Half of start-up businesses fail in the first year and 95% fail within the first five years.

Yet despite the economic downturn, the SME market continues to grow. While no one knows if a business will succeed or fail – you can take steps in order to help your business get off to the absolute best start.

While most entrepreneurs focus on getting their business up and running, many often forget the importance of accountancy and how it sits at the heart of every business proposition. Every entrepreneur wants their business to grow and be profitable, but the problem is that a lot of entrepreneurs forget that in order to be profitable you have to understand your finances and the process of your financial management from day one.

While it’s easy to shy away from the basics of accountancy, those that do this do themselves no favours further down the line. The financial management of your business affects everyone from your supplier through to your customers, investors, employees, shareholders and HMRC.

In this economic climate businesses that don’t understand the fundamentals of basic accountancy and bookkeeping will sink quickly. As will those that see the professional guidance of an accountant as an unnecessary cost.

Every business regardless of size and turnover needs the professional advice, expertise and support of a professional accountant, especially when first starting out. When looking for accountancy support, use an accountant that is registered with a professional body and therefore up to date with their continuing professional development (CPD).

Tip one: Before you set the wheels in motion and part with both yours and your investor’s cash, seek professional support from a professional accountant

Why?

• An accountant has years of knowledge and insight and can be a solid advisor to you throughout your business journey
• An accountant can spot problems with your finances before it’s too late
• An accountant can offer you advice and act accordingly on important issues such as tax legislation, PAYE, NI benefits, liquidation etc
• An accountant will keep you up to date with changes to government legislation
• An accountant can find ways to maximise the potential of your company in order to ensure growth

Just as much as it’s important to have on hand a professional accountant, it is equally as important for you as the budding entrepreneur to have a good grasp of your financial management and the basic accountancy terminology.

This is part one of a three-part post. The second installment will be posted on 29 August.

Henry Cooper FMAAT was AAT's 32nd President.