Whether your business is a start-up or a veteran, here are 4 ways to get off to a flyer in 2011…increasing profitability, saving you time and reducing your costs.
(1) Make a business plan
It cannot be stressed enough how important it is to prepare a business plan. In the same way that you wouldn’t set out on a journey without a clear idea of which route you intend to take, you should not try to run a business without a clear idea of what you want to achieve, and how you expect to get there.
A business plan should be as detailed as possible, to ensure that all potential obstacles are identified. To do this properly, you will need to include a financial budget into your plan. Generally speaking, it is when you start to look at the numbers that you start to be more realistic about what you can (and cannot) achieve in the next three, four or five years.
(2) Management accounts
From experience, many business owners do not know how their business is performing during the year. Management accounts will give you a good idea of how profitable your business actually is.
To make it even more beneficial, compare your management accounts against your budget. If you are not performing as well as expected, look at the reasons why and make necessary changes – before it is too late.
Management accounts are also a good way to estimate your current year’s tax bill. Providing your business would perform similarly over the remainder of the year, you should have a good indication as to how much corporation tax you will need to pay down the line.
(3) Put good systems in place
Setting up internal procedures early on not only improves customer service, it can also save you money. If you have slick systems, it improves efficiency and reduces the need to correct mistakes, which all helps to improve your bottom line.
For example, take invoicing. How are you going to invoice your clients and ensure that you invoice your clients on a timely basis? How will you make sure you know which invoices have been paid? Whilst this is not as exciting as say, marketing, it can have a dramatic effect on how your business is perceived by customers.
(4) Use the right business structure
Many people are not aware of the legal and tax differences between operating as a sole trader, a partnership or a limited company. These differences can have a huge impact on the amount of tax to be paid, as well as affecting your personal responsibilities.
Establishing a limited company can be a great way to reduce your tax bill and limit your personal liability (should the business fail). However, you should not form a limited company just because you think it might be a good idea. For instance, you should be aware that being a director carries certain legal responsibilities. We would always suggest speaking to an accountant to ensure that you make the right choice for your business.
Watch out for more useful tips in the coming weeks. In the meantime, we wish you a happy and successful 2011.
