It's impossible to do everything and many entrepreneurs often spend the early days focused on product/service development as well as sales and marketing to generate income and growth. The point being you should always seek help in the areas you're less experienced in when the time demands it. That means building a network of support and considering the help of a mentor.
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For entrepreneurs, the "start-up" phase is where your focus is likely to be. This is a frantic period of launching a new product or service and feelings can vary considerably. There will be considerable excitement as to future prospects, mixed with anxiety as to the time, money and effort required to build the business. Quite soon after launching, you'll hit a "brick wall" and your start-up will need an injection of finance to progress further forward.
This forecast will help you to better plan for important purchases and investment decisions. To understand how financially secure your start-up operation is, use the working capital formulawhich allows you to understand how many times the business can pay off its creditors in the next 12 months using cash and any other assets that can be converted into money within a year.
To obtain start-up funding, first you must map out exactly what you need the finance for. As part of this you should detail how this money will help the business develop and grow. You'll need to produce forecasts for sales, cash flow and profits as part of this. This will provide a potential source of finance with an understanding of how the funds will be used and what they will ultimately do for the business.
You should refer to this document regularly and reference your projections. Good forecasting and planning are key to understanding future income and expenditure. By doing this you will help ensure your start-up doesn't suffer a shortage of cash over things like the payment of suppliers or employees. Such issues can prove fatal and force a business to close.
A common question we hear in the early stages from entrepreneurs is, "why do I need an accountant?" As the previous sections on this page have demonstrated, managing the finances of your start-up is anything but an easy task. Unless it's a skill of yours and something you really want to do, it could take up valuable amounts of your time and distract from other vital business areas.
Developing your concept, building your network, servicing customers, building your brand and making sales will likely be higher
This means the likelihood is you're going to need to work with an accountancy firm from the very start. A good advisor will keep you compliant with all filing, legal, tax and regulatory requirements. This will save you significant time by providing you with insight, from their experience of guiding other start-ups, as well as analysis, regarding how well you're doing and what can be achieved through your financial position.
Be sure to find an advisor that shares the same passion for your business as you do and has a great track record of client service delivery. Ultimately your accountant is an investment and akin to an essential member of your team.
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