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Five Mistakes All New Businesses Make

Growing Your Small Business

Growing Your Small Business

It's a sobering statistic, but around 80 percent of new business start-ups are destined to fail. The specific reasons for such a high mortality rate vary from business to business, but there are a handful of key mistakes common to many new business owners. Avoid these and your business stands a much greater chance of survival.

1. Lack of research

You may think your business idea is bound to succeed, but it's essential to do some detailed research to back up your instinct:

  • Do you really understand what your product is?
  • Is there a market for your product or service?
  • Will people be prepared to pay what you want?
  • What competition is out there?
  • Is there a sufficient infrastructure to support your business? Is it seasonal?
  • How will you survive lean periods?

Unless you research your market thoroughly, it will be impossible to know whether your business is viable or not.

2. Failure to plan

There are two key areas in which all new businesses must plan:

  • First, you need a comprehensive and realistic business plan:
    • Ask your accountant when putting this together - he or she will be objective and help you to set targets that are achievable.
    • Building goals into your plan will help you measure how the business is performing so you can react accordingly.
  • Second, draw up a proactive marketing plan:
    • Many new businesses are too passive when it comes to marketing their products.
    • It's not enough to design a website and wait for the orders to flood in.
    • Marketing should be multidisciplinary and exploit all forms of delivery, whether mail shots, email, or newspaper and magazine advertising.
    • You need to keep driving your message and USPs by whatever means.
3. Looking after cashflow

Cash is king - it's a fact of business life: you need to manage your cashflow and that takes planning. Your accountant will help you to devise systems in order to help you:

  • Stay on top of your debtors and collect in cash.
  • Monitor your outgoings and not overspend
  • Set budgets so you can plan for lean times
  • Put aside sufficient funds for taxes and other unforeseen expenses.
4. Insufficient systems and processes

Many start-ups fail not because the product is poor but because the business is inefficient. This is where it can really help to bring in an accountant to help delegate some of the aspects that are not always intuitive to a new business owner.

  • Implementing appropriate systems and processes in areas such as bookkeeping, stock control, and time management, will help your business run smoothly, allowing you to spend time growing order books instead of firefighting niggling issues.
  • Robust accounting systems provide you with measureable data and information that will help you to make the right decisions and keep your business on track.
5. Failure to react

We live in a dynamic world and business environments are constantly changing due to social and technological changes.

  • Business models that were once successful are no longer thriving.
  • If your business is to succeed you need to innovate and move with the times.
  • Stay one step ahead of the competition and be prepare to react to new challenges and potential opportunities.

There are hundreds of potential business pitfalls, but if you avoid making the five mistakes outlined here you'll have sidestepped some of the major causes for business failure.

Profit isn’t the problem – cashflow is king

Cashflow is king if you’re a busy, hard-working small business owner. Getting paid on time is vital for success. But, invariably, not everyone can or will pay up when they should.

What is cashflow management? In its simplest form, cashflow management is doing everything possible to make sure money flows into your business as quickly as possible, and leaves the business as slowly as possible.

And those cashflow, billing and invoicing challenges certainly aren’t unique to the small business community. Profitable businesses are just as likely to close their doors for cashflow reasons as unprofitable ones.

No matter how well-respected, innovative or essential your business and its output is, if you’re not in control of the books, you may end up treading water.

Stay afloat with five top tips to help you to get paid on time, invoice more efficiently and create a healthier cash flow:

1. Discuss payment terms before you get started

Getting this sorted upfront means that there is no confusion down the track. It also sets the client’s expectations around payment before you start the work.

2. Keep detailed records of inventory and time

This saves time when it comes to creating the invoice and makes sure you don’t miss anything. It also means if things are going over budget you can let your client know.

3. Make the invoice clear and easy to understand

List the details of the job in a way that makes sense to the client; any confusion could create a payment lag. It’s also good to personalise your invoice with your business logo and your bank details so you can be paid.

4. Use online invoicing & implement payment services

Cloud accounting software offers an online invoicing feature that encourages collaboration with your clients, changes made to invoices are instantly updated, letting you know whether the invoice has been received, as well as viewed. This, coupled with a payment service, can really help get that payment in quicker. Up to two weeks quicker in fact!

5. Keep on track with debtors

The squeaky wheel gets the oil. When things become overdue, send reminders, monthly statements or make a phone call. It shows that you are serious about getting the invoice paid. Having a process that helps streamline invoicing can reduce the amount of time you spend collecting your hard-earned money. Check out our video if you just keep "chasing payments"

If you need more advice on cashflow issues, then sign up for a free consultation session with one of our experts. We practice what we preach as our article in the Guardian shows.


Part Accountant, Part Business Advisor

Part Accountant, Part Business Advisor

Today’s business accountant wears two hats – ‘bean counter’ and ‘business advisor’. The new breed of accountant can deliver good all-round advice on a wide range of business issues Business start-ups without an accountant in the team from the word go are courting disaster. While there may be few beans to count in those early […]

RG & Co



Catalyst Inc,
Titanic Quarter
+44 2895 219365

Name: RG & Co Chartered Accountants
Email address: richard@cloudaccountingni.com
Phone: +447868663538