Noticing that the latest series of Dragon’s Den has just kicked off and being closely involved with our work as part of Growth Business’ Young Gun Awards, I got to thinking about what I would advise young entrepreneurs from an accountant’s perspective.
My three top tips would probably be:
1. Are you adequately funded?
Cash flow is important for all businesses, but particularly so for young and potentially fast growing ones. So I would take a good, hard look at the business’ funding – whether this is owners’ equity or bank loan or a combination of both – and review the projections for when the major expenditures will fall and when the money is likely to arrive.
2. Do you really have a unique advantage?
The long term success of a venture, and it’s value as a business (which will be a key factor in obtaining future funding for expansion), will depend on the extent to which there is a really unique advantage and whether the barriers to entry are high (this could be the large amount of capital required to set up). Otherwise, the company may enjoy only a brief period of growth and success before numerous alternatives flood the market.
3. What’s your track record and financial acumen?
The quality and type of people driving the venture is vitally important. In the absence of any hard information about their past track record in setting up and running a business, I would assess how switched on and joined up they are about the financial structure, prospects and risks of the venture.
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