There are so many special moments when you run your own business. From taking that initial leap and deciding to back yourself, to the little successes that spur you on along the way. There’s the satisfaction of seeing your business grow with new team members and increased revenue, whilst also growing as a person as you navigate the various obstacles that inevitably come your way.
It’s certainly not easy though, and the last thing you’ll want to consider would be the business eventually failing.
I read a great post on LinkedIn recently, and it’s a message that’s worth sharing as it highlights the importance of looking after your finances, which ultimately looks after your business.
The company was called Rocket Powered. They had a great team, provided fantastic service to their expanding client base, had a cool brand and even had toilet rolls stamped with the company logo! What they didn’t have however, was a finance function that was being properly invested in.
They would use 18 month old financial data and gut feelings to make important business decisions, didn’t have a budget or forecast, and never had monthly management accounts.
They were investing less than 1% of their revenue into the businesses finance function so making informed decisions was tricky. Things got even worse when HMRC carried out a VAT inspection and they hadn’t been using their accounting software correctly.
Rocket Powered eventually failed, and they learnt these lessons the hard way. The founder now runs the successful accountancy proposals company, GoProposal, and they invest around 4% of revenue into the company’s finance function to make sure everything is being done properly. Of course, every failure is an opportunity to learn, but by sharing these experiences hopefully everyone can learn without needing to fail first!