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When starting your own business, early success is necessary. After all, 20% of start-ups fail within the first year, and 70% fail within the first 5. With these figures in mind, there are a few essential activities that you need to be doing to avoid falling into these groups. Here are some of them:
The Foundations of cashflow and budgeting
You may have heard that ‘GROWTH EATS CASH’, and that’s certainly true. Every business should ensure that they must have a profitable budget and cashflow forecast in place, so that they will be in a stronger decision-making position to take the next step for their business, whether that be:
- Growing or expanding your start up
- Achieving a better financial reporting foundation for new or existing products
- Undertaking a business restructure
The importance of cashflow in the early stages often goes under the radar with all of the turning cogs. However, according to a 2022 study, 82% of businesses that went under did so because of cashflow problems so in both early and later stages of a business, cashflow and budgeting are vital.
Tax Optimisation for Business
The tax requirements when starting a business often come as a surprise to many entrepreneurs. However, while there are many requirements, there is also a wide range of tax optimisation methods to be used due to tax deductable business expenses. The lower your net profit, the lower your self-employment tax will be, so writing off as many expenses as possible can help reduce your tax bill.
Making charitable contributions is another great way to reduce your tax.
Regulation and Compliance
For your business to function legally, it needs to comply with specific industry standards, laws, regulations, and ethical conduct standards that apply to your business.
- When you run a business, it is always important to stay updated on changing laws, regulations, workplace norms and applicable industry standards.
- By conducting regular internal audits, you will be able to discover what compliance requirements you are falling short on and place emphasis on the areas in which you need to improve.
- It is essential that all of your employees understand the workplace policies and acceptable codes of conducts, why they are in place, as well as the consequences of not following them.
Insurance
Insurance is a critical part of your business continuity approach as it helps to both manage risk and protect your business from loss. If you don’t invest in adequate insurance, you are leaving your business vulnerable to significant but otherwise easily avoidable consequences. This may mean you have to close your business or pay large amounts of money.
Insurance is needed for the following reasons:
- Insurance provides monetary reimbursement during financial crises thus protecting your business from financial woes.
- Liability insurance protects your employees, allowing them to feel more secure at your business as well as preventing them from losing employment if a lawsuit comes up.
- Insurance helps in avoiding the outcomes of being sued.
- In the unforeseen circumstance of a natural disaster or property vandalism / destruction, having property insurance ensures the necessary repairs and replacements can occur without it coming out of your pocket.
Once you master these 4 categories early in the life cycle of your business, it sets you up for success now and for the future. As your business grows, the foundations are the same and all that is required are some slight tweaks.
More information can be found here:
https://www.cornerstone.edu/blog-post/how-to-achieve-business-success/
