The first year in business is make or break time for most companies; either you manage to make it through into year two or you don’t. It’s a harsh reality but one many budding businessmen and women have had to face. And with the credit crunch firmly gripping the United Kingdom it has become and indeed is continuing to become even harder to maintain a grip on the slippery ladder of success in that all important first twelve months.
Banking is the key to success in your first year of business. Many businesses, especially small to medium sized businesses, have to ensure that their banking structure is firmly in place if they want to survive. This means having a firm grasp on the company accounts and also having as good a relationship as is possible with your bank manager and business banking advisor.
When it comes to business one of the most common mistakes made is how to hand cash as it comes into the business. Some individuals – if they are sole traders or part of a small limited company – will accept payment for work done or services provided and put the money straight into their pockets. This may seem at the time as money earned but in reality you are damaging your business and its bank account but failing to deposit anything collected. You should bank everything, cash and cheques alike, and where possible try and ensure all monies are paid directly into the business account via bank transfer.
Personal loans are another important part of business banking; you have to ensure that come what may you can make the repayments on these loans on the dates they are due. This is where many businesses fall down; ignoring the loan repayment dates and hoping their bank manager will understand. Unfortunately he or she has someone to answer to as well so it is not always the case that they will understand. If you know or suspect you may miss a repayment date get in touch as soon as you can and explain why.
Your company profile is what sells you to prospective clients. It is something you need to work hard and building up. Where possible ask for assistance from referees and if you do a good job for someone or provide them with an outstanding service ask them if they would be happy to tell others. You will find that other companies will be happy to as everyone has to start somewhere.
Using Company Money Wisely
In your first year of business, especially if you are a business that provides goods to other customers, keep your stocks low. It is not always the best policy to have a warehouse full to bursting with a variety of products. Stock levels can be replenished as and when needed and this is a good way of ensuring you are not tying up much needed cash in stocks that you may not be able to sell. It is wise to note that unfortunately if a business fails and has high stock levels most stock will be sold off at a greatly reduced rate to try and recoup what money the liquidators can.
Manage your company as though it were your own child; this may sound a little clichéd but it is so important to be on top of everything. And if you can’t be employ the services of someone who can maintain the day to day running of the business while you concentrate on bringing in new clients. It is difficult to manage a business on your own so asking for help is always something you should be prepared to do. In addition to this you should also always know exactly how the company is financially. Many individuals who trade as sole traders or are part of a small limited company leave the finances to others and whilst this may free up your time it can leave you at a disadvantage if you are issued with an unexpected tax inspection or bank audit.
For more information on how to form and run your own business you should initially speak to one of the many small business agencies (details of which can be found in your local telephone directly). They will provide you with assistance when it comes to writing your business plan and applying for grants and loans from your bank. They may also be able to put you in touch with service providers who can assist with financial and legal matters too.