Small Business - Start Right and Finish Strong
Small Business Tips for Success This article is intended to assist people either new to business or intending to start a new business, it is not intended to cover all the different types of business, but more of an overview of the basics that apply to all, It covers a few general rules that when applied certainly assists the new business owner not to fall into the statistics that make up the number of business failures.
Starting a business can be daunting, going sometimes from a regular and stable income such as wages or salaries to something that is not altogether guaranteed takes a great deal of courage and commitment and hard work, sometimes it can be a choice and other times a necessity, especially if you find yourself out of a job and in a position where it is hard to find another one.
For this article we will assume you have started a business from scratch, whether its a small home based venture or a new development on existing premises.
It does not matter, the principles are the same.
Be aware, it takes time to get a business off the ground, unless you are really fortunate and income starts flowing in from the start, you must be prepared and should have factored in a time frame that enables you to survive with no income, I suggest to Clients a period of about six months with no income at all, plus be able to pay your basic costs, this way the chances of losing your home and failing are greatly diminished if things go wrong.
You know how to do the job, but you are not sure of the book keeping side, remember there are loads of legal requirements to meet, a visit or call to your friendly Inland Revenue Service will certainly help.
Most of them are happy to assist you in getting the fundamentals right.
Before you commence take a list of all the assets or equipment you are introducing to the business before you start purchasing more, it is easier for your accountant at tax time to separate what has been introduced and purchased, this will maximise depreciation expense and hence the value of the business.
Make sure you have a separate bank account for your business and use it only for your business, do not fall into the trap of a combined personal and business bank account unless you are super efficient at coding and remembering later what is personal and what was business expenditure.
Saying that if you have doubt about what a business cost is, use the business account and let your accountant sort it later, this way you do not miss anything that could reduce your tax liability.
But make note on the bank statement what it was for.
Every month go through the bank statement and fill in what the transactions were for, again, don't leave it till well into the new tax year to do it, you will be pushed to remember.
Your Accountant will certainly appreciate it.
May even save you a few dollars.
Maintain a good filing system for cash purchases and paid invoices write on them date paid, how much paid and if using a cheque, record cheque number, file them so you can go back easily to find them, I prefer alphabetically, I find them easier to find if there is a query down the track.
Try and get to know how your business is doing.
Get to understand terms like creditors and debtors and how they interact with your business, don't rely just on looking at your bank statement, be aware what is owing to others and what others are owing to you, keep on top of them.
Also try and maintain a healthy stock on hand balance, do not overstock or understock it costs money.
This will come to you later when you know what is moving and what is not, starting out be a bit conservative and trust yourself, not the salesperson who is trying the hard sell, the first year is the hardest of all.
Most importantly do not be afraid to ask for assistance if things are not going too well, talk to your bank manager, talk to your accountant, very important that you have a good working relationship with them, if you think they do not have the time for you, change them, its very important to know they are care about how you are doing and that you are not just an income to them.
Be in control your business, don't let your business control you.
And smile at your customers, repeat business is the best and the cheapest.
These are just a few suggestions that will help your business grow and not become one of the statistics that relate to the high percentage of business failures in the first few years of start up.
Starting a business can be daunting, going sometimes from a regular and stable income such as wages or salaries to something that is not altogether guaranteed takes a great deal of courage and commitment and hard work, sometimes it can be a choice and other times a necessity, especially if you find yourself out of a job and in a position where it is hard to find another one.
For this article we will assume you have started a business from scratch, whether its a small home based venture or a new development on existing premises.
It does not matter, the principles are the same.
Be aware, it takes time to get a business off the ground, unless you are really fortunate and income starts flowing in from the start, you must be prepared and should have factored in a time frame that enables you to survive with no income, I suggest to Clients a period of about six months with no income at all, plus be able to pay your basic costs, this way the chances of losing your home and failing are greatly diminished if things go wrong.
You know how to do the job, but you are not sure of the book keeping side, remember there are loads of legal requirements to meet, a visit or call to your friendly Inland Revenue Service will certainly help.
Most of them are happy to assist you in getting the fundamentals right.
Before you commence take a list of all the assets or equipment you are introducing to the business before you start purchasing more, it is easier for your accountant at tax time to separate what has been introduced and purchased, this will maximise depreciation expense and hence the value of the business.
Make sure you have a separate bank account for your business and use it only for your business, do not fall into the trap of a combined personal and business bank account unless you are super efficient at coding and remembering later what is personal and what was business expenditure.
Saying that if you have doubt about what a business cost is, use the business account and let your accountant sort it later, this way you do not miss anything that could reduce your tax liability.
But make note on the bank statement what it was for.
Every month go through the bank statement and fill in what the transactions were for, again, don't leave it till well into the new tax year to do it, you will be pushed to remember.
Your Accountant will certainly appreciate it.
May even save you a few dollars.
Maintain a good filing system for cash purchases and paid invoices write on them date paid, how much paid and if using a cheque, record cheque number, file them so you can go back easily to find them, I prefer alphabetically, I find them easier to find if there is a query down the track.
Try and get to know how your business is doing.
Get to understand terms like creditors and debtors and how they interact with your business, don't rely just on looking at your bank statement, be aware what is owing to others and what others are owing to you, keep on top of them.
Also try and maintain a healthy stock on hand balance, do not overstock or understock it costs money.
This will come to you later when you know what is moving and what is not, starting out be a bit conservative and trust yourself, not the salesperson who is trying the hard sell, the first year is the hardest of all.
Most importantly do not be afraid to ask for assistance if things are not going too well, talk to your bank manager, talk to your accountant, very important that you have a good working relationship with them, if you think they do not have the time for you, change them, its very important to know they are care about how you are doing and that you are not just an income to them.
Be in control your business, don't let your business control you.
And smile at your customers, repeat business is the best and the cheapest.
These are just a few suggestions that will help your business grow and not become one of the statistics that relate to the high percentage of business failures in the first few years of start up.
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