How To Give Your Business The Best Start (or revive it)

Financial management
Read Time:3 Minute, 40 Second

No doubt, you will have heard the phrase that cash is king. That’s true, but in this digital era, there can be just as much value (if not more) in the technology that lets you tap into additional cash streams for your business.  

It boils down to how effectively you manage your company data. The money matters, but it’s the data your business captures that can bring in more revenue.  

3 Metrics that Matter when Growing a Business 

Setting up your back-end office for financial management 

Businesses succeed not by the service or the product they deliver to customers, but by the management of the product or service delivery. That is essential to understand. It’s how a good business can get beat by bad competitors. The competitors just managed the books better.  

Run your business from a management perspective. Bury your head in the finances to get a deep level understanding of the money coming into the business and where it goes. Limit the leakages by managing the overheads, negotiating contracts with suppliers, and managing the suppliers you do work with.  

Some of your service or product delivery will be dependent on third-party partners. That could be manufacturers, distributors, packaging firms or payment processors to get your invoices paid. Fees will be involved and your partner’s service reliability and quality will matter to your business too.   

Ever wonder how investors can buy a business, boost its bottom-line fast, then flip it for profit, or bring on investors?  

They improve the balance sheets. It’s the fastest way to increase a company’s value. To do that, you absolutely must have your accounting system set up right from the get-go.  

Value your customer data 

Nearly every type of business today can become data-driven. Even the local hair salon can use booking appointment systems to collect names, addresses, and keep a record of a client’s appointment history.  

This data can be used to work out who your most profitable customers are. The age demographics, the times they prefer to shop, how they communicate with your business (phone, email, social media handles), and that can help shape your future marketing strategy. If you want to target your ideal customer, it definitely helps to know who they are.  

Like everything in business, when you start, it is a guessing game. Once you have customers, you should have data, and that can then be used to shape the future of your business.  

Just make sure that before you start hoarding loads of customer data you are GDPR compliant and registered as a data controller with the Information Commissioner’s Office (ICO). There is a three-tier pricing system for the fees payable. Small businesses with fewer than 10 employees and less than £632,000 turnover fall into the lowest tier (1) attracting a fee of £40.  

Register for the correct VAT scheme for your business (before you need to) 

You do not need to meet the VAT threshold to register for VAT. There are different schemes. The Standard VAT scheme and the Flat Rate Scheme. Both have their pros and cons. The Standard Scheme lets you reclaim the VAT that you pay on purchases. The Flat Rate Scheme doesn’t.   

But, although you cannot reclaim VAT on the Flat Rate Scheme, you do pay a lower amount to the government. That’s the advantage. Currently, the VAT rate is 20%. The rate you pay depends on your industry. You can make some extra money by keeping the difference between the rate you charge and the rate you pay to HMRC. You just need to stay on top of your record keeping and abide by the rules of the scheme.  

The current threshold for registering is £85,000. This can change, but what doesn’t is when you need to register. Do it early because once you reach the threshold, you only get 30 days. And, if you aren’t charging VAT on your goods or services, HMRC will still bill you. If you don’t register on time, there can be a penalty too. And that will be on top of any VAT owed for sales over the threshold.  

The best way to get your businesses finances in shape is to get all of your data into a central accounting system that is compliant for Making Tax Digital. 

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