Starting a business? 4 ways to ensure you’re in great financial shape now!

Starting a business is undeniably exciting. As an entrepreneur, you’re likely to be highly motivated, with an unshakable belief that your business idea is what the market wants and needs. 

However, according to the US Bureau of Labor Statistics, there’s actually a high probability that your new business won’t survive. Data shows that around 20% of new businesses fail within the first 2 years, and 45% don’t make it to five years.  One important reason is that they underestimate the investment required, not just to start up, but to keep the business healthy, so it can become established and grow. Lack of cash will cripple a business in the first months and years. If you’re thinking of starting your own business, take the steps below to ensure you’re in great financial shape as you start your journey! 

1. Identify your objectives

Sounds obvious, but the first thing you need to be clear about is how you want your company to grow. Are you looking for a slow and steady expansion as you find your feet and gain experience? Or are you looking for exponential sales growth almost from launch?

2. Do your market research

It’s easy for an entrepreneur to view their idea as the solution to consumer problems that will blow competitors out of the water.  Do some solid research to test the reality of this belief.  How good is your product, compared to your competitors? Ask their customers.  How will your pricing compare?  What’s the growth in your sector, and how are new entrants to the market doing? 

3. Get the legal stuff in place

This sounds like a no-brainer, but it pays to focus on the details. Solid legal advice, accountancy, and even tax relief services all need to be in place, especially if you would rather concentrate on the important stuff, that is, launching your business and getting your product to customers.

4. Cover your bases 

As we said in the introduction, when considering the finance you’re going to need, it’s essential to plan for the worst.  How would your business, if it had been operating, have coped with the effects of the pandemic?  How will it survive if the economic downturn that many experts are predicting lasts longer than expected?  Become a pessimist when you plan and it will help you ensure that you’ll get the finance in place to help you survive and thrive. With worst-case and best-case scenarios in place, you’ll be able to create a balanced and realistic financial plan which will impress lenders and investors.  Also, if you’re using your personal funds to start the business, you’ll have made a realistic risk assessment.

Follow these steps and you’ll be in a solid position to ensure your business is in great financial shape as you launch and start to operate.  You’ll certainly have given yourself the best chance to ensure that, if you become a statistic, it will be as one of the percentage of start-ups who survive and grow in those all-important early years!