Starting a new business can be an exciting time, but this needs to be tempered with some practical thinking about how you give your new venture the best chance of success. The financial aspects of any business are crucial so the wisest thing to invest in is a financial planner. With their guidance and advice, you will ensure the success of your business is built on sound financial planning.
Sadly, many new businesses fail within the first year of opening, and the number one cause is lack of financial planning. Even with the best product or service, the finest marketing campaigns, and a captive audience, without financial planning in place, a business is going to struggle.
The first mistake new business owners tend to make, is to assume the best-case scenario when it comes to sales and profits. They then base the amount of costs they can incur on this figure and then wonder why their business has a cash flow problem before it is barely off the ground. A financial planner will generate forecasts based on several models so that you can see the situation from several different success levels.
This does not mean you should always assume the worst case, but at least with the forecast models, you will be able to take steps to prepare for all scenarios in terms of your cash flow. This may mean extending any lines of credit you have, seeking further investment or adjusting your cost levels. At least by knowing in advance what you can do to counteract any slow start to your business, you are much better prepared to deal with it, rather than being caught by surprise.
A financial planner will also be able to prepare forecasts professionally and in formats that can do a better job of attracting potential investors than might otherwise be the case if they were done by the business owner. Investors want to be reassured that any start-up business they are going to invest in is being run on a sound financial basis, and there is no better way of proving this than having a financial planner prepare your forecasts.
Using the best financial practices for bringing in revenue and paying for any costs is also something your financial planner can advise you on. It could be simple advice that you don’t pay bills until they are due rather paying as soon as you receive them. This all adds to maximising your cash flow, which is the lifeblood of any new business.
A financial planner should also be able to give you tax advice or if not, suggest that you seek a tax expert so that when the time comes to pay any taxes due by the business, it is done in most efficient way. More importantly, it will avoid paying any more tax than the business legally should. This is not anything illegal, but rather the means to ensure your new business gets all the tax breaks it is entitled to, in the same way your competitors will do, if they have employed a financial planner.