Most successful small business owners I meet and work with share one particular characteristic in common –
They are highly motivated people.
In the past, they might have worked for a company or had a great idea and said,
“You know what? I can do this better. I can do this for myself. I’m going to give it a go.”
Good on them! It takes a lot of bravery to start your own business.
They will already display signs of the ability to persevere when things get tough. Motivation and perseverance are both essential traits of a business leader in the making. Business owners who are mentally prepared are able to approach tough times and identify problems that are coming up in their business.
Small business owners will inevitably face many challenges
Every business will face these challenges in the first 12 months:
- Lack of Customers – You will need to grow a customer base from zero. This can take time!
- Cash flow shortages – No early sales mean no money in, but you will have costs (money out)
- Self Doubt – Is this even going to work?
- Relationship building – You will need to create relationships with an accountant, banks, suppliers, new employees, and even the ATO.
Those struggles are inevitably going to be faced early on in the business lifecycle. If business owners can approach these issues in a calm and rational fashion, they’ll have every chance of making it.
If you are going to set up a business, you need to have a business plan before you even start. You need to have a direction and I recommend you have a plan for the first 12 to 24 months.
Your business plan should incorporate the upcoming financial commitments that the business is going for the first 12 months. Do not go into your first year in business pretending that those capital needs aren’t there and hoping that the business will just flourish and take off. Plan conservatively and update the plan constantly. Check your progress against the plan. Be ready from day one.
If you plan from the start and you have your capital needs funded; you are ready!
You could be ready to start a business and you’re so excited about the concept, but you need a little bit of time to save up cash reserves. That’s smart. Whilst you are saving, there are so many other aspects of the business you can work on to ready yourself for success. These will be the topic of a future blog.
When business owners are starting from a good place and keeping good records as they go along the way, keeping up to date with financial progress, reviewing your plan, you have every chance of making it past the first 12 months when historically many businesses fail.
Involving technology plays a big part as well. Start with a cloud accounting file from day one. If you’re not familiar with how they work, engaging a bookkeeper can help keep the costs down in the early days, and scale with your business needs as you grow. It’s a smart investment.
Talk with your Accountant
Business owners in the past would come back to their accountants after completing their first year of trade and give them the shoe box full of receipts and say, “How did I go?”
Its great to give feedback, but it can be a missed opportunity to make a real difference if the business was not successful. Taxation can also be a nasty surprise if you’re not planning ahead.
The opportunity with cloud accounting packages such as Xero or MYOB allows you to check in with your advisor regularly throughout that period and asking, “How am I going?” It’s such a dynamic shift because you can get advice along the way. A helpful suggestion in Month 3 or Month 6 from an experienced advisor could change the future of your business. Like the recommendation to hire your first employee, or engage in marketing, website development, increase prices, etc.
When I’m working with businesses connected with a cloud accounting file, I have real-time access to their data. I can see the financial performance, visualise the business taking shape. I can then ask questions like:
“Tell me about your business”
“What can we do differently?”
What did you find challenging?
“ What’s working really well?
“How is your cash flow”
“Are things going according to plan?”
Working with your advisor from the outset has helped me solve problems for clients before they become a source of failure. Your advisor can then fuel your motivation with positive feedback, or encourage you to persevere if things are not going well. Business success is a team effort.
LMS Advisory works with business owners at all stages of the business cycle to fuel growth and ensure your business foundations are secure and scalable. We refine the compliance experience so that we can get to the advice (where our experience can add real value). KeepMyBooks are bookkeepers and business lifesavers who will help ensure your financial data is relevant, correct, and constantly up to date.