Most start-up business founders do not have a finance or accounting background. Most of the time it may not make sense for a start-up business to hire a full-time finance manager. This sometimes means that financial management for start-ups is complex and daunting. Managing your income and expenses is important in order to stay legally compliant, secure early-stage funding and set your business up to scale. We have outlined five key financial tips for business owners to ensure their accounts are set up in a way that will support business growth.  

Five Tips to Improve Financial Management for Start-Ups

Set Manageable Income Objectives 

Everyone who starts a business has ambitious goals for their start-up’s future. However, it is important to set realistic revenue targets. It is advised to break down your financial objectives into manageable and verifiable milestones. Working towards intermediary income objectives helps you stay on target and highlights any necessary modifications. Conducting a start-up financial model will help you map out the targets that make sense for your business as it grows.  

Prioritize Expenses  

Any business growing in size, will have many different expenses. To avoid cashflow issues and keep on top of your budget, differentiate between essential expenses and “nice to have” expenses. Good expense categorisation will help you to effectively deploy limited cash flow in the areas that need it most. It is advised that you regularly compare your actual spend and your budget. This will show where you are overspending and where you need to adjust avoid cash flow problems. Read more about optimising your expense management in our recent blog.  Once you can see where you are frequently exceeding budget, you can act fast to reduce spend.  

Additionally, keeping a separate business and personal account is advised. This allows you to separate personal expenses and business expenses. This gives you to have a clear picture of your business’ financial health. There are many digital banks that offer alternative business accounts, read more.  

Dedicate Time to Ensure Information is Accurate

It is important to dedicate time to maintaining accurate and up-to-date records. Accounting records that aren’t accurate makes it more difficult to accurately manage your finances. Consider working with a professional bookkeeper or accountant. This helps you ensure that your financial records are correct and allows you to focus on other business priorities. Additionally, this helps you avoid costly accounting mistakes.    

Choose A Proactive Approach to Managing Finances

Investing time from the beginning will help you avoid future pitfalls. Spend time to proactively set up your accounting system in the beginning of your business journey. This will help avoid stress when your business becomes more demanding. Here are some ways to help you proactively set your business finances up for success and avoid common pitfalls. 

• Pay attention to your business’s current and future data needs and ensure you have adequate categories set up in your business account.  
• If you have separate business bank accounts and credit cards, take time to link these with your accounting software. This ensures all transactions automatically flow into your books.  
• Keep records of non-cash expenses such as automobile mileage and business use of personal mobile phones.  
• Work with a start-up accounting professional from the beginning. This establishes a solid foundation for your business finances and help prevent re-work down the line.  

Get in Touch 

If you are running a start-up business, you could benefit from working with a team of professional accountants. Gallagher Keane maintain their entire practise using cloud accounting software.  Using cloud accounting software allows your business to streamline their expense tracking by building expense reports, tracking invoices, updating books and issuing reimbursements.  If you are interested in finding out more about Gallagher Keane’s online accounting services, why not book a no-obligation call with us.