Entrepreneurs cautioned to keep a lid on costs when starting a business
In the wake of COVID-19, what were once employees are reconsidering how they’ll make their living in a new world.
Cue the surge of budding entrepreneurs!
Starting your own business can feel like you’re in a pressure cooker with newfound worry about when the next dollar will land in your bank account.
However there are some solid and proven steps that owners of business start-ups can take from Day 1 to keep your finances in check and make what should be an exciting process less daunting.
1. Side gig safety net
Picking up a side job could help reduce financial pressure and add some structure to the week.
It’s not uncommon for entrepreneurs who go from full-time employment to no structure find it overwhelming and they end up going back to a job.
If you can find a part-time job and leave your ego at the door – willing to do anything from brewing coffee, washing dishes or doing backroom work – be grateful that you can be fully present in your part-time job and, as a result, be fully present in your business.
2. Hire specialists
Apportioning income in a separate account to hire a bookkeeper is a smart move.
Make sure that you source professional advice from mentors as well as experts in their fields. When you’re starting out, you don’t know what you don’t know, so it pays to ask as many questions early on. Having professional help ensures that you don’t miss something important, especially when it comes to regulation and hitting deadlines on time, not after the fact!
And make sure that you do your tax annually, rather than letting it pile up for several years!
Recordkeeping is much easier with digital technology. Barely anyone hoards paper receipts for expenses anymore. Working with a professional bookkeeper can tick this box from the start of your engagement and keep you organised from the get-go.
3. Keep personal and business expenditure separate
Whether you deal with a bookkeeper or an accountant (or both) this is a golden rule!
The first step is to open up a separate bank account for your business. Doing so not only helps make that mental shift from thinking of your business as a fun hobby or a side project to a serious business, but you’ll be much more confident selling your products or services once your tax and systems are sorted.
Leaving the back end of your business in disarray subconsciously affects how you present to customers.
Entrepreneurs that know the advantages of organising their business into specified accounts can have multiple accounts covering tax and legal costs, operating expenses, savings to invest back into the business and payroll.
4. Keep a lid on costs
Another best practice piece of advice to new business owners is to keep overhead costs low and to use as many free resources as possible.
It’s out there if you know where to look: free software and as many free templates as you can practically use.
Starting as lean as possible could be a game-changer in the long run. Whereas launching yourself into $20,000 to $30,000 of debt puts you under pressure straight away, rather than having an opportunity to just enjoy working, getting out there and finding new customers.
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Specialising in Xero bookkeeping, Notch Above is a remote service bookkeeper and BAS Agent that offers Xero setup, as well as training and ongoing support. Notch Above can take care of all the bookkeeping tasks you would rather not do, like bank reconciliations, supplier payments, payroll services, debtor control and BAS returns. Contact us Australia-wide on 1300 015 130.