F is for

Financials

I am guessing that you are trying to set up a small business to make money? Granted there are plenty of other reasons but most people want to make money. Well to make money you need to watch what you spend.  

If you have a products based idea then make sure you are working out the right price to sell them for in order to make money and cover the cost of your time. I work out my time as £8 per hour and so if something just takes 15 minutes to make, then I make sure I include £2 in my costs.  A lot of people say that if you are making products such as gift baskets then you need to think along these lines 1/3 of the price is your products, 1/3 is your time costs and 1/3 is profit.  This is just a guideline and on many of my products I try to make 40-50% profit.

If you have a service based business such as a painter/decorator, then you need to decide how much you want to get paid each hour you work.  You must then add the cost of any products you use on top of this.

There is one thing that I stress to all the people who tell me that they are starting a business; GET A GOOD ACCOUNTANT. I have a lovely non stereo typical accountant who when I first started out took two hours out of her time to take me through everything over the phone.  I have studied business, and even I felt quite scared by the process of working out all the accounting stuff. This is one area that I really recommend you spend money on.  Get a good knowledgeable accountant who will be happy to take you through everything step by step. 

If you are wondering where to find one, then just ask the people around you. I am sure you know someone who is in business, who uses their services. Mine was recommended to me by Mrs Smith, and I have not recommended A Star onto others.  

If you are reading any of my posts and you come up with questions, please feel free to leave them in the comments box.  Meet you back here for G tomorrow!