How To Start A New Business
When you start a company it is important to set it up correctly from the outset. The best place to start the process of registering your business, and to discover all the other things you need to do to comply with the many regulations that govern business.
One the most important task to do when starting a new business is to come up with a business plan. It is the job of your accountant to come up with a well-structured plan for your new business.
The business plan can personally benefit the entrepreneurial team. Usually a great deal of money is at stake, and the consequences of poor decisions can affect many people for a long time. In developing and writing a business plan, the entrepreneurial team reduces these anxieties and tensions by confronting them in advance. By projecting the risks of the new venture into the future, the team comes to grips with potential negative outcomes and the possibility of failure.
Every business plan should include:
Profile of the company’s management – Listing the names of top executives and their qualifications and industry experience.
Kind of Business – A brief description of the industry your firm is focusing on or the new venture’s strategy.
Objectives – The short term and long term objectives of the new business venture.
Financial requirements – Briefly state how much finance is required indicating the degree of flexibility you are willing to show in case the investor suggests any changes in your plan.
Budget allocations – How you will be using the finance.
Market Analysis – The business plan should dwell upon the prevailing competitive environment with a view to convincing the investor that his/her product/service is a niche product or service with substantial prospects for growth and capable of attaining a competitive position in the market.
Environmental Influences – The impact of the environmental influences such as political, economic, technological, socio-demographic and ecological factors that affect your area of business.
Quality – The quality control measures to be put into place for ensuring quality of the product/service.
Marketing – Identify the target market which should be substantiated by a thorough market research. Once the target market has been identified, focus on the communication strategy including advertising, branding, packaging etc.
Sales Forecast – Sales forecast is primarily dependent on three factors – size of the market, fraction of the market you will be able to capture as a result of your marketing strategy and the pricing strategy.
Financial Plans – A new venture must show projected profit and loss statements and cash flow statements.
Human Resources – Make an organisation chart with details of key executives and profiles of individuals likely to be hired.
Form of Business – Describe the legal form of your business – whether it is a sole proprietorship or a partnership, public limited co., private limited co. or society, etc.
Critical Risks – As a legal and moral obligation, the entrepreneur must, in the business plan, envision risks the investor would be undertaking in case he makes a choice to invest in your business. This will protect you from civil and criminal liability.
An important accounting function for starting a small business is the creation of a budget. Budgets outline the expenditures needed for various aspects of the business. Entrepreneurs may budget capital for hiring employees, advertising strategies, inventoried purchases and other types of business expenditures. Sticking to a budget helps entrepreneurs avoid wasting capital on non-essential business items. Budgets can also create a historical record of how the small business spent capital for producing consumer goods or services.
An accountant can also help if you are applying for a bank loan or other sources of funding. They can ensure that the application and supporting financial documentation is accurate, and they can help you with any questions that the lender might have.
Having an accountant on board also shows the lender that you are serious about your business.
When you are starting a new business, decisions come down to cost. When it comes to hiring an accountant, costs have to be considered in terms of time savings and other efficiencies. When you look at it like this, hiring an accountant as early as possible in your business can bring serious benefits.