If you’ve been toying with the idea of starting a new business but are still looking for the perfect moment, then there’s no better time then now. With the economy on the verge of a promising recovery and many sectors already planning for growth, summer 2024 is a great time to turn your start-up plans into reality. Whether you are a veteran business owner, or this is your first step into the world of business ownership, there are several things you can do to ensure your start-up’s financial fitness in the crucial first couple of years.
1. Review And Update Your Financial Records
As a brand-new business, it is essential to have complete and accurate financial records in place from the start. These records serve as a guide for making strategic decisions and avoiding potential pitfalls, and will save time when it comes to submitting your end of year accounts next year. Full and accurate records make it easier for you to compile accurate financial statements – which are essential when seeking funding for your business – as well as performing year end closing operations. Even if you haven’t started trading yet, it’s also worth putting strong accounting policies and procedures in place so you can hit the ground running when the money starts coming in.
2. Set Realistic Financial Goals
Most start-ups don’t make huge profits in the first 12 to 24 months, and many don’t break even to begin with. Nevertheless, it’s helpful to set financial goals that align with your short-term business objectives to help drive early success. Don’t set the benchmark too high, but give consideration to realistic revenue targets, cost saving initiatives, and longer-term investment plans (2 to 5 years) when setting these goals. To decide whether or not they are achievable, evaluate your goals according to SMART criteria – making them Specific, Measurable, Attainable, Relevant, and Time-bound.
3. Check Your Cash Flow Projections To Ensure Liquidity
Cash flow is the lifeblood of any business, and is especially important for money-strapped start-ups, so careful management is crucial to avoid financial problems early on. We recommend a flexible cash flow forecasting strategy for start-ups to predict liquidity levels, with a tethered cash flow strategy to minimise your risk. This will help streamline your initial start-up costs, minimise borrowing needs, and strengthen your working capital for long-term stability.
4. Prepare Documentation For Tax Filings
Even if you don’t turn a profit in your first year, you’ll still need to file a corporation tax return with HMRC and annual accounts with Companies House, and you may wish to register for VAT before you reach the income threshold (currently £90,000) to give your new business added professional credibility. Keeping organised records throughout the year and staying informed about any changes in tax laws will help avoid issues when it comes to making your filings.
Next Steps
Your start-up may be a team of one at the moment, but as your business grows, so will the need for a capable financial team. Outsourcing your accounting to a professional team of accountants to handle complex financial tasks and provide strategic advice will save you time and resources while ensuring accurate and efficient financial management. To find out more about outsourced accounting and how we can save you money while you establish your new business, please contact one of our team by clicking here.
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