Although setting up a business can be tricky, the real challenge is creating growth over time. Growth is critical for small business owners, but there are many pitfalls, and therefore less than half of SMEs survive beyond their first five years. Here are some examples of sustainable growing your business aiming for a long term:

Bringing new business 

Your focus, as a business owner is developing a new business pipeline. Creating strong sales and marketing strategy and execution is your main priority – this will typically include a variety of marketing channel activities such as digital campaigns across social media, networking events, email marketing and organic content-based growth. Regardless of your value offering, unless you can reach your audience and create a lead funnel, you will not be able to sustain growth and revenue stream.

Cash flow is crucial 

You should always have a strong grasp of your business financial key data by using cash flow management and monitoring tools. These will help you plan for growth, assess resources, and work out how far you can safely stretch budgets before needing to extend your credit or seek financing.

There are also many options available for  adding cash without harming cash flow – invoice financing or funding from  finance providers. These lending packages create operating flexibility so that if there is a problem in your cash flow or there are late payments, you can secure a back-up funding to keep things running smoothly until resolving the cash flow issues. 

Maximize revenue streams 

It makes sense to maximize the amount of growth that can be funded through the company’s own revenues first. A keyway to increase profits beyond sales and operational efficiencies can be a tax relief in the form of research and development (R&D) tax credits, capital allowances and Patent Box tax relief. Additional public grants may also be available to apply as a small business or a startup.

Manage your payment terms 

Placing robust payment terms policy for new contracts is an effective tool to ensure and minimize exposure to late payments. It appears that many SMEs (as much as a third at least) experienced late payment in the past 12 months, costing their business significant losses.

The bigger the company and contract, the longer the payment terms they will ask for. Try to negotiate the acceptable 30-day payment terms (not always the easiest for smaller companies) or set terms that better suite your company to adjust your cash flow to handle much later payments. Another option may be a request for an upfront initial payment – ideally 50% of the fee before starting the work and the reminder, after completion.

Another option that you may consider, is debtor protection which insures a business’ order book. If a customer does not pay its invoices on time or stops trading, the insurer will cover the outstanding debt.

Patent Box

Consider, if applicable, the Patent Box tax relief from 2013, which rewards income from patents with a reduced rate of corporation tax. Since this is a relatively new tax relief, a huge proportion of companies remain unaware of it, and it is the job of accountants to make sure clients check their eligibility. 

Capital allowances 

Capital allowances can be offset against all the expenses associated with your commercial infrastructure such as HVAC and ventilation, wiring, heating, lighting, and security. All UK taxpayers that own commercial property may be eligible for Capital Allowances tax relief, but eligibility and the value of each claim depend on multiple criteria.