Every year, millions of businesses started throughout the globe. Were you one of those businesses? Or are you hoping to become one this year?
For anybody contemplating starting a new business, money management is probably the top of their list of considerations. For students starting a new business this is even more important, due to the low budgets and high outgoings that you may already have as a result of student loans and living expenses.
But this is not to say that starting a new business as a student or graduate isn’t an incredibly exciting, enjoyable and liberating step to take. What is important is how you are able to manage your budget, no matter how big or small, to ensure you have the best chance of creating a successful and long running business. So where do you begin?
Know Your Budget Inside Out
…And more importantly, stick to it!
Many businesses will fail within the first two or three years, and a handful of these will be due to poor money management. If your business is new, then it is extremely important that you understand your entire budget. You will need to make a variety of decisions based on this project which will make or break your business, so being aware of what you have to spend is vital.
To understand your budget you will need to know your current income and outgoings. Initially, your income may come from another job (a part-time job may be vital to supplementing the cost of your new business) and your outgoings will need to be reduced as much as possible giving you enough money to live on. What you have left will be your budget, and this should be used carefully to sustain and grow your business. It would be used to pay for supplies and office space as well as outsourcing and merchandise.
Making your first sale during your first piece of work may be a very exciting moment for you, but remember to put the money you make back into the business and save the treats and expensive celebrations for when your business is a bit more stable.
Don’t Expand Before You Need to
In a new business one of the biggest expenses by far is hiring staff. Many student business owners may feel that they do not have time to complete all of the necessary tasks surrounding their organisation themselves and will therefore decide to hire “an extra pair of hands”. Before doing this it is important to decide whether you really need them and if by hiring them, you will be making a profit from them – will they be bringing in more money than it is costing you to hire them? If the answer is no, then wait a little while and consider it again.
When you do hire staff, it is important to know the rules and legislation is surrounding how they are treated, paid and looked after.
Know When to Spend Your Money
As a new business, there will come a time when you will need to spend money; and knowing when to do this can make or break your business. Often, one of the first tasks that is outsourced to the company is payroll. This may be due to the importance of getting it right first time for the high level of knowledge and skill that is needed to ensure that procedures are followed correctly.
Often, it is worth spending the money to outsource certain aspects of your business, such as payroll, so ensure that you make this an option and start your business with success on the horizon.
Guest post by Nick Doyle of Corporate Payroll Solutions (http://www.payroll-solutions.co.uk/).