Chances are, you started your business because you’re ambitious, you have big ideas and a clear vision of how your company will look when it’s thriving. While all of these traits are important – essential, even – in a business owner, the nitty-gritty of day-to-day management and attention to unglamorous details can prove just as crucial if your business is to survive through hard times as well as the glory days.
First of all, it’s time to stop binning those receipts. Remarkably, over one-fifth of small business owners claim less than half of their expenses, with 25% not bothering at all for amounts of under a fiver. It’s a long, long tax year and those petty expenses can really add up. Being thorough and disciplined with receipts and putting aside time to administrate them can result in a most welcome level of tax relief – saving money that can be ploughed back into the business.
Next, slow down! When starting out, every expenditure should be carefully balanced against its projected benefit for the business. There is a time to scrimp and a time to expand – and smaller businesses with a lower bottom line and higher profitability tend to be stronger than cash-splashing bigger businesses. Likewise, a successful period can inspire dreams of diversifying – but all businesses will ebb and flow, and long-term stability is a better basis for embarking on new ventures.
Those inevitable tough moments can be a real test for a young company, but preparing for the bleak periods can make them far more negotiable than wandering into them blindly. Put aside enough cash to cover two months worth of operating costs and you can buy your business some coping time when things get close to the bone.
If you’ve been running your business for some time, it will prove profitable to put aside a few hours to consider some of the ‘leaky bucket’ cost factors explored in the practical infographic below, and anyone starting a new would do well to account for these potential money drains in their initial business plans.