First up we have Wyatt Cavalier, the Managing Director and Co-Founder of Honest Coffees, a startup that sells single origin, specialty grade and Fairtrade coffee online.
“I think every new business experiences loads of financial difficulties no matter where they take their funding. We’re self-funded, which means we’ve got to pay lots of attention to where every penny goes, and that means making some hard decisions especially when it comes to staff. You overcome them through honest and very critical evaluation of your forecasts and costs (take your projected revenue and divide it by three; take your projected costs and multiply them by three; take all your timelines and multiply them by two) and by being as logical and unemotional as you can about how you spend money. In terms of advice, I’d tell aspiring founders to think very hard about how and where they want to get funding from. Every route, from loans, self-funding to venture capital, has its pros and cons, and it’s important to think hard about what you want to get out of the company before you decide what to do.”
Next we have insights from Helen Moulinos. Helen started the creative business Space 1a Design in London with her husband 3 years ago, selling British-made sustainable home and interior accessories.
“We’ve had a few good lessons learned over the years. The biggest learning we had was not to keep more stock than you can realistically can sell and turnover within a short timeframes. In the early days we had too much of our funds tied into stock but didn’t have pragmatic sales and marketing strategies. These days we have the opposite challenge and turnover stock faster than we can replenish for some of our lines – we have had to adjust our ordering patterns and cash flow to accommodate growth and market demand. We are now more thoughtful and understand the correlation between our stock and finances and adjust dynamically with ebb and flow of the market. My advice to a new startup is to study the data – the answers are there”
Finally we have experiences and advice from Lark Ismail, founder of Lark’s Virtual Solutions. Lark’s Virtual Solutions is a virtual assistant and Internet marketing business, dedicated to finding online marketing solutions to meet their client’s needs.
“I think it’s important with all financial decisions to have the money first. I remember reading advice for financing startups when I started and I noticed two main schools of thought. Most taught you how to borrow and get investors to get established. Many businesses aren’t profitable during the first few years and it does takes time to build up. I make sure to plan for and save up for all expenses in advance so that the money is there when I need it. We may take growth slower but we’re never in debt or losing money on interest. I’m currently working on launching a new service which will rack up my marketing expenses. Rather than jump in with the launch now, I’ve been spending the last few months planning out every expense and saving up for it. I’ve learned that every business decision, especially financial decisions, require a lot of planning. There may be several services that could benefit your business, but take the time to figure out what specific results you’ll see and what is the biggest bang for the buck. You don’t need to sign up for everything that could bring you some benefit. There are lots of great tools for budgeting and monitoring your finances. I’ve found Qapital to be really helpful for saving goals because it’s simple and user friendly. It’s extremely visual and easily accessible on my phone. They have some great automated savings features but I primarily use it for a visual of how much of my savings is allocated to each business goal. In the past when I transfer money into my business savings account, it just appears as a lump sum of money in my account. I’m saving up for different expenses at once and so this doesn’t help me know how close I am to reaching my goals without frequent calculations.”
We hope that these insights have inspired you to follow your dreams of becoming a successful UK entrepreneur!
Author Bio: Stephen Verber specialises in corporate finance and heads up the forensic accounting department at Alexander & Co. Stephen is also a member of The Academy of Experts.