False economies business start-ups should avoid falling for
Saving money when starting up in business is usually something business owners aim for, and as such, many new business start-ups will be looking to execute multiple business operations functions themselves in order to cap costs in the set-up phase.
However, there are many false economies in doing so, not to mention mistakes that can be made when trying to be all things in the business. Here are some of those false economies.
Winging the business plans – putting together a business plan is an important task for business start-ups for a variety of reasons – apart from the obvious need to have a plan in place for a business to benchmark progress, have an overview to refer to on an on-going basis and detailed market analysis to establish demand – it is vital in aiding any finance applications for the business. Yet, many businesses either do not have a business plan or have one that is inadequate. Enlisting the help of a business adviser to help with a plan may seem like an unnecessary cost, but having a robust business plan from the outset is extremely beneficial and can help avoid costly mistakes or missed opportunities – as an independent view from a business ‘outsider’ can help establish the business blind spots.
Conducting accountancy tasks in-house – it is perfectly viable and feasible for business owners of small businesses to execute accountancy tasks such as VAT, payroll and self-assessment tax returns. However, not only are these tasks time consuming and require complete accuracy, but compliance with the latest legislation can be an issue for those not working in the field. Using an accountancy practice for these types of activities is a no-brainer, reserving valuable time to concentrate on other aspects of the business and growth, particularly for business start-ups.
Avoiding the cost of extra support – owner-managed businesses of a certain size may start to require a higher level of support from their accountant at some point, whether for a business health check, management accounts or strategic growth planning advice. However, the cost of using an accountant for these services can often be a barrier for business owners, and so they use their accountant for the usual functions such as payroll or tax returns. Many forward-thinking accountants now offer fixed-fee packages to be able to help provide a higher level of support, without the worry of the meter running for the business owner. Business owners should speak to their freelance accountant about additional support services and utilise them more.
It is of course advisable to be savvy in business and not spend where expense isn’t warranted, but often, the outlay associated with getting professional help is far outweighed by the benefits to the business.