By Gary Young, Managing Director of Sage’s Accounting Division, UK and Ireland
More people than ever are choosing to liberate themselves from the rat-race and start their own business. But whilst the motivations for doing this differ – a better work life balance or financial freedom – all entrepreneurs want to bring their big idea to life. Whether it’s been a long held dream to run a coffee shop, become a consultant, or see yourself as a smartphone app designer, making it happen is the next step.
Entrepreneurs often have a passion for business but not so much for paperwork and are focused on devoting time and energy to making their business successful, not necessarily getting all the process in place to hold it together. Getting the right support is crucial. Whether you’re looking for financial advice, independent expert business guidance from a mentor, or a friend who can act as a sympathetic ear when you’re burning the candle at both ends, it can make a big difference.
The majority of small and medium-sized enterprises (SMEs) turn to their accountant for sound independent financial advice and can be a vital extension of their business. A good accountant is worth their weight in gold and can help any small businesses effectively navigate a path to growth through a challenging economic environment.
To help small business owners achieve a more valuable relationship with their accountant, Sage has developed top tips to help foster a good partnership and allow business owners to get the best out of it.
1) Set up a support network from the start
You’ve got the great idea and it’s really important that you truly enjoy the experience of running your business. Just because you are starting a business, you don’t have to be an expert on every aspect of it. Your role is to focus on the USP and you could waste time – and money – trying to do things you aren’t qualified to do, so seek professional advice when you need it. An accountant can advise on almost anything – HR, IT or payroll – and guide you through the ongoing challenges of the current business landscape. Accountants are more than number crunchers!
2) Get help to write a business plan
To avoid the pitfalls of investing money into a business idea or new product that may not work, an accountant can help you look at the reasons why you’re starting the business. It’ll stop you losing money and offers the chance to ‘stress test’ the business potential faster.
3) Set your goals
Once your business plan is in place, establish your short, medium and long-term goals with someone who understands how slowly or quickly a business can grow. You can make these decisions using forecasts created by an accountant who will evaluate your goals as you move your business forward based on real world numbers. It’s worth remembering that your accountant can add value to your company as at least 40% of your fee should be for business advice.
4) Get the money lined up
It may not be Dragon’s Den, but if you need to approach potential investors or lenders your accounting partner can help you find them – traditional or otherwise. In the current climate banks may not be open to new ideas and don’t like businesses without proven track records. You’ll be able to create a financial fall-back plan with a qualified professional.
5) Remember that cash is king!
Business – big or small – is only as good as its cash flow and an accountant can help you from the start. Fully expect that people may not pay on time, so ask how your accountant can help you create terms and conditions, plan your business expenditure, create debt plans or look at additional revenue streams. If you’re starting a new business and need financial help, accountants can review loan packages, monthly charges – and suggest better rates – and investigate investment grants and help you decide what’s best for you.
6) Get the best deal!
Whether you’re buying a chair or laptop for the office, or a establishing the right suppliers for your business, an accountant can help. They’ll be able to look at the unit price; help construct bulk discount structures for you and generally see about maximising profit potential for you. Bartering your services rather than paying for them is one way of saving money that can be invested in the business!
7) Get help organising your office
Most start-ups operate from a kitchen table or spare room to begin with and don’t forget you’re starting small. Your accountant can advise you on growing with the business whether it’s advising on which business bank account best suits you to business liability insurance, IT or payroll.
8) Keep the paperwork in check
Getting organised and staying on top of the paperwork is vital – storing receipts in a shoe box won’t help your business. Organised paperwork and tax returns will help you stay focused and can help your accountant or business advisor assist you with planning or accelerating the growth potential of the business.
9) Have the right software
Your laptop is the most flexible business tool you’ll own. Look at off-the-shelf software, either on disk or online, to help you keep track of your business assets. At first you won’t need complex tools so make sure whatever you choose has just the features you need. If you’re a solo operation, consider online systems that keep records in a remote location like a cloud server. As your business grows your accountant can guide you on the best business software and smart phone apps suited to your company.
10) Get networking
Tap into your local business community through your accountant who will serve other businesses that could become potential partners or prospects!
11) Consider your people and make sure you get paid
If your business experiences rapid growth you’ll need to keep an eye on your workforce as it will be your biggest expense. As part of your ongoing business plan, your accountant will be able to advise when is the right time to bring people into the business and if they should be full-time, part-time or consultants – helping you make better business decisions. With a sound financial plan tracking cash flow and customers you’ll see at a glance how much you’re earning and make sure you are getting paid for it!