Many employees have probably at one stage or other dreamed of being their own boss, and professionals are no exception. But being a highly educated and qualified professional – such as a doctor, lawyer, accountant, or architect – doesn’t necessarily translate to having the right kind of skills to run a business.
Running a business involves way more than supplying your service, collecting payments and paying your expenses and taxes. There are many issues to consider. Here are some of the challenges that qualified professionals may face in being business owners, and how to overcome them.
Cash flow problems can be a huge source of stress for a business owner. They can spiral out of control if not managed well, especially if interest rates and penalties build up and increase the debt.
Having adequate working capital is essential for any business. A healthy cash flow is required for paying wages, suppliers, rent, utilities, contractors, taxes, superannuation, marketing services and other expenses, and for taking advantage of opportunities for business growth.
All too often, business owners can find themselves forgoing their own wages or borrowing money to get them through another week. While borrowing can provide a solution in the short-term, good strategies are needed to maintain a positive cash flow over time. Some of these may include negotiating new terms with suppliers, changing debtor payment terms to COD or offering discounts for earlier payments, securing an overdraft to enable greater availability of cash when required, or a combination of these.
Financial record keeping
Keeping financial records up-to-date is another area where small business owners sometimes fall down. Good book-keeping is essential for knowing where your business is at in terms of cash flow, profitability, and tax office compliance. It is also good for security in that it enables you to check if your business has suffered an act of theft or fraud.
Some of the tasks to tackle include prompt entry of all financial transactions into your recording system, payment of wages and accounts on time, GST recording, and bank reconciliations.
Operating in a modern business environment requires coming to grips with modern technology. Cloud accounting for instance can streamline book-keeping and save an SME considerable time each month. Digital marketing, including having an optimised website with quality content and using email newsletters and social media posts, is important in helping you to reach your customers. The use of the latest communications technology, such as services that allow you to fax online and receive a fax through email, can all contribute towards improving competitiveness.
Other issues to tackle
- Tax office compliance – including BAS returns, PAYG, superannuation, payroll tax, income tax returns.
Planning – such as setting budgets, sales forecasting, and measuring performance against targets.
Insurance – including property, public liability, professional indemnity, business interruption, and workers’ compensation.
Others – marketing and promotion, long-term strategies for growth, employee management and appraisals, equipment and premises leases, and security and safety.
Are you equipped to run a business?
Running a business is not for everyone, no matter how brilliant they are. If your desire is simply to offer your professional services and get paid in return, then you might be better off as an employee or contractor. But if your dream is to work for yourself, you can succeed by staying motivated to overcome the challenges you might face in running your SME. Share on Facebook Share on Twitter Share on Google+ Share on LinkedIn