Startups can be tricky, especially in the lower middle market where money can be tight. Nevertheless, small business drives economic prosperity in the United States, so it’s crucial that entrepreneurs continue to take risks. Just because it is a risk does not mean you should not do your research, so consider these three important aspects of small business when a startup seems on the horizon.
Starting a company is the first step in the business life cycle, and the one where the money coming in is not likely to match the money going out. Navigating this time requires forecasting on costs, including hiring employees, creating the product or service, financing the purchase of equipment, renting office space, and income over the first year or two. Diving into a new business without projecting these numbers can end in failure – it is one of the reasons that 30% of businesses fail in the first two years, and 50% fail within five years. Planning now means less of a mess later when things are finally off the ground.
Next to note is the way that a small business reports and files taxes is vastly different. If you have worked as a business owner in the past, you may know, but if this is your first go at the lower middle market, do your research. Most businesses require at least monthly internal reports on expenses in each budget area and revenue. Properly reporting revenue and paying quarterly taxes is a breeze if you accurately track the money coming in.
Lastly, a small business budget is not meant to track every penny, but rather provide a guide to help you make better financial decisions and offer insight into areas where you can make improvements. Making one is key to projecting growth and staying steady through tougher times. Understanding the business cycle of your enterprise and budget accordingly is crucial to a worthwhile budget. For example, many businesses are seasonal in nature, with fluctuating periods of both revenue and expenses. It’s important to separate fixed costs like rent or loan payments from variable costs, such as the cost of materials to build your product. If it seems like too much to manage, SA Capital Partners is available to assist in the startup process.
SA Capital Partners masters the lower middle market with a number of clients by using experience and knowledge that can only come from years in the industry. From capital raising to organizing budgets and planning materials for your startup, SA Capital Partners is here to walk you through the entire process.
About SA Capital Partners:
SA Capital Partners is an innovative financial services firm that specializes in mergers & acquisitions advisory and capital raising for lower middle market businesses. We aspire to give all the tools necessary to complete any transaction. SA Capital Partner’s financial services industry specialists provide comprehensive, integrated solutions to banking transactions. Our breadth of services and industry knowledge allow us to understand each client’s unique business needs. Our goal is to make all financial services available to every small business.