My business started from a conversation with a friend , and I meet so many people where their business has grown from an idea or a wish to do things differently. For some it is perfect timing – they may have a redundancy package to use as capital to start the business, or it could be a lifestyle choice following retirement or returning to work. For others it is out of necessity to provide an income. Whatever the reason for starting a business the fundamental of good financial control is of utmost importance.
There are some depressing statistics about how many new businesses fail in their first year, 5 years, ten years etc. The top ten reasons for failure are mainly finance related. Many people have set up their business during the recession, and have kept costs low while being realistic about the price they can charge. New business has fared far better than existing businesses with a high cost base.
However your business has started you will want it to flourish and be profitable. Many people will talk about their business in terms of turnover, and how big their business is – but don’t forget the Banker’s Mantra – “Turnover is vanity, profit is sanity but cash is reality”. Always know the bank balance and what commitments you have, if you manage the cashflow properly your business can succeed.