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3 Ways Start-ups Can Ensure Stability

3 Ways Start-ups Can Ensure Stability

by Fintech TimesFebruary 28, 2017

It’s not easy starting a business. Nine out of 10 businesses fail in the first year, with a further 95% failing within five years. The statistics are sobering, but there are many benefits to starting a business. You can be your own boss and if the business is a success, the financial rewards are immense.

The entrepreneurial landscape has never been better. There has been a sustained shift towards entrepreneurialism in the last few years. In 2015, 608,110 new businesses were started, which was a 4.6% increase on the previous year. It’s become easier for people to start a business. Despite the economic upheaval in the last few months, there is every indication that leaving the EU will be good for entrepreneurs.

The UK welcomes entrepreneurs with plenty of financial support, the lowest corporation taxes of any G20 nation, and a highly skilled labour force. However, unless you put measures in place to ensure business stability in a volatile economy, your chances of building a successful business are low.

Maintain Awareness of the Financial Landscape

With Brexit just around the corner, the financial landscape is changing. It seems likely that the UK will be departing the Single Market in the next year or so, which will have a major effect on trade with the EU. There is no reason to assume that the UK won’t be able to negotiate favourable trade deals with the US and other trade partners, but it’s a good idea to maintain a close watch on the financial landscape.

The pound is currently low against the dollar and Euro. This has an impact on supply chains and international trade. If you import, your costs will rise; if you export, your products are more competitive. Monitor currency fluctuations on ETX Capital and have a currency strategy in place to help you weather any volatility in the financial markets.

Monitor the Global Economy

Globalisation has a far reaching effect on businesses. What happens in the US and China impacts closer to home. For example, President Trump’s election in the US has sent the dollar soaring, which in turn has had a knock-on effect on the Euro and pound.

Emerging economies represent potential new markets for businesses. If you are ready, you could enjoy a head start on your competitors. Currency fluctuations and the health of other economies also affect supply and demand, so it’s wise to stay in touch with what’s happening in the wider world.

Manage Cash Flow

Cash flow can make or break a business. Positive cash flow enables a business to pay its creditors, grow and prosper, but negative cash flow makes it hard to pay the bills and take advantage of growth opportunities. A business cannot enjoy stability if cash flow is sporadic, so it is essential that you manage your cash flow.

Keep a control on your income and expenditure, update your cash flow forecast regularly, and have contingency plans in place to provide for unexpected events.

Business stability hinges on a number of different factors, but in all cases, you need to conduct risk assessments and have backup plans to protect the business. Analysis carried out by Columbia Business School found that high performing businesses were stable, yet capable of rapid innovation and readjustment of their resources when needs arose. You can learn from this.

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Fintech Times
Fintech Times
The Fintech Times is the world’s first and only newspaper dedicated to fintech. Published monthly, The Fintech Times explores the explosive world of financial technology, blending first hand insight, opinion and expertise with observational journalism to provide a balanced and comprehensive perspective of this rapidly evolving industry.