Start-up businesses and entrepreneurs instinctively concentrate on developing their idea into a profitable service or product, and hold off on financial planning until there’s ‘something that looks like a business’. But delaying financial considerations for too long can impact on the future commercial success of your start-up, warns Dene Reardon at BDO Guernsey. Here, Dene who has a wide commercial sector client portfolio, flags some of the key financial factors for start-ups.
· Getting funds. There are a series of ways to get funding; but first simplify matters and map out your financial needs from initial costs to working capital. Too often the initial cash injection is considered without asking what amount is needed to keep the business going which actually matters far more. Developing a secure relationship with funders whether bank, alternative lending or investment, relies on being able to articulate your financial plans and back them up with financial information that can only be obtained from good record keeping from the outset.
· Financial advice and help. Getting the best advice possible is key to success, and good advice doesn’t have to be overly costly. Begin by talking to those who offer it willingly - like the Guernsey Chamber of Commerce, Barclays Eagle Lab, Start-Up Guernsey, and the Guernsey Registry. Pick up the phone to professional services firms. They won’t charge you for an initial conversation and if they can’t help you, they will likely know someone who can. Sending a well-prepared email is easy but speaking on the phone will widen the discussion. Even though asking questions might feel intimidating; most people are approachable and want to help you succeed. Prepare some initial research and questions, but don’t feel you have to have all the answers either. If you decide to pay for business advice or support services, gain competitive fee quotes and challenge them to understand what you are paying for!
· Record keeping. Decent record keeping from the outset gives you vital information. Understanding how much time is spent on a task or what your true expenses are will ultimately help you to cost your product or service and make the all-important profit.
· Outsourcing. At every stage an outsourced financial director function can be beneficial. Holding you accountable to agreed goals, they can see beyond the day-to-day grind and offer you strategic counsel. It’s increasingly common that these are virtual relationships where the FD has dashboard access to the financial picture, dialling in to meetings for updates or reporting.
· Technology. It’s a real friend to the start-up business and entrepreneur. Online financial dictionaries can help unravel jargon until you become more conversant with financial terminology. Selecting and implementing the right accounting processes and software is easy today with cloud accounting platforms such as Xero or Sage offering easy-to-use dashboards and reporting for informed oversight and decision making. Integrated bank accounts, invoicing and expense recording support real time processes that allow you to focus on advancing your business. Demonstrations for these systems are an excellent opportunity to get some more advice on various financial aspects of your business.
· Learn how you earn. Trial and error is so important at the start of a business journey. If you’re selling a product consider a pop-up offer; if you’re service based then why not offer that service to a charity as a test. You will get valuable feedback and it will help you understand essential financial information like what your hourly rate should be or what you need to sell your product for.
Dene is one of BDO’s mentors supporting the Accelerator Programme run by Barclays Eagle Lab and the Digital Greenhouse, advising start-ups on sound financial management. If you have any questions about managing your finances in your new venture, contact Dene.