According to start-up statistics within the UK, 20% of businesses fail in the first year and 60% will go bust within their first three years. With 660,000 new start-ups registering in the UK each year what could be the reasons for such a high failure rate?
While there are many factors, the top two reasons startups fail is because:
– there’s no market for their services or products, or;
– they run out of funding or cash.
The two reasons listed above, and many others, could have easily been avoided if they had reached out to professionals early on in the start-up process. Professionals such as accountants (hint, hint).
Here are eight ways that new or early-stage businesses benefit if they consult an accountant earlier rather than later.
Eight ways an accountant can help new businesses
They can help you…
1. Identify whether your new business idea is achievable – an accountant can help you analyse your market research data to see if there’s enough demand for your product or service to sustain your business. They can also assist with outlining your business goals too.
2. Decide on a business structure – choosing a business structure that suits you can help save you time and money as it impacts your tax, personal liabilities and asset protection. An accountant can assist in ensuring you pick the right one for you.
3. Create a business plan – a large chunk of your business plan will involve financial forecasting, setting out your business costs, revenue expectations and funding preparations. Naturally, an accountant is the ideal professional to assist you in this.
4. Secure funding – accountants can give guidance on which lenders to reach out to as well as helping you create your loan pitch. They can assist you in creating an accurate and definitive economic forecast for your business.
5. Register your business – you will need to register your business. An accountant can assist with this as well as registering you for tax and helping you set up your business bank account.
6. Choose the best business insurance – an accountant can advise you on the best insurance options to make sure you have complete protection at the most cost-effective price. They can help with property and vehicle insurance to professional liability and business interruption insurance.
7. Make the right recruitment decisions – from advising you on recruitment decisions (e.g. whether a part-time employee or outsourcing makes more financial sense) to helping you with payroll and auto-enrolment, accountants can help vastly when it comes to hiring employees.
8. Plan for the future – great accountants become a trusted member of your team. They help you set your business goals and they provide you with ongoing advice and support throughout the years to help you achieve them.
Always seek an accountant’s advice when starting a new business
Failing to properly plan for the financial needs of a new business will ultimately lead to challenges. Challenges that could lead to the complete failure of the business if left unaddressed.
By getting an accountant involved as early as possible in the process, they can identify and alleviate any risks for you and help you budget and plan out your finances. With an accountant by your side, you’re far more likely to be a part of the 40% of new businesses that survive the 3-year mark!