Setting up a start up business can be incredibly challenging, but also very rewarding to watch your brand grow and take shape. One obstacle that is an immediate concern is being able to manage your finances and ensure that you can reduce your debt whilst keeping expenses low.
Thankfully, we’ve put together some hints and tips for start ups who need to tackle their finances head-on. If you can get used to managing your finances, that’s one big step towards start up success. It will also help you reduce any debt incurred from a start up loan or similar lines of credit.
Get a business account to suit you
The success of managing your finances as a start up can be crucial to whether you can make a success of your new business venture. Anything that will help you have better visibility of your accounts and allow you to make quick actions on the fly, such as make payments, create invoices and make transfers, will definitely help. That’s where your business bank account comes in.
Having a bank account that is immediately set up to assist you as a small business owner can be the difference between success and failure in some cases. This is because some of the best business bank accounts allow you to perform the following important tasks while on-the-go:
- Check your balance
- Make transfers
- Make payments
- Create invoices
- Track expenses
- Use an overdraft
- Access to immediate banking support
Keeping track of your accounts couldn’t be easier with app-based business bank accounts, allowing you to login on your smartphone or tablet and perform the actions listed above, amongst other things.
Keep personal and business expenses separate
Many start ups make the early mistake of using their personal account to manage their money from the start. This can lead to confusing personal and business expenses, making it a lot more difficult to claim VAT at a later date.
Whilst it might be tempting to simply work from your personal bank account, always ensure you keep all business expenses separate by opening a business bank account as soon as possible. Whether you have an accountant or are using accountancy software, making this differentiation between personal and business should be done from the start.
Alongside a business bank account, it’s worth implementing accounting software that will allow you to automate certain processes such as sending out invoices, payroll and reporting. This extra level of money management gives you full visibility of your accounts, whilst saving you a lot of time on admin tasks.
This will also allow you to adhere to government guidelines regarding Making Tax Digital, which is a scheme to make claiming VAT even easier. You can find out more about Making Tax Digital here.
Have a look into implementing accounting software for your start up business by using one of the following companies:
Alternatively, using a business account provider such as Countingup will allow you to have a business bank account with integrated accounting software. This is particularly useful if you plan on doing your own bookkeeping or if you would like to give your accountant access to your account. It will mean that you will save time and possibly money too.
Having your business banking and accounting platforms set up will give you unlimited access to your accounts so you can avoid overspending and make sure payments are made on time. In addition, it will also give you a great opportunity to measure your performance every month.
The Key Performance Indicators (KPIs) you might want to track include the following:
- Customer enquiries/visits
- Customer satisfaction
- Marketing reach (social media statistics)
- Website traffic
- Products sold
Not all of the above KPIs will be relevant for your business, but it’s worth measuring your performance so you can personally see any improvement or decline in your business performance.
Keep overheads low
Whilst you might have the infrastructure to manage your finances as a start up business, this can quickly come crashing down if you aren’t actively keeping costs low. There are several ways as a small business you can keep your overheads low, including the following:
- Rent equipment rather than buy outright
- Compare utility companies to get better rates
- Do your own bookkeeping using accounting software
- Reduce or cut out paper
- Travel off-peak to reduce travel costs
Depending on the type of business you have, or the industry you work within, you may or may not have more ways to reduce your expenses. The main point is that getting into the habit of keeping costs low will ensure you aren’t overspending, which is crucial in your first few months as an active start up.