When you are starting a new business, there is so much to do and so much to learn and, sometimes, you don’t know what you don’t know. We’ve asked our expert team to give you their top five tips for new businesses. Some tips are from their own experience as business owners and some are from their own area of expertise.
This week, it’s Scott Warren’s turn, to give you his top five tips for Financial Advice.
Tip 1: Do your Market Research
In the first few months of your business running, offer your goods and services out for free. This way you will be able to build a good client base, and from that you can ask your clients what prices they would pay for the goods and services that you are providing. This way, you get a strong grasp on how much you should be charging for your services, along with some great client reviews which are always important when starting a business!
Tip 2: Know What you Want out of your Business
Set out what you what to achieve financially from your business. You need to have financial goals set out, so you know what your price point needs to be for the goods and services you offer. You need to make sure that your financial goals and your price points are in line with each other, because there’s no point offering your services at a cheaper rate if it means you’ll need to work a hundred-hour week and run yourself into the ground. This would lead to you have an unsustainable and unachievable business model.
Tip 3: Know your Cashflow
A lot of businesses end up struggling, not because of a lack of sales, but because of a lack of cashflow. This means that all the money coming in is going straight back out the door and this business now has no money. The best way to combat this is to simply have 2 accounts, 1 for expenditure and 1 for reserves. If you make sure that these accounts are from 2 different banks, then it allows you to have the freedom you want with the money in your expenditure account, while keeping the money in the reserves account hidden away and out of sight for emergencies.
Tip 4: 70/30 Rule
Another good way to improve your new business is to apply the 70/30 rule. The 70/30 rule basically means that with the money your business takes in, you should be spending no more than 70% of it on your business expenses and keeping the remaining 30%+ of your earnings to put towards your reserves and improving your cashflow. You should always look for ways to be improving your cashflow, and over time your aim should be to get your bills down to using just 10% of your income.
Tip 5: Don’t Forget your House
Always remember that your cashflow doesn’t just affect your business, it also effects your home life. You need to ensure that you take household bills and other living costs into account when dealing with your income and expenses. This needs to be reflected in your prices too, as you need to make sure you are generating enough income to cover all costs. I’ve seen many businesses in my time that have failed to take household bills and living costs into account and ended up causing themselves some serious issues.
Bonus Tip: Time
Above all, remember that your most important assets are yourself and your time. You can always make more money, but you can never make more time. I’ve found so many businesses work far too many hours doing far too many needless tasks. Spend your time focusing on the important tasks that are going to make you money and put the tasks that aren’t going to lead to your business’ success on the back burner. Think about it this way: Every time you waste an hour, you throw away £30. If you waste just 1 hour a day, every day of the week, that’s £150 in a week and £600 in a month. Make sure to set and stick to your working hours, and never be afraid to finish early, especially if you’re celebrating landing a client! Work when you need to work and relax when you need to relax. I have 3 main roles in my life; I run my own business, I am a Local Politician and I’m a Chair on the local School Governors Board. I still make sure that I keep my working day between 09:30 – 17:00. Time management is possibly the most important one of all.
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