For many people, breaking away from the humdrum world of the corporate office into a small start-up company is a dream of freedom. Moreover, the opportunity to work on a personal tech project and make it profitable is also professionally tempting. There are notable success stories of tech start-ups that have hit the big time and earned their founder’s big money. However, that is far from the whole story.
The tech start-up: make money quickly?
Although a tech start-up is popularly seen as a quick way to get rich, that is not often the case. Unless a new product or service is designed, packaged, marketed, and ready to go live, there is lots of work to do before any income starts rolling in. Even if you have few expenses or equipment or materials purchases, there will most likely be concept development time to cover. Furthermore, unless you are a sole proprietor, this will include other people and therefore potentially salaries. Costs add up quickly.
Complications of the tech start-up
A first hurdle for the tech entrepreneur is finding funding to cover the gap between opening a business on paper and commencing trade that generates income. You may have savings to cover this period, but otherwise, seeking finance is likely to be a large part of your work, taking time from the tech side of your new business. Moreover, the initial paperwork of establishing a business format, accounts, and premises cannot be overlooked.
Understanding business finance
Getting to grips with finance is the first order of business for a tech start-up. This background research is best done, if possible, before taking the plunge into entrepreneurship. If you understand the framework of business licences, taxation, employment contracts, and accounting before your first day as an entrepreneur, you are already ahead of the many who leap into start-ups without understanding the financial risks.
Getting the right accountant
An excellent starting point is identifying the right financial expertise for your support network. For example, Pocket Accounts stands out. A tech start-up needs support from people who understand how businesses work at a nuts and bolts level. Accounting and taxation, two of the biggest worries of business owners, are specialities at Pocket Accounts, and from day one a company like this can help you along the right financial path.
Simple tips for a business plan
Especially if you need financing, starting up involves a business plan. In writing this, you get to analyse your own situation. Being honest with yourself at this stage saves a lot of worry later on.
The basics can seem simple:
Carefully identify costs, overheads, and taxes
Evaluate likely income
Quantify the gap between goals and reality
Explore ways to bridge that gap
The trick, however, is in the detail. This is where you may need to find creative business solutions as well as inventive tech solutions.
In summary: start up, start right
Jumping in and kicking off a tech start-up can be exciting, and many entrepreneurs find success. Many more find themselves in difficulty because they did not examine the financial implications at the outset. By doing your homework and finding a knowledgeable financial partner before making the first steps, you can start out ahead of the game.