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Start-ups urged to manage resources more carefully

The Institute of Chartered Accountants in England and Wales (ICAEW) has called on start-ups to be more frugal with their cash flow in their infancy and avoid ‘burning through resources too quickly’.

Entrepreneurs were asked about the perceptions between starting out in business and the actual reality, including what they would have done differently had they turned the clock back.

A third of business owners admitted that failure to agree a common vision for their business was a major flaw in the infancy of their operations. This was followed by failure to manage cash flow (20 per cent) and not seeking business advice sooner (15 per cent).

Three-quarters of those surveyed felt running their business was more challenging than they first anticipated, and not getting enough customers (28 per cent) and failure to make enough money (28 per cent) caused the most concerns.

Finance professionals, who work with start-ups, cited that using up existing resources too quickly (25 per cent) was the biggest fear among entrepreneurs.

Small business advisors rank cash flow management as a start-up’s biggest hurdle to overcome (23 per cent) but entrepreneurs surprisingly place this lower (16 per cent) than even sales and marketing techniques.

Stephen Ibbotson, director of business, ICAEW, said: “The desire to create a successful start-up in the UK is still very high and continues to grow.

“Entrepreneurs’ perceptions of what they think will be the challenges they face as a start-up and the reality they actually encounter are very different.

“These false assumptions can often lead to businesses not fulfilling their maximum potential and at worse, failing completely.”

More than two-thirds (68 per cent) of entrepreneurs believe obtaining the services of an experienced business advisor is extremely useful for any start-up.

When quizzed as to whether any of the challenges related to setting up their business surprised them, 40 per cent of entrepreneurs said no. But again this is at odds with the 90 per cent of finance professionals who feel a gap exists between the type of challenges start-ups assume they will face and the reality.

At TaxAssist Accountants we assist entrepreneurs every day with the preparation of their cash flow projections, budgets and business projections when required.

A good business idea needs a solid business plan, so why not ensure your idea becomes a reality and book a free initial consultation with your local TaxAssist Accountant today.

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