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The best way for a new business or startup to build a strong foundation is to implement a financial strategy right from the beginning. If you’re considering starting a company, remember this: when building a business, it is critical to consider and develop a thoughtful financial strategy by asking the right accounting questions. Taking the time to build your business from the ground up with a healthy financial foundation can help you increase profit, reduce overhead, and minimize tax liability.
Here are just a few questions you’ll want to ask yourself before getting started.
Question 1: Am I prioritizing revenue over financial and operating cost considerations?
Are you factoring labor and operating costs into your decision making? A lot of new business owners make the mistake of chasing profits while neglecting to consider competitor pricing and expenses such as labor, materials, and overhead. Accurately breaking down all job-related expense allows you to make accurate estimates in order to minimize your risk and maximize your profit.
Question 2: Do I have a clear risk management strategy in place?
Every business has a certain level of risk, which can quickly overtake any successes if not considered and planned for appropriately. Rather than honing in on competitive bids and chasing profits, make sure to step back and evaluate any risks.
Pursue jobs that provide the best profit, rather than any and all bids. Make sure to rate projects according to an accurate system that includes the type of work, minimum profitability, overall time frame, a buffer for extensions or delays, and your worker’s skill levels.
Question 3: Am I choosing the right business entity?
Consider your business entity structure. Every structure has risks, costs, and benefits. You’ll need to determine what’s right for you and your business on a case-by-case basis in many cases, and in order to maintain legal compliance and fiscal responsibility standards as well as meeting the owners’ personal and business goals. Take the time to do your research to discover how each entity type is taxed on both a state and federal level.
Question 4: Did you factor evolving technologies and tools into your business strategy?
Finally, consider the impact of ongoing digital transformation on your industry. Technology and software options are constantly changing and offering new opportunities and advancements for operational efficiency. Are there any technologies or tools you’ll want to build into your long-term strategy that can provide cost reduction, improved efficiency and greater profitability in the long run?
If you are looking for business startup expertise, contact RBTK at email@example.com or 858.430.0300.