How to Prepare Your Startup for Success
Much of New Zealand's workforce is dominated by small business. While the big corporates play a big part, small businesses feature just as heavily!
So it is no surprise that people test the waters with their own startup ventures quite frequently.
But, it doesn't always go well.
Let's skip the scary facts and figures about business failure rates, not every idea can be a success. And it is well documented that launching and running a successful startup is a lot of hard work. Even the best ideas in the world will fail without the right preparation.
Nobody launches a business intending for it to go bust. But there is an old saying that goes something like, "failing to plan is planning to fail." This is particularly true in startup businesses. Laying the proper financial groundwork is integral to success.
So, let's help you get started by going over the essential things you need to do to create a successful startup from a financial perspective.
How to Prepare Your Startup for Success
Set Smart Goals
It is important to know exactly what you want to achieve with your business. Then, you need to plan out how you are going to achieve it and set a timeline. Big goals can seem overwhelming. So, take the time to break them down into bite sized, manageable pieces, and use them to inform your business plan...
Create A Business Plan
Developing a professional, well-thought-out business plan is the most critical part of preparing your startup for success. Having one will help you successfully apply for loans, get investors to buy-in (if you need them), and give you a guideline for the first few years of business.
Your business plan should include a solid financial plan. That will feature things like a startup budget, balance sheet, profit and loss statement, and cash-flow statement.
The business planning process may well be the trickiest part as you will have to do a lot of educated guesswork. The great thing is that in the early stages, your plan is like a guideline. The best approach is to underestimate your income and overestimate your expenses until you have some trading under your belt.
Consult An Accountant
When you are just starting out, you want to make use of as much expert knowledge as you can. And an accountant will have a lot of tips and advice on how you can get started on the right foot. They are especially knowledgeable when it comes to your business and financial plans.
They can spot things you might have missed and point you in the right direction for financial planning over the next few years. Here at Strive Accounting, we are passionate about setting startup businesses up for success. So, don't hesitate to get in touch and run your plans by us.
Armed with your business plan, it is time to gather the funds you need to get off the ground. This could include putting in your own funds, bootstrapping your way by reinvesting profits, getting a small business loan, seeking help from friends and family, or hunting out angel investors.
Have a plan for where the money is going to come from and how you are going to pay for things so that you don't end up in financial strife from the start.
Budget, Budget, Budget!
Setting a strictly monitored budget is one thing. Sticking to it is quite another challenge! Do your best to keep fixed expenses low (perhaps turn your spare room into a home office rather than paying for an expensive suite in town), and keep track of your spending.
Often when you are first beginning, there isn't a lot of money coming in. So be very mindful of what goes out!
Use The Right Systems
To make life easier from the beginning, get your systems and processes running smoothly. Using online accounting and invoicing software like Xero, MYOB or Wave will make life easier and help keep track of your finances. Plus, if you decide to hire a bookkeeper or use an accountant down the line, they will be able to jump on board quickly and easily.
Have An Emergency Fund
In spite of the best planning, the unexpected can happen. Markets fluctuate and personal circumstances can change. Before you go full steam ahead, make sure you have a healthy emergency fund that can help you get through tough times without too much extra stress.
Launching a startup is exciting, fulfilling, and exhausting. But with solid foundations, you can make life a little easier and set yourself up for success. While it's tempting to save money by doing everything yourself at the beginning, there are times when you will save a lot of time, energy, and money by getting expert advice.
Don't be afraid to reach out to others who have been in your position for advice, or even seek out a mentor to help guide you through. And if you need financial advice, we are always happy to help here at Strive Accounting. Drop us a line today.