Banks
Keep it separate
It is crucial to have a separate bank account for the business as it allows you to understand your cash flow better and imposes discipline on the money you take out of the business for personal use.
Understanding banks
People mistakenly believe they walk into their local branch and the small business adviser will write them out a cheque or grant them an instant overdraft. It doesn't work like that and it is important to understand the role of banks in helping you, if indeed they are able to do so at all.
Banks are not charities and will not take on the risks of your business unless you are willing to do so as well but before signing anything check the small print and take professional advice – this cannot be repeated enough times.
Even at the outset when making the budget you will have your eyes opened when you realise the direction in which some of your costs are heading
Break even
Do you know your break-even point? Work it out and you may get a shock, but if you do it should be the starting point for some serious examination of costs and sales strategy. How many items do you need to sell in order to cover the cost of running your business? Remember, it is the profit per item that counts and not the money from sales.
Budgets
This is about forecasting where the business is heading financially and making appropriate provision. I can't remember the last time I saw a budget that played out accurately, but they are fantastic tools for focusing the mind and when looking back after the financial year end it allows you to question why actual costs may be wildly different from those in the budget.
Even at the outset when making the budget you will have your eyes opened when you realise the direction in which some of your costs are heading.
Build on your strengths
Once you have identified what your business does well you need to devise and implement a strategy for building on these strengths, either directly in your existing field of business or perhaps by moving into related area that you can exploit using your strengths especially if there is limited scope for growth in your current area of operation.
Business premises
Before you sign a lease on premises for your business give careful thought as to whether the location and building is suited to your requirements. In all cases take legal and financial advice from professionals prior to making a commitment because if it doesn't work out it could be a very costly exercise with catastrophic results.
