Building a business from the ground up is one of the most difficult, yet rewarding, things an entrepreneur can do.

While there are many reasons for launching a start-up, one of the primary reasons will be to generate income.

Sometimes you need more than just ambition to succeed, so here are some tips for how to keep out of the red and in the game.

  1. Stay on top of cash flow

Not properly managing cash flow is one of the main reasons SMEs fail, so knowing when to cut and when to spend is essential to success.

Cash flow statements can be hugely valuable, giving you visibility of what’s coming in and out. However, remember they’re just a snapshot in time and one late payment could temporarily skew your figures.

Avoid tying up too much of your budget in wages and other fixed costs while you’re growing. Outsourcing services mean you only pay for help when you need it but negotiate hard on cost and payment terms before signing any contracts.

At the beginning of your journey, you won’t be able to justify hiring an accountant. Accounting apps like FreeAgent, QuickBooks and Xero can be a good choice.

  1. Understand what you can claim

There are many tax entitlements you could be missing out on, which could give your business a much-needed financial boost. We’ve all heard about common business expenses like rent, insurance and transport but what about the other lesser-known entitlements?

For example, if a uniform is important for your brand image or protects your staff, you could claim a tax deduction if you have accounting records and it has a permanent logo. Your employees can also claim for maintenance; this online calculator will provide an estimate and send out the relevant forms.

If you’re disrupting your industry you could also receive R&D tax relief. This scheme is purposefully broad; everything from a new piece of software to a boundary-pushing restaurant dish is covered.

You and your staff may also be due money back on any fees you’ve personally paid for professional memberships or subscriptions. Tax relief is worth 20% to a basic rate taxpayer, so in effect, you’re eligible for 20% of your fee back. If you have not claimed previously, you may be able to make a claim for the past four years.

  1. Prepare for the worst… and the best

While you’re dreaming of reaching the top, it pays to be prepared if you were to hit rock bottom. Having a savings reserve in place (6–9 months’ worth is recommended) can help keep your business afloat if you fall on hard times.

Not every supplier or customer pays on time, so invoice factoring can be used to finance slow-paying accounts receivable, improving your working capital by giving you immediate funds for a small fee.

You should also budget for growth, setting aside funds for research and development, technology, training and office relocation, so when you’re ready to take your company to the next level your finances can keep pace.

  1. Set yourself financial goals

Avoid becoming just another ‘zombie start-up’ with stagnant growth.

Just like Rome wasn’t built in a day, you can’t achieve your financial goals in one go, so having goals with measurable milestones can help you track your progress and achieve consistent growth.

By starting with specific numbers over the course of a month, six months or a year, you can easily do the maths to break down big goals into smaller, more palatable chunks.

By Tony Mills, director, Online Tax Rebates