You are no doubt aware that most new businesses fail, so you need to do all you can to ensure that yours will not be one of them. Sometimes great business ideas do not succeed because of a lack of attention to a few key practical areas. By paying attention to the following you can make sure you give your new businesses every chance of success in the long term.
1. Plan Before You Start
The best way to get to grips with all the things you are going to have to do in order to get your business off to a good start is to create a proper Business Plan. This is not just something you put together to persuade investors to come on board, it is primarily a tool to help ensure that you understand every aspect of what you are about to do, making it far less likely that you will be knocked off course by the unexpected. Make sure that a good accountant is part of your planning so that you properly consider things like tax liability, VAT and company structure.
2. Understand Your Finances
You can’t leave financial matters entirely up to your accountant. As the business owner you must understand and be responsible for how your business works financially. Unless you really know what is going on, you are not going to be able to prepare a realistic cash flow forecast, and if you don’t do that you are not going to know whether you need to borrow money, when you need it or for how long. Get this under your belt and take steps to secure the funding you need to cover the times when you may need a cash injection. Cash flow problems are the thing most likely to kill off your business, so knowing when you are going to need cash and making sure you have it in place is vital.
3. Put Agreements In Writing
You are almost certainly going to be relying on various other companies and individuals to provide goods or services that you need in order to carry out your own business. Do not be tempted to be too casual about such vitally important arrangements. Where appropriate use proper contracts, but always confirm everything in writing, paying attention to the detail. When everything is going well it can seem like an unnecessary waste of time, but you have to consider what could happen further down the line if you are not getting what you were promised and when relationships are no longer so rosy.
4. Keep It Lean And Mean
When you are starting up it is wise to try to keep your commitments to those that you can get rid of easily if you need to. Avoid being a direct employer if you can use a freelance person or outsource the function instead. If you suffer a drop in turnover and need to reduce your overheads you need to be able to react quickly to avoid financial problems. Work in partnership if you can and look at ways to share responsibilities with other companies.
5. Spend As Little As Possible On Premises
The type of premises you require will depend to a great extent on the nature of your business, but take care not to commit to fancy or large premises if you could manage without. Ideally you should work from home if your business allows. If you need to meet people you can always go out to them or hire meeting rooms locally if you really need to. Spending money on occasional meeting space is far less costly than the ongoing overhead of having your own premises. You can expand and improve your premises as your business grows. Keep the two things in proportion.
6. Give Some Thought To Health And Safety
Not exactly the thing that gets you out of bed in the morning (unless your business idea is to do with health and safety of course), but this is an area where you must at least have some awareness of your responsibilities as an employer and business owner. Working for yourself at home, this is going to be no problem, but if you have premises, employ staff, have hazardous materials on site or engage in potentially dangerous processes, then you must take is seriously and may need professional input.
7. Take Out Appropriate Insurance
Insurance may not excite you, but not having it could put you out of business. Some insurance, such as employers’ liability, is compulsory, whereas other types of business insurance are a matter of protecting yourself against claims that could damage the viability of your business. Public liability cover is the most obvious one and this is to defend you against claims by any third party for injury or damages. This is particularly important if you have clients or members of the public on your premises, or if you or your staff work on other people’s property. Other options include stock cover, fixtures and fittings, building and contents insurance and professional indemnity.
8. Build Relationships And Networks
Networking is not only a good way to generate leads and new business, but can be a great source of keeping up to date with other issues and developments that can affect your business. The more people in your local area or in your market sector that you have good relationships with, the more options you have for calling in favours or getting help or special deals if you ever need to. People running any sort of business will encounter the same problems that you do, and having people that you can bounce problems and ideas off can be a great help too.
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