Failure is not an option.
Many entrepreneurs and business people alike praise the benefits of failure. The thing you need to remember is there are no winners in failure. Someone always loses. Be it you, your investors, business partners or your credit score. Failure is not an option, it’s a failure and last resort.
Your accountant is, for all intents and purposes, God.
Often startups and small companies tend to neglect accounting and the importance of accountants. Outsourcing to overseas companies, doing your own taxes, online services. No company has ever lasted more than a second without a good accountant. Never undervalue the importance of finance and accounting. Keeping this area of the company in order will be an essential part of your success in business.
The best possible option is to keep an accountant on payroll or having one work for you as a freelancer. It is especially important for the person or persons to have a splendid reputation. Ask references, do background checks. If in doubt, move on and search elsewhere.
You want to keep your accounting and finance people happy. Do not underpay or undervalue your finance staff. Otherwise, they might leave and return with a tax audit.
Do not piss off the government.
Avoid arguments, long tedious legal battles, public confrontations at all cost. Government is government and government always wins. That is if you do not have $billions and army of lawyers to fight back. This applies to all countries in all geographical locations.
Especially avoid confrontations with the tax office and employment boards. These agencies have the means, and quite often, will, to end you then and there.
This might sound “wrong”, “immoral” and all that. Welcome to the cold, dead world of running a business.
For every action there must be a paper trail.
Every expense made on behalf of the company. Every sale. Every dealing with banks and every deal with vendors. Contracts, receipts, agreements, invoices. Everything. Guard the paper trail as it would be your own firstborn. If not provided, ask. Papers plz.
Paper trail is good to prove something, and no proof means, well, no proof. Especially in context with the previous point about government, no proof means potential fines.
Do things for a very good reason.
Think, before you do. Check contracts before signing them, or better yet consult with a lawyer. Do not hire people you can not afford. Do not promise what you can not deliver.
Assume the worst-case scenario.
This is simple. Hope for the best, plan for the worst. Will you survive the next unpaid invoice? Or will you starve?
Keep your KPI’s in check.
Key performance indicators (KPI) are a set of quantifiable measures that a the company uses to gauge its performance over time.
KPI’s allows determining a company’s progress in achieving its strategic and operational goals.
They also help to compare a company’s finances and performance against other businesses within its industry.
There are many KPI’s out there, and most are industry-specific. Yet, some are not, some are more global, or company-specific. Googling “business/finance/marketing/etc. KPI” should give you some idea.
Keep your cash in control.
For companies, one of, if not the most important KPI’s is cash runway. Cash runway is the amount of time that your company can survive without going bankrupt, given the expenses and income remain constant. Income in this context includes cash and guaranteed accounts receivable.
For example, if your company has $100,000 in accounts, and your expenses are $25,000 per month and income is $0, your runway is 4 months.
For a pre-profit company, cash runway should be no less than 16 months. For profit turning company it should be around 8–12 months, depending on other KPI’s.
Redundancy and contingency for everything.
Do not rely on single vendor deliveries, services or quite simply, anything one. This implies software tools, online services, providers, vendors and even employees and partners.
Services get closed, vendors go bankrupt, employees and partners leave.
It is best to distribute assets and operations of your company across the board as much as possible. If you are running a restaurant, have contingencies for undelivered ingredients and produce.
Doing stuff on time also helps. But nothing is eternal, even you yourself.
If, because of specifics of your business you can not have either redundancy or contingency for some core part of your business, expand the business as soon as possible. That is, expand in areas you no longer have this dependency. Valid for niche operations that rely on one vendor manufacturing stuff and similar.