As a financial services executive and consultant based in Toronto, I work every day with enterprises of all sizes, from major corporations to emerging businesses. And while I love what I do with established companies, I also greatly enjoy the opportunity to interact with and help entrepreneurs. In some cases, my clients are startups. In others, they’re business leaders who acquire existing companies. In both cases, the common thread is that they’re all beginning a new journey. They’re starting at point A and want to get to point B and beyond.
From what I’ve observed — and from my own experience helping business leaders in a wide variety of entrepreneurial situations over many years — I’m sharing my advice for all entrepreneurs. If you want to position your new or recently acquired company for the most advantageous chance for success, do these three things.
Be financially savvy.
As a new business owner, you’re naturally going to be ambitious and aggressive. After all, you have big dreams and you’re willing to do whatever it takes to make those dreams come true. That said, when starting up a business, the most important thing to remember is to be realistic. Yes, you have high expectations for your company, but my best advice is to start small and gradually work toward your goals. While every type of business has its own financial requirements, from office space and amenities to legal fees, payroll and others, an entrepreneur really needs to have about six months worth of fixed costs on hand in the beginning. You also want to take time to plan your costs while also being realistic about your expenses. They will likely increase as your business grows.
Generally speaking, it can take two to three years for a new business to begin showing a profit. Expect that. It’s probably going to happen. At the same time, good financial management is crucial to the success of any business. For that reason, it’s always good for you to know your numbers and check on them frequently. Once the business is open, you’ll be smart to manage its financial performance by creating a budgeting process and reviewing the business plan regularly for performance. Precise planning makes a difference in that it will enable you to improve profits, reduce costs and increase ROIs.
Become a confident decision maker.
As an entrepreneur, you’re going to be faced with more decisions than you probably expected to make. Some will be easy, while others will require serious thought and consideration, gathering information and seeking advice from those who can provide it. Ultimately, though, you need to make, approve or sign off on the decision, then live with it. Learn to explore all the angles, examine all the facts and consider all the results and implications. Once you make each decision, be confident that you did the right thing. This not only helps your company progress, but it also sends a quiet message to your employer that you’re an effective leader.
Be agile and flexible.
As we all know, everything doesn’t always go as planned or expected. When these situations occur, you’ll find yourself having to “pivot” (one of today’s most often used buzzwords). This means changing course when you least expect it. A strong entrepreneurial quality is the ability to adapt to unexpected situations, stay calm, find a solution quickly, and move on. It’s not an optimal way to work, but it is a necessary one.
Document all finances.
If you’ve owned a business previously, then you know what to expect. If not, know that business taxes are completely different from personal taxes in many ways, and that good habits go a long way toward preparing for a stress-free tax season. Make sure to keep a paper trail of all expenses so that you can easily provide them to your tax accountant. Set up a calendar reminder to pay your tax installments on time throughout the year. Keep detailed records of your capital expenditures and always keep track of your business deductions. And most important, get professional accounting advice early if you don’t have a bookkeeper on staff.