1. Put together a strong advisory team
Starting a business can be a lonely process and thinking you can do it all by yourself is the road to extra stress and pressure. Successful business owners surround themselves with a strong group of advisers to help them achieve their goals.
Your core team should include an accountant, a lawyer, your banker and a mentor—an experienced business person you admire. Then add experts who can give you quality advice on specialist areas where you may lack skills.
2. Choose the right business structure
Should you start as a sole proprietor, a limited liability company, a partnership or something else? The business structure you choose to operate your business under can have a huge impact upon your tax liability, how you run your business and how easy it is to expand in the future. Make sure you start off on the right foot and seek advice.
Think beyond this year. Which structure will carry the most credibility with customers? What’s the best structure if you want to expand the business or take in partners? What structure would best suit future investors? Think of succession as well – one day, you may want to sell or pass on the business to family, staff or an outside buyer.
3. Sort out all compliance requirements
You don’t want to be distracted by compliance issues once you’re in business.
List down everything you need to sort out now—health and safety issues, permits and consents from authorities. Will you need permission to start a business from home? Will your business involve dangerous activities, noise or toxic chemicals? If so, what permissions do you need? What health and safety measures do you need to take?
What taxes do you have to pay and when? What’s a good system for getting this done so you don’t miss any payments or incur penalties?
Make a checklist and work systematically through it with help from your advisers.
4. Set up good systems
Good business is all about good systems. To run your business well you need efficient processes.
Think about everything from production and work processes to billing and shipping. With good systems, you can:
- Run the business more efficiently and delegate more confidently.
- Deliver quality products and services.
- Train new staff more quickly.
- Add value to your business for future buyers.
- Build the foundation you’ll need to franchise your business in the future.
5. Develop good credit management
If you sell on credit, then you need a fast, efficient and consistent credit management process. Never let things – or your reputation – slide in terms of credit management.
6. Deploy a good accounting system
You need timely information to make the right business decisions. Get help from your accountant to set up an easy-to-operate accounting system.
A good accounting system allows you to:
- Automatically download and categorise bank statement details.
- Generate instant profit and loss, budget and other financial reports.
- View a quick dashboard summary of business performance.
- Bill customers, track payments and flag overdue payments for your attention.
- Keep updated on your cash flow position, so you can update your forecasts.
7. Identify and monitor your key drivers (KPIs)
Some key performance indicators (KPIs), such as gross profit and net profit margins, are common to all businesses. However, each business also has KPIs specific to its type, such as production units for a manufacturer, conversion rate of visitors into sales for a retailer or billable hours per week for a service business.
Get help from your financial adviser or accountant to identify the core drivers for your type of business. Then, monitor them closely and set improvement goals.
Monitoring your KPIs will help you grow your business and show other stakeholders (such as lenders and investors) that you have your finger on the pulse of your business.
8. Build good relationships with stakeholders
In addition to customers, lenders, investors and suppliers there are also important stakeholders in your business. Make it a point to develop good relationships with all of them. Showing you have good money skills and can forecast cash flow crunches well in advance will build the confidence of your lenders and investors.
