As a new business owner you must ensure you set up your business correctly from the start. One way to make sure this happens is to have an initial discussion with an accountant. Here are some key points you need to consider to help you get off to the best start!
- Your Business Structure and Plan
Understanding how to structure your business is an important conversation to have with your accountant. Getting this right from the outset can avoid costly re-structuring and can assist with asset protection as well as tax efficiency.
A business plan should also identify what you are going to do and how you are going to do it. It should include financial and non-financial information. This is not a stagnate document and should be updated regularly. Your business plan not only provides crucial information internally, but can be used externally for various stakeholders, such as financiers.
- Business goals, objectives and growth
Identifying and establishing both financial and non-financial goals from the start is crucial. Furthermore, conducting a SWOT analysis, ensuring the risks that are identified are at an appropriate level, or mitigated, and establishing a growth strategy will assist you on the right path.
Forecasting where you want your business to head not only assists in the management of your business, it also provides your existing or future employees clarity around key milestones and your financial goals.
When starting a business there should be a number of scenarios you are working from, i.e. best case, worst case and most likely. It is often hard to gauge what is actually going to happen, however there are a number of tools and assumptions your accountant can assist you to formulate.
This process not only assists you in documenting what your expectations are but also identifies how likely you are to obtain them. Sensitivity analysis can be performed, helping you to understand what the key drivers and metrics for your business are in order to reach your goals. For example, understanding the relationship between gross profit and stock holding – ensuring you are stocking the correct mix of inventory to sufficiently cover your overheads and maximise turnover and profit.
- Investing in the correct financial technology for your business
Many business owners fall into the trap of taking specific actions because that is the only way they know how, or the way they have been ‘told.’ We are lucky to live in a time where innovative technology is very accessible, which can have a huge impact on how your business is run, from the simplest of processes such as integrating your point of sale system to your accounting system, to much more complex issues. Engaging an expert to assist in navigating you through the many choices can save you a lot of time and get your business systems up and running a lot sooner!
- Understand your business’ accounting & bookkeeping function
A final important tip for new business owners is to make sure you understand your business’ accounting and bookkeeping function. As the business owner this may not be your area of expertise however you do need to be able to manage those you put in charge of this. Your accountant will be able to assist you in gaining some clarity and a better understanding of the function so that you are best equipped to manage this area effectively and keep an eye on things.
- Relationships with stakeholders
We don’t reach goals individually, they are achieved through team work. Relationships are critical to success, so it is essential that you invest in them. This includes relationships with bankers, suppliers and other business partners you may have. Businesses, especially newly established ones, will need to endure some tough times during their journey of growth, and it’s the relationships you have with your various stakeholders that often get you through them. The tough times are when you rely most heavily on your networks, your previous good business practice and reputation.