Britain is home to a wealth of innovative startups. In order to find out how these individuals have navigated financial matters in order to go from initial concept to fully fledged business, we have spoken to successful startups across the UK to gather advice for entrepreneurs looking to start their own new venture.
Below we have expertise from Steve Folwell, Managing Director of Lovespace. Lovespace provides a new take on storage solutions.
Get into good habits early on. Prepare a budget and a set of KPIs that are relevant to the stage your business is at. Focus on the things that matter the most to your success but that are the least secure assumptions. Our initial focus was much more on volume and cost per acquisition than it was on other costs or even revenues. Make sure you are monitoring your performance on at least a weekly basis. Unless you’re Nostradamus your predictions will be way out, but you’ll get into the habit of challenging your beliefs and assumptions and soon you’ll find that some things become much more forecastable than you had thought. You can then focus on the areas that really make a difference.
Next up we have advice from Luke Lang, Co-Founder of Crowdcube. Crowdcube is the world's leading investment crowdfunding platform.
As with many start-ups, Crowdcube was self-funded and backed by family and friends in the early days. When we needed further capital to fund Crowdcube’s growth, we gave our investor community the opportunity to back the business, raising finance in three separate rounds on the platform. Following a VC investment from Balderton Capital, we went on to raise £1.2 million in just 16 minutes in our last round on Crowdcube, breaking the world record for the fastest equity crowdfunding raise. There are a host of financing options available for businesses looking to raise seed or growth capital; from traditional routes such as banks, VCs and angels to alternative finance options such as crowdfunding and peer-to-peer lending. Crowdfunding is quickly becoming a mainstream funding option for businesses and in the last four years alone, over £70 million has been invested through Crowdcube, funding more than 210 businesses. For any business seeking investment, my advice would be to always be mindful that no investors wants to take on more risk than they have to. So, when pitching for investment the more tangible developments a business can demonstrate, such as sales or contract wins, the better.
Finally we have insights from Marie Dancer, Managing Partner at Richard Nelson LLP. Richard Nelson LLP is a national firm of solicitors offering expert legal advice throughout England and Wales.
Make sure you have the right legal structure in place for your organisation from the outset, as mistakes can be costly. Common options include; sole trader, partnership, limited company, limited liability partnership. Have the right contracts in place with customers and suppliers to ensure that obligations on both sides are clear. Take prompt advice on debt collection issues before problems escalate. Often having a simple process in place can help demonstrate that you’re on top of credit control issues and sends the right message that your bill needs to be paid. Identify which legal risks you can insure against and which are realistically necessary for the nature of your operation. If you’re going to employ staff, get a basic understanding of employment law issues upfront. Work with an expert who can guide you through the process. Consider issues such as data protection and which licences or procedures you need to have in place.
We hope that these insights have provided you with actionable financial advice that you can use when setting up and growing your new business.
Author Bio: Stephen Verber specialises in corporate finance and heads up the forensic accounting department at Alexander & Co. Stephen is also a member of The Academy of Experts.