Your Financial Toolkit: The Non- Negotiables Before You Launch Your Dream Business
Hi Mobsters, it’s Sophie here, mum, Fractional CFO and founder of WrightCFO. This month I am talking about your financial toolkit. The non-negotiables beofre you launch your business. As always feel free to pop any questions or feedback in the comments box below, no question is a silly one!
Juggling motherhood and building a business is an incredible feat of passion, dedication, and often, copious amounts of coffee! As a mum on the entrepreneurial journey, you’re likely spinning many plates – from perfecting your product or service to marketing and networking, all whilst managing family life. Amidst this exhilarating whirlwind, it’s easy for some of the less glamorous (but utterly essential) aspects of business to take a backseat. Top of that list? Your finances.
But here’s the truth: laying a robust financial foundation from the absolute get-go isn’t just a ‘nice-to-have’; it’s the bedrock of your business’s long-term success, sustainability, and ultimately, your peace of mind. Think of it as packing the ultimate toolkit before you even open your virtual or physical doors – the essentials that will help you navigate the exciting road ahead with confidence.
Too often, we see passionate founders, especially those balancing business with family, overlook crucial financial elements in the initial rush. So, what are these non-negotiables? Let's break them down.
1. Crystal Clear Business Plan & Financial Projections: Your Business North Star
Before you do anything else, get clear on your plan. This isn’t just a dusty document for potential investors; it’s your roadmap. For a busy mum, it’s your sanity-saver, helping you make informed decisions when time is precious. What problem are you solving? Who are your customers? How will you reach them? And critically, what are your financial goals?
Your financial projections are a key part of this. Don’t panic – they don’t need to be a work of complex art initially. Start with realistic forecasts for your sales, costs (both fixed, like website hosting, and variable, like materials), and profits. This isn’t about predicting the future with a crystal ball, but about understanding your numbers. How many sales do you need to make to cover your costs? What’s your pricing strategy? Having even basic projections helps you set realistic targets, measure progress, and pivot if things aren't going to plan. It's about knowing where you're heading and having a guide to get there, even if the route takes a few detours.
2. The Right Accounting Software: Your Time-Saving Superpower
If there’s one thing mobsters need more of, it’s time! Choosing the right accounting software from day one will genuinely save you countless hours and headaches down the line. Forget shoeboxes full of receipts or complicated spreadsheets that make your head spin. Systems like Xero are designed to be intuitive and can automate so much of the financial admin.
At WrightCFO, we’re experts in implementing and training businesses on Xero, and we’ve seen firsthand the transformation it brings. Imagine having a clear overview of your income and expenses at your fingertips, sending professional invoices with a click, and connecting directly to your business bank account. Digital record-keeping isn't just 'best practice’, it's essential for efficiency and for making things like your annual tax return significantly less stressful. This frees up your precious brainpower and time to focus on what you do best – building your brilliant business.
3. Solid Basic Financial Controls: Your Safety Net
Financial controls are simply about having good habits and processes in place from the start. This is your financial safety net, preventing small leaks from turning into big problems. Key things to implement immediately include:
A separate business bank account: This is non-negotiable. Mixing business and personal finances is a recipe for confusion and potential tax headaches. Keep it clean from day one.
A system for managing expenses: Whether it’s using an app that syncs with your accounting software or a dedicated process for scanning and filing receipts, track every penny.
Clear invoicing procedures: Invoice promptly and professionally. Make sure your payment terms are clear and follow up on overdue payments diligently.
Regularly review your numbers: Don’t wait until year-end. A quick weekly or monthly check-in on your income, outgoings, and bank balance can help you spot trends and address issues early.
These controls aren't about restriction; they're about creating a stable platform for growth.
4. A Firm Grip on Your Cash Burn: Know Your Runway
Cash flow is the lifeblood of any business, especially a new one. You need to understand your ‘cash burn’ – that’s the rate at which your company is spending its capital before it starts generating a profit. Knowing this helps you determine your ‘runway’ – how long you can operate before you run out of money if your income doesn’t meet expectations.
This might sound a bit stark, but it’s incredibly empowering. When you know your cash burn and runway, you can make informed decisions. Do you need to cut costs? Can you afford that new piece of equipment or marketing campaign? Is it time to look at funding options? For a mum balancing the family budget alongside a business budget, this clarity is even more crucial. It allows for proactive planning rather than reactive panic, ensuring you have the resources to keep your dream alive and thriving.
5. Understanding Your Funding Options: Fuelling Your Growth
How are you planning to fund your business? Are you bootstrapping (using your own savings)? Relying on early sales? Or will you need external funding? There’s no right or wrong answer, but it’s vital to understand the financial implications of each path before you commit.
Bootstrapping: Gives you full control but can mean slower growth.
Loans (e.g., Start Up Loans): Provide capital but mean taking on debt that needs to be repaid with interest.
Grants: Free money! But often competitive and with specific criteria.
Equity Investment: Selling shares in your business can provide significant capital and expertise, but means giving up some ownership and control.
Research the options relevant to your business stage and type. Understand the terms, the commitments, and what each option means for your financial future and your vision for the company.
You Don’t Have to Do It All Alone
Reading through this, you might be thinking it sounds like a lot, especially when you’re already knee-deep in product development, marketing, and, well, life! Navigating these early financial waters can indeed feel daunting. The good news? You don’t have to be a financial expert overnight, and you certainly don’t have to do it all by yourself.
At WrightCFO, we understand the unique challenges faced by founders/ Our WrightCFO Start-Up Bundle is specifically designed to provide new businesses like yours with essential fractional CFO expertise right from the beginning. We help you establish best practices from day one, ensuring you build that solid financial bedrock without the immediate expense of hiring a full-time senior finance professional.
Sophie Wright, ACMA, CGMA
