A recent study revealed that mums who quit their chosen profession to have a baby face a pay cut of up to £20,000 a year when they return to work.
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The need for flexibility when it comes to making a living is imperative to any new parent who wants to spend time with their child and still earn money. And many are turning to business ventures of their own, but how much do mums and dads know about the finance of setting up a business?
All businesses are different, whether it is size, sector, location, or speciality – there is always an element that sets one apart from the other and no two businesses are alike.
But there is one thing that is common to every business in every country and sector around the world – finance. It determines the income coming in and the expenditure going out, inputs and outputs, the size of an organisation, and more importantly if it will be financially successful and sustainable.
Before making the decision to branch out and step into the unknown, it’s important to understand the role the finance functions play in the world of business. It forms the basis of effective business management and will ultimately affect the bottom line.
Here, Tom Kelman, Director of Finance and Corporate Resources at AAT (Association of Accounting Technicians), shares his top 5 finance tips for business start-ups:
Be realistic: Many businesses that succeed don’t make a profit for the first couple of years; if you are hoping to get “rich” quick then you may need to think again.
Expand your knowledge: Consider a short course on the fundamentals of finance. Courses such as AAT Essentials provide practical, straight talking training on how to manage business finance more effectively. Training will be one of the best investments you’ll make and you’ll find yourself using your new skills and knowledge on a daily basis.
Be aware: Tax legislation changes at a never-ending pace and it’s important for new businesses to keep up. For example, the introduction of a new reporting system for PAYE in April 2013 will affect the way employers submit tax information. These are the types of issues you’ll need to be aware of. Websites such as www.smeweb.com provide a great hub of information for business owners.
Have a plan: Implement an accounting system and make sure it works. The law requires all businesses to have proper accounting records. By doing this you’ll manage your business better and help stimulate business growth. Start-ups that don’t do this put themselves at a serious disadvantage.
Talk to an expert: Train up and read as much as you can but at the end of the day, don’t be afraid to ask for help from a professional accountant.