It’s a rare small business that doesn’t go through some periods of financial adversity, whether it’s right at the start or as it begins to scale up. Andrew Walsh believes that entrepreneurs will be much better placed to deal with those difficult periods if they take the time to learn at least the basics of accounting.
In this case a little learning shouldn’t be a dangerous thing, because it will mean you’re exposed to far fewer of those nasty moments when your banker jabs a finger at your balance sheet and asks, “how are you going to fund this?”
You’ll still need to hire an accountant and a credit controller of course, unless you want to spend a lot of your precious time with your company’s books, but when you need to go to the bankers for a loan it’s a big help if you can speak their language.
It’s great if you can start up without any debt, but it’s important not to be underfunded. If you don’t have enough cash in a young business, you risk stunting its growth. If you do decide you need finance, check to see if any grants are available before you turn to the banks.
Banks are often reluctant to lend to small businesses, and there’s a fair chance that any loan they offer will be conditional on security against your assets. You need to look hard at the terms, because they can be extremely rigorous. Plan for the worst-case scenario, and whatever decision you make, be sure that you can deal with the repercussions.
But Andrew believes that determination and persistence are even more important than talent, and it’s when their business is struggling that entrepreneurs prove their mettle.
They need to roll their sleeves up and never lose sights of their goals.
I have a limited company who owes about £20k in corporation tax and have no company assets – I’m thinking of trying to get them to close my company down!