Ask any successful entrepreneur and they will tell you that there are few things in life as rewarding and fulfilling as having your own business. Being your own boss and the financial freedom that accompanies it doesn’t hurt either. However, the hard work, perseverance, determination, and just about everything else that leads to business owners’ success are frequently overlooked when their triumphs are celebrated.
If you’re thinking about starting a business you ought to know what you are getting into beforehand and there are many not-so-obvious things you need to be aware of before doing so. As a trusted small business accountant that has seen many successes over the years, we know exactly what it takes to help you achieve your own success. In this article, we’re looking at everything you need to know before starting a small business.
Things you need to know before starting a small business
It isn’t easy
The very first thing you should know about starting and running your own business is that it’s not going to be easy. In fact, at times it can be extremely difficult, which no university or business course can prepare you for. Many people get into entrepreneurship because they think it will be “easier” and it’s simply not the case.
You know what they say: “if it was easy, everyone would be doing it”. There will be many late nights, early mornings, and many tears. We just want to make sure that you’re acutely aware of this factor as so many entrepreneurs underestimate the hard work that is involved. That being said, starting your own business can still be one of the most exciting, liberating, and rewarding things you can ever do.
The odds are, statistically, against you
Did you know that 20% of small businesses fail within their first year? 30% by the second year and 50% by the third year? By the end of a decade, this figure sits at a staggering 70%! This may seem gloomy, but we’re not mentioning this to scare you off but rather as motivation. Being cognizant of the failure rate before going into starting a business could work in your favour.
The good news is that these figures remain the same for your competitors too. They are also up against it, and it won’t be easy for them either. All you need to do for your business to survive is to be better than 70% of the businesses in the same industry as you. The likelihood is still small, but it’s still doable and a lot more so if you shift your perspective in this way.
It takes a lot of sacrifices
Making sacrifices is synonymous with entrepreneurship. Just ask Elon Musk who used to sleep at his office and shower at his gym… while he was renting out his apartment! Determined small business owners have to give up a lot for their businesses to succeed like time with friends and family, a steady salary, and proper rest. Underestimating the sacrifices that have to be made when starting a small business is a leading reason why many fail.
Someone once said: “Entrepreneurship is living a few years of your life like most people won’t so that you can spend the rest of your life like most people can’t”. We’re not saying it will be easy, we’re just saying that it will be worth it.
Cash flow is critical
As a new or prospecting business owner, you may not quite come to grips with cash flow yet, but for your business’s survival, it’s essential that you do. It’s been said many times but only because it’s true: cash flow is the lifeline of any small business” (just ask your small business accountant). Essentially, cash flow is the money that moves in and out of the business, i.e. money spent and money received, and this should remain positive if you want a profitable business – and who doesn’t?
It’s ultimately jousting between revenue and expenses, and the former should outweigh the latter. A business will simply struggle to survive when it spends more money than it takes in. That sounds a lot like “profit”, but it’s not. Profit can be taken out of the business without it affecting the business in any way while cash flow is essential to keep the business going. Simply put: a business can’t be profitable without a positive cash flow so it’s absolutely imperative that you, or especially your small business accountant, keep on top of this aspect of your business.
You won’t be able to do EVERYTHING, even when you want to
At the start of your entrepreneurial journey, you may find that you have to wear many hats. In most cases, your budget, or cash flow, doesn’t allow you to employ people in dedicated positions right off the bat. Roles like developers, the marketing coordinator, the small business accountant, or the sales representative may all initially fall on the founder/s’ responsibility.
With growth, however, this might not be sustainable for long and this is where many business owners find themselves between a rock and a hard place. They don’t have the means to employ someone full-time, but they can’t continue to keep doing all the duties themselves. The solution? Outsourcing.
Instead of wasting valuable time trying to get things done, which you might not even be that good at, you should outsource them. Not only will the results be better, but you can also focus your energy on other things that you are more productive at. In conjunction with this, automation can also be your friend so automate every process that you can. When you can’t do everything, let others and the machines do it for you!
Partners are important
Starting a business by yourself can be, well, lonely. It can also be extremely risky. When you don’t have anyone at your side, there’s no one to bounce ideas off of and this can lead to bad decisions. And bad decisions can be detrimental to new businesses. It’s therefore a good idea to team up with a partner/s that will have similar equity in the business.
Choosing the right partner/s is just as important as having them in the first place. So don’t go about and accept just anyone to join forces with you. Ideally, partners should have different strengths and weaknesses which they can play off of each other. Be sure that the partners in the business can all complement each other.
Mentors are essential
Just like having the right partner, and the right small business accountant, having a mentor or someone to turn to in times of need can significantly ease your business-owning journey and have a significant impact on growth. Some of the best business people in the world have mentors, so why shouldn’t you? Mentors are usually experts in their field and bring a wealth of business knowledge to their mentees.
Having a relationship with a mentor is a two-way street, though, and you can’t expect to get without having to give. Mentors can also find value in their mentees by learning new strategies and operations while you gain insights from them. So, just like your partner, choose your mentor carefully.
Marketing is a necessity
Many entrepreneurs tend to skimp on marketing, especially at the beginning of a new enterprise. But in today’s world of business, it’s no longer a simple case of “build it and they will come” anymore. The field has become too wide and too competitive for that largely thanks to the digital revolution. It’s therefore essential for marketing and advertising of your business.
The good news is that the same digital revolution makes it easier than ever for your business to find its customers and, more importantly, for your customers to find your business. Through social media, email, and SEO, you can easily and relatively inexpensively market to your potential customers – focus on the core problem your business solves and put out content with enthusiasm about the ideas about how to solve those problems. But don’t discount the power of traditional advertising, like billboards, TV, and magazines, if you have the budget for them.
Knowing what to expect when starting a new business is one thing, executing it all is another. To recap, here is a quick checklist of some tips you can implement at the start and during your new business journey:
- Know it won’t be easy
- Stack the odds in your favour
- Be prepared for making sacrifices
- Manage your cash flow with the right small business accountant
- Outsource work when and where you can
- Partner with the right people
- Get an eligible mentor
- Market and advertise
Surebooks: a small business accountant for any business
In all honesty, there’s no one facet in a business “more mportant” than another but the importance of adequate finance management can never be overestimated. At the end of the day, no business, whether big or small, can function without finance management – it’s the key to profit and growth. And unless you’re in the business of “business finances”, the finances can be intimidating.
The good news is that we’re here to help. Surebooks is a trusted small business accountant, amongst other things, that offers accounting services, payroll services, and tax compliance with great advice along the way to ensure that you can grow your business. We have a selection of small business accounting packages on hand to get your finances in check. We also offer custom quotes if needed, just in case you feel that something is missing. Here is why you can trust us:
Our accountants are accredited by South Africa’s major accounting services bodies, SAICA and SAIPA. We’re also registered as tax practitioners at SARS. Furthermore, our leadership has CIMA or Chartered Institute of Management Accountants accreditation.
We really know what we are doing. The executive leadership has worked for blue-chip level brands but most importantly, as entrepreneurs themselves. Our leadership understands what entrepreneurs need! We give advice that saves you money and makes your life easier.
Our leadership has started businesses and run them successfully from the ground up! In addition, our leadership has experience in running finance at enterprise-level, so we have experience in how to get you to the top but also how to run things optimally when you arrive there!
We ensure that the latest in technology works for you and not against you, freeing up your time and cash flow to re-invest your business. The technology we use ensures accurate and comprehensive accounting services that grow your business.
We manage your accounting so that you save time to unlock valuable cash flow, as we talked about, to re-invest in your business. Start focusing on your business by letting us be the small business accountant to manage your finances. Get in touch with us today for a FREE consultation!