Financial skills: the key to running a successful business

When it comes to operating a profitable and growing business, a sound understanding of finance is something that’s pretty much an essential qualification. “Businesses don’t appear out of thin air, and there’s often a heavy upfront cost involved – from loans to investment capital, there are a lot of financial questions to be answered. As the business grows, there are also ongoing costs. From calculating profit and loss to checking that the accounts are all in order, running a successful business really does require a substantial amount of financial know-how.” states witsIFA.

Start-up costs

The costs involved in setting up a business in the first place are pretty large. Whether you’re taking out rental contracts on new premises or you’re planning to hire some staff to get the business off the ground, there’s a lot associated with launching a firm. As a result, you’re likely to find yourself in a position where you need to access capital.

Different entrepreneurs approach this in different ways. Some people decide that the smart move for them is to offer to sell a part of their company to an investor in exchange for some much-needed ready cash. Others decide to take out a loan. Either way, you’ll need to make sure that you’re able to accurately assess all of the different options in a numerical and quantitative way – otherwise, you may find yourself unable to stay on top of it all.

Number crunching

Even once the start-up costs are covered and you’ve moved on to making a profit and actually running your business, there’s yet more financial business to think about. You’ll need to ensure, for example, that you stay on top of your profit and loss records: whether you’re applying for further investment or simply working out how much your dividends are likely to be worth, you’ll need to know the right sums to perform. This is the sort of task that long-time entrepreneur Brian Weal performs, and it’s something that needs to be done on a regular basis in order to keep on top of business developments.

Not only does this kind of behaviour make good business sense, but it’s also the law. As is the case in most developed economies, the UK requires companies that operate here to perform regular financial reporting tasks. Every year, limited companies might need to do everything from producing a statement of capital to paying any owed tax – and if you don’t have a strong grasp of financial principles, then you might not be able to either carry out or supervise this.

If you’re running a business, then there’s a lot to think about. From market research to the hiring and firing process, you’ll always be kept on your toes. However, it’s essential that you think about the financial aspect of the business. By being financially savvy, you’ll be able to ensure that your firm has everything from the satisfaction of its legal requirements to a profit-focused strategy in place. If you don’t have the financial skills you need to do this, then the time to start learning is now.

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