is so easy to focus on the business and forget about your personal needs. Particularly in business start up, the stability of personal finances is ignored and therefore when something unforeseen happens we are not prepared for it, not only do we suffer personally financially , it may be the end of the business. Make sure you seek advice on your personal financial situation and lay the foundations first.
7. Plan for retirement
Although it may seem a long way off start to plan for retirement. Do not rely on the growth of your business for income in retirement but have separate assets which will accommodate this.
8. Protection for you and your business
You need to consider the ‘what if’ scenario. Think of every eventuality in your personal and business life and make sure you have an action plan and the funds to deliver it. For instance if you have a business partner what would happen if they died?
9. Keep a personal budget
You will be so busy running the business that your personal finances will take a back seat. To enable you to determine the income you need to take from the business you will need to keep a budget. Review on a regular basis and look at where your money is being spent.
10. Have the confidence to grow your business
You may decide when you set up the business how much you would like it to grow. Even if you have a plan, opportunities will come your way and you need to know how to take the business to the next level. Your financial team and your network/local contacts will help you to do this.