Most people come up with an idea for a business or product at some stage in their life. A small selection of those people have the courage to take their idea and start their own business. Out of this small select of people, only a fraction will be able to turn their small business into a successful one.

Half of the problem is that setting up a business is not easy and many new business owners could do with a little help and advice to help them through their first few months of trading, and to help build a long-term successful company.

Of course there are many factors that make up a successful company, and everyone makes mistakes, however here at MoneyTowers.com, we have come up with our Top Five Tips for new business owners to help make your business a success.

1. Don’t get carried away by one year’s success
Congratulations if you’ve made a hefty profit in your first year. However, do not rest on your laurels – one year’s profitability is not necessarily an indicator of the years to come. Don’t spend all your first year’s profit on new equipment or staff perks – budget sensibly and make sure you save some of that cash in case you hit and problems in the near future

2. Bad Debts
Bad debts and poor cash flow are one of the biggest hindrances to new businesses and are often the reason that new companies fail. Learning to avoid bad debts takes experience and some skill. Try to be prepared – research your customers in advance (perhaps do a credit check first); ensure you send your invoices out on time, with the terms and conditions of payment clearly printed on the invoice – consider discounts for quick payment, or charge interest on late payments; It’s not fun, but chase for payments as soon as they are overdue. If you don’t have the manpower or you need a quick injection of cash, consider using a factoring company to help.

It is important when chasing bad debts that you keep your business head screwed on – do not accept poor, flimsy excuses or sob stories. If someone says they will pay you on a particular day and they don’t, chase them up. If your customer is having cash flow problems, try and negotiate a compromise – perhaps through a payment plan (sometimes a little of the money is better than none of the money). Do not be afraid to start legal proceedings if the debt drags on unresolved for a long period of time.

3. Don’t stop moving
Standing still is not an option in today’s world – you need to keep moving. Make sure you keep up to date with all the latest news in your industry and identify any areas that you could capitalise on, or areas of your business that need improving. Business plans are an excellent idea – outline a strategic plan for both the short and long-term future of your business.

4. Don’t be afraid to sack poor staff
If you feel that your fellow directors, or some of your staff, are underperforming, do not be afraid to get rid of them. Poor management is one of the more common reasons for businesses to fail therefore it is important to get the right blend of staff. As soon as you spot an issue, it must be addressed. If positive action is not taken quickly, it may drag the business down.

5. Seek advice
It is sometimes incredibly tempting to go it alone – to remortgage up to the hilt and use personal credit cards to find the business. If you find your business is failing, do not be afraid to ask for professional help. Once your company starts making a loss, it can be incredibly difficult to turn around. Try speaking to local, experienced businesses, or your bank or building society as they may be able to help. Your business may end up failing, but don’t be too disheartened – businesses can sometimes be restarted or assets purchased from the Administrator’s, so it is not the end of the world. Try to keep some money in your pocket until you have taken professional advice over the state of your company.

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