There are many things that make a new business venture successful, and financial planning is certainly one of them.
Studies show that having an accountant on board is something most high-achieving start-ups have in common. Successful start-ups were 54% more likely to have hired an accountant right from the start, according to a 2015 Sage report. On the other hand, a survey of 200 unsuccessful start-ups found that running out of cash was the second most common reason why they failed.
Accountants have a lot to offer entrepreneurs. Their work goes beyond filing tax returns: they have the potential to be an integral part of the team, lending invaluable financial expertise and perspective that will guide entrepreneurs towards better business decisions. In an uncertain economy where 10% of businesses fail within the first year and less than half make it to their fifth birthday, there’s no point waiting until you ‘make it’ to invest in your financial future.
Here’s why hiring an accountant is right for your business:
1. You’re going to be frazzled, forgetful, and have a whole lot of fish to fry
Even the most organised and in-control person in the world will be overrun by the tasks, considerations, proposals, complaints, meetings and general busywork that comes with launching a small business. You’ll likely be a CEO, marketer, salesperson, secretary and product designer all in one – don’t be an accountant too. Let an expert take at least one load off your mind.
2. When it’s time to grow, you’ll know
An accountant will keep you grounded and realistic when it comes to expanding your business. While you might be brimming with business acumen and have a solid head for figures, it’s good practice to minimise risk whenever you can. Going with your gut – or your potentially over-optimistic financial assessments – can spell trouble. When it comes to expanding your company, taking on new team members, adding more stock to your inventory or accepting a big new client or commission, having an accountant to watch your back might just save your business.
3. Investors trust accountants
If you’ve ever watched Dragon’s Den, you’ll know that no amount of passion, creativity or charisma can take the place of a solid financial plan when it comes to winning over an investor. Your pitch is only as good as your projections: get someone on board now to ensure that your figures are precise, reliable and at your fingertips when it really matters.
As well as making sure you have the data and analysis you need to make a successful pitch, an accountant lends you credibility and respectability – something you’ll need if this is your first foray into entrepreneurship.
4. They’ll keep you on the right side of the law
Whatever field you’re in, you’re likely going to have to untangle a worrisome web of rules, regulations, and compliance requirements. Taking on an accountant with experience in your industry will ensure that you’re not overlooking anything important. Running afoul of the law can be an expensive mistake.
5. Their insight will help you learn from the best
Your accountant will most likely work and have worked with dozens of businesses similar to your own. They’ll have unrivalled insight into the practices and processes that work in your industry, as well as the pitfalls to avoid. Don’t reinvent the wheel if you don’t have to – learn from the successes and mistakes of others and you’ll save yourself time and money.
Hiring an accountant might seem like a big expense, but the reality is you’ll pay for accounting one way or another, whether it’s by the man-hours you devote to working out your tax returns, by the funds you’ve lost through letting an investment slip, or at worst, by losing your company due to mismanaging your accounts. Make an investment into your financial health now and you’ll save yourself money in the long run – along with a few sleepless nights.
If you’re planning to manage your money alone or simply want a firm foundation in accounting, ICS Learn’s award-winning AAT courses are the answer. They allow you to learn at your own pace, so you can easily fit your study around your business.
Lauren Jack is a content writer for ICS Learn.