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It is well known business fact that over 50% of business startups fail in the first year.
With the economic downturn making things even tougher for new firms, one way to keep costs down are to consider cloud computing to avoid costly expenditure of IT equipment such as servers and keeping up to date with the latest software.
The right technology you can. IT will make your business run smoothly
You’ve got the name, the product and the cash. You’re also willing to work hard. But what if you could make that workload lighter?
With the right technology you can. IT will make your business run smoothly, help you balance books, target revenue opportunities and access customers. It’s just about knowing where to begin.
No matter what business you're involved in, cash will be your number one priority from the outset. You'll need to get a firm grasp of the business's cash flow as well as a good understanding of the costs of running your business.
Keep track of the money at all times to avoid debt problems or bankruptcy
Buy a cash analysis book or set up a spreadsheet, recording what you earn and spend. Reconcile this with bank statements and track how you are covering costs. Then make provision for salaries, tax bills, utilities and product purchases so that you know where you stand.
- Keep track of every penny. Check accounts weekly to calculate whether what's coming in is greater than what's going out.
- Don’t get in to debt with suppliers; start small as overtrading can often lead to debt problems.
- Have funds before making payments. Delay what you can manage without until you can afford it. Bouncing cheques destroy reputations.
- Price your product right. What are your overheads? Make sure that they are covered while still making a profit.
- Don’t fall behind with the taxman as PAYE or Corporation Tax arrears can end in legal action.
- Use a business account that doesn't charge you, avoid customers who are problem payers and resist anything that charges you interest.
- State a credit period on invoices and habitually chase late payments. 30 days works for most businesses. If clients pay late then consider factoring of invoices or business loans.
- Use internet and 24 hour phone banking to check accounts especially when you are busy when late payments or missed bills can slip through.
- Keep up to date files for invoices, receipts, tax information and bank statements for at-a-glance information.
- Use electronic or wall calendars to track whether your invoices have been paid and check it weekly, ticking off payments as they arrive.
- Make provision for dips in trade. Save into a separate account with a monthly standing order for a reliable business nest egg.
- Never ignore money worries. If cash flow is slow find out why - perhaps customers aren't paying on time - and tackle it immediately.
- If you start to run low on cash then speak to an debt advice company early on and consider an IVA for personal debts or company liquidation or CVA for limited company debts.
For more information about personal or business cash flow & insolvency advice and how it can help you or your business, call bankruptcy-insolvency.co.uk debt advice service on 0800 074 6918 or email email@example.com