I’m Starting My Own Business: What Do I Need to Know?
Starting a business is usually the second step of entrepreneurship. The first step is coming up with the great idea for an innovative product or service that fills a need, often referred to as “pivoting”. For many people who are thinking about starting their own business, this second step can be even more difficult to take. Not
only is there a lot of work that goes into creating a business, but there’s also the risk that it won’t succeed.
In order to make sure you get off on the right foot and have a better chance at success, you need to know what you’re getting yourself into. Here are some things every new entrepreneur should think about before they start up their own business:
1) Taxes – While taxes may not be the most fun thing to think about when you’re just starting out, it’s important not to ignore them. Make sure you understand all of your tax obligations as soon as possible so that you can set aside money in advance. Also, know how to file your taxes properly after your business makes money so that there aren’t any complications down the road.
2) Licenses and Permits – Many entrepreneurs forget that they need to apply for licenses and permits the same way traditional companies do. The good news is, some of these are available online so you can have them ready before you even start operating. However, it’s important to meet with your local government regulator or economic development office to ensure that all of your paperwork is completed correctly.
3) Business Structure – When starting a business there are several different types of structures you can choose from: sole proprietorship, partnership, corporation (S Corp., C Corp.), and limited liability company (LLC). There is no “perfect” structure; each one has advantages and disadvantages depending on your needs. Work with an attorney who can help you determine which structure is best for you, but keep in mind that the decision will affect your tax obligations.
4) Insurance – Insurance may be one of the most important things to think about after deciding on a business structure. Most business owners know that they need insurance if their employees work at their businesses, but what many entrepreneurs forget is that accidents can happen anywhere and it’s better safe than sorry. Look into an umbrella policy so that unplanned medical expenses are covered if someone gets hurt on your property or while conducting business-related activities.
5) Business Plan – While not required by law, having a business plan at the beginning of your venture will make growth much easier. Your plan allows you to set goals for yourself while also helping you to stay on track while growing your business. Additionally, having a plan in place will give you credibility with investors or anyone else interested in financing your company.
6) Growth – Most new entrepreneurs set out with the goal of creating a business that will last forever. However, it’s important to understand that not every business is meant to grow at the same rate. Set growth goals for yourself so that you know how quickly or slowly you should expand over time. Make sure to do your research before becoming too ambitious because no one likes being stuck with inventory they can’t get rid of.
7) Team Building – Whether you’re planning on hiring employees or working solo, building up an effective is key to achieving success. If you’re going to hire employees, be prepared for a salary and benefits package that will need to be updated on a regular basis. If you plan on working solo, make sure you have a business attorney or accountant who can serve as your right-hand man/woman so there are no issues with the IRS down the road.
8) Marketing – It’s important for entrepreneurs to understand from day one that their businesses don’t stand a chance without a solid marketing plan in place. Make sure that you invest in advertising early on since it takes time for new customers to find you, but also work on creating awareness of your brand among potential customers. Don’t be afraid to get creative when planning out your strategy; many times marketers underestimate what they can do with a small budget.
9) Financials – This is one of the most important pieces to entrepreneurship and it’s also the least glamorous. If you don’t know what you’re doing with your financials, taxes will become a complete nightmare and business growth could come to a screeching halt. The good news is that there is plenty of software or services out there that can help you stay on top of your numbers so you always know where your business stands financially. The even better news? They’re all relatively inexpensive!
10) Cash Flow – It’s important to keep an eye on cash flow throughout the entire life-cycle of your business, but keep in mind that when you first start out, it might be difficult to do this on your own. Cash flow is the difference between your incoming cash and your outgoing cash, so if you’re receiving $100 less than what you owe in bills each month, it’s considered negative cash flow. Look into opening up a line of credit or getting an advance on invoices from clients so that you can keep your business afloat during those first few months until things start to pick up.
Starting a business is usually the second step of entrepreneurship. The first step is coming up with the great idea for an innovative product or service that fills a need, often referred to as “pivoting”. For many people who are thinking about starting their own business, this second step can be even more difficult to…