According to business start-up statistics in the UK, 20% of businesses fail in their first year and around 60% will go bust within their first three years. Approximately 660,000 new start-ups register in the UK every year according to The Telegraph, so what are the reasons for such a high failure rate?
While there are many factors, the top two reasons start-ups fail is because:
- there’s no market need for their services or products, or;
- they ran out of cash.
These two reasons, like many of the others, could have potentially been avoided if they had consulted professionals early on in the process of setting up their business. Professionals such as accountants.
Here are 9 ways that new or early-stage businesses benefit if they consult an accountant earlier rather than later.
9 ways an accountant can help new businesses
They can help you…
- Identify whether your new business idea is feasible – an accountant can help you analyse your market research data to see if there’s enough demand for your product or service to sustain your business. They can also assist with outlining your business goals too.
- Decide on a business structure – choosing your business structure can impact your tax, personal liabilities, and asset protection etc. An accountant can help you choose the right one, saving you time and money in the process.
- Create a business plan – a big chunk of your business plan will be your financial forecast which outlines your business costs, revenue projections and the funding you will need. Naturally, an accountant is the best professional to help you with this cost analysis.
- Secure funding – accountants can advise you on which lenders to approach as well as helping you create your loan pitch. They can help you create an accurate and reliable economic forecast for your business.
- Register your business – you will need to register your business with the government and the Internal Revenue Services (IRS). An accountant can assist with this as well as registering you for tax, applying for licenses and permits you may need, and setting up your business bank account.
- Choose the best business insurance – an accountant can advise you on the best insurance options to ensure you have complete protection at the most cost-effective price. They can help with property and vehicle insurance to professional liability and business interruption insurance.
- Make the right recruitment decisions – from advising you on recruitment decisions (e.g. whether a part-time employee or outsourcing makes more financial sense) to helping you with payroll and auto-enrolment, accountants can help significantly when hiring employees.
- Set up cloud accounting software – accountants can help you run your business more efficiently by looking at your processes and advising on the most appropriate cloud accounting software. Some even offer migration, set up, and training services when it comes to software too.
- Plan for the future – great accountants become a trusted member of your team. They help you set your business goals and they provide you with ongoing advice and support throughout the years to help you achieve them.
Always seek an accountant’s advice when starting a new business
Failing to properly plan for the financial needs of a new business will undoubtedly lead to challenges. Challenges that could lead to the complete failure of the business if left unaddressed.
By getting an accountant involved as early as possible in the process, they can identify and mitigate any risks for you and help you budget and forecast your finances. With an accountant by your side, you’re far more likely to be a part of the 40% of new businesses that survive the 3-year mark!