Finance tips to help your business Ngā tīwhiri ahumoni hei āwhina i tō pakihi

Getting started

1. Step01

   Create a business model that works

   Your business model is the way your business is going to operate and make money, however much you want to make. It helps you identify how much money you’ll need to get started and what your income needs to be to cover costs and make a profit.

   You should:

   • choose a business structure – for example, you may run your business as a sole trader, company or through a partnership
   • identify your operating costs – for example transport, staff, electricity, lease
     estimate your likely customers – for example, foot traffic and how competitors in your area perform
   • know your limitations – for example, if your café can seat 20 people, it limits how many people you can serve in a day
   • keep metrics specific to your industry – for example, the cost of a café will be different to an IT contractor.

   It’s easier to model operating costs first, then think about how much money you’ll need to cover your overall costs.

   Choosing the right business structure
2. Step02

   Set a budget

   Your budget is where you set your goals and a plan for how you’re going to get there, once you know how much money you need to cover your costs and make a profit.

   You should:

   • set your targets and profit goals for the year
   • plan for your costs and decide when payments need to be made
   • review your budget based on how you’re tracking monthly.
3. Step03

   Keep track of your finances

   Accurate records help you see what’s going on in your business and understand your numbers.

   You should:

   • keep accurate and up-to-date records
   • stay on top of your cash flow (the money coming in and going out)
   • use a separate bank account for all your work income and expenses to track your spending
   • understand the trends – for example, see if you have enough to keep you going through quiet periods or gaps between contracts
   • set aside money for periodic payments – for example, putting aside a portion of your income to cover taxes and levies
   • ask to pay bills in instalments – for example, pay for your accountant throughout the year instead of in one big invoice.

   Guide to business tax
4. Step04

   Keep on top of debtors

   You need to be paid for the work you do. Until payment is made, you’re financing the cost of this out of your own pocket.

   You should:

   • be clear about the estimated cost before starting the job
   • invoice for the work you do as soon as possible
   • chase debtors regularly.
5. Step05

   Get an advisor if you need help

   Finances are an important part of running a business, and sometimes this means you’ll need help from an accountant or bookkeeper.

   You should:

   • get advice before making a financial decision you’re unsure of – for example, expanding into a new area or buying a high-value asset
   • ask for help if you feel like you’re not on top of things or at key times – for example, when doing your first tax return or when operating at a loss
   • weigh up the cost – paying an expert may end up being cheaper than trying to do it yourself.

   Getting financial advice