It may sound obvious but knowing your numbers is essential for business growth.
Understanding how much your product costs to make and deliver, how much you expect to take out for yourself and what your running costs will be i.e employing staff, marketing costs, office space, equipment, bills, maintenance etc are all part of essential business planning.
During my time on Dragons’ Den I was surprised by how many entrepreneurs came to pitch ideas that certainly had legs – ideas that could potentially make a splash in the market – but when it came down to answering basic financial logistics such as how much are you going to retail the product? What is your estimated profit? Will you need to employ staff? Lack of research was obvious and what we’d get is a bunch of random figures conjured up on the spot. Why would a dragon invest in a business that didn’t have a clear sales forecast? After all, we need to be fairly confident of a return and if you can’t answer simple financial questions, we’re not interested.
I completely understand how tedious finance management can be and how tempting it is to leave everything to last minute but eventually you’ll have to tackle the task and delaying it will only make it more difficult and leave you feeling even more perplexed.
When I was starting my first business, I had all of my invoices, statements and receipts in unlabelled and unorganised shoe boxes! I was not (and never will be) an accountant – that’s why today, I surround myself with the best finance people in the business.
The emergence of new technologies has impacted business immensely, especially in terms of every day admin management. This increasing amount of helpful tools will help our next generation of entrepreneurs start and grow their businesses successfully. Why do you need shoeboxes full of receipts like I had when you can download an app which organises everything for you in click of a button?
A recent study commissioned by online accounting company Xero, who were recently ranked #1 by Forbes in its list of the World’s 100 Most Innovative Growth Companies, has found that 95 per cent of entrepreneurs think software and technology are key to running a happy, efficient business. Despite this, almost half admit they don’t have the right tools or technologies to do so.
There’s no denying the importance of tech in business; the figures speak for themselves, as do the thousands of tech startups evolving every day.
According to the research from Xero, slacking on financials can cost the average UK business £35,000 in their first year, equating to a potential £175 billion loss in revenue. Fear of failure is always present in our entrepreneurial community and there will be a few hurdles to cross during your start-up journey but with so much support available out there, finance management doesn’t need to be one of them. Entrepreneurs must make good use of the new applications and technology driven tools available to them because staying on top of your numbers allows you to make informed decisions about the future growth of your business.
As a dedicated entrepreneur, I am delighted to see that technology is encouraging more and more would-be entrepreneurs to take the plunge and start-up because they know technology is on hand to take the headache out of running a business. Now they are able focus on what differentiates them from the competition, build their brand and invest in people.