Alastair Barlow is the holy startup grail: an entrepreneur, with decades of experience as an accountant.
As a former consultant and senior finance partner at PwC for 16 years, Barlow’s bread and butter was consulting on the ins and outs of financial best practice for small businesses.
He wanted a slice of the action, and started up StaaG, a British clothing and handmade leather goods company in 2012. And it was this perfect confluence of financial insight and entrepreneurial experience that in turn led him to found flinder in 2017.
At flinder, Barlow mentors ambitious, growing businesses from startups to those generating a turnover of £50m to help them achieve growth.
We asked him to share his top tips for some of the thorny financial issues facing small businesses in year one of starting up.
What is your advice for deciding between getting a loan or getting investment for startup costs?
First, there are other options for funding startup costs, so it’s not that binary.
You can also save up before launching your business and not take a salary for a few months. If you are manufacturing products, you can leverage supplier credit.
Ultimately it depends on your vision for the business, your existing resources, and your risk appetite.
What will a bank or investor expect to see as a demonstration of finances?
I’ve seen many financially educated individuals get business finances completely wrong because they don’t understand accounting.
If you’re unsure, speak with an expert.
How soon can an entrepreneur expect to pay themselves a salary?
Your cash flow will determine this. How soon you can pay yourself a salary depends on your business model, your funding, and how quickly you can monetise your offering.
Beware, though, that you probably won’t earn the type of salary you want right away. It takes time to build up to a comfortable salary.
When should entrepreneurs start thinking about employing staff?
I say you should start planning for this immediately if your ambition is to grow your business.
I suggest you design your target operating model — the future structure of your business — and a high-level organisational structure in the early stages.
You need to know what you’re aiming for and figure out your strategy for getting there.
How will a small business owner know when they need an accountant’s help?
It’s simple: you will always need an accountant’s help.
Just as you wouldn’t operate on yourself if you needed surgery, you should save yourself the trouble and hire an expert.
What are the most important figures to track for the business’ financial health?
Apart from cash and net profit, focus on leading indicators such as employee satisfaction, product feedback, and customer NPS (Net Promoter Score is a measure of customer satisfaction).
Soft factors like work/life balance and quality of life are just as important.
How can entrepreneurs get better at managing business finances?
There are plenty of free webinars and training courses to learn basic bookkeeping and finance, such as ACCA-X.
You can also join an entrepreneur group for guidance and references or speak to an expert that understands your business and aspirations.
How will an entrepreneur know when it’s time to make their side hustle (a supplementary income to your primary job) a sole source of income?
Having juggled a side hustle and a full-time job myself, you will never put enough effort or conviction to get it to work.
Because it doesn’t need to—you have another source of income on which to rely.
My advice is if you’re passionate enough and you think it has the potential, then jump in and do it properly.
Once you have no other options, it must work. That’s how you put your all into it.
How to boss your small business finances
Starting a business? Getting your finances under control from day one is key. Ever wish you could get advice from someone who really knows their stuff? Well now you can.