I’ve officially been a small business owner for almost four years. My small business is very small, but it does provide some extra spending each month. However, I’ve found that even with a small business, I’ve learned a tremendous amount about operating a business. No matter how small your business may be, you still have to manage the finances, consider taxes, perhaps look at legal aspects, market, advertising and so on. I believe my experience in the last few years has prepared me well if my business continues to grow. I’ve learned a lot of the basics. But it has also prepared me for an entirely different business opportunity someday, if that were to occur.
Business Start – Up Tips
So today, I thought I would share 9 business start – up tips that come to mind that have helped me become more experienced and learn more. Hopefully, they help you too.
1. Create a legal business entity
You can either work with a lawyer, or file directly with your Secretary of State to set up a legal business entity. Setting up a legal business entity separates you from the business. This is especially useful, again, if you end up with a legal issue. Make sure you’re doing business as the entity. It’s better to have someone pay XYZ company versus you directly. You can then deposit the funds into a business checking account. Overall, I think it’s best to pay a lawyer for an hour of time to discuss which entity is best for you and other things to think about in separating yourself from the legal business.
2. Separate your personal and business accounts
As soon as you start earning money with your hobby it’s best to set up a separate checking account and credit card. You don’t want your personal finances to become more difficult ot manage with business related expenses intermingled. It’s best to keep this budget separate. Separate accounts makes it easy for tax reporting purposes too. You can more easily identify income for the business verses personal income, business expenses and deductions. Finally, if you ever end up in a lawsuit or legal matter, having your business funds separted can’t be a bad thing according to one attorney I spoke with.
3. Use a business email address
In all matters involving email, make sure you’re using a business email address that separates your email from business. A business email address shows you’re operating as a professional business. Furthermore, it provides the opportunity to provide links to your website and business contact information in your email signature. Doing all of this looks much less hobby and that you’re serious about what you do.
4. Formalize your business with a plan
Having a plan for your business is important because it helps you determine the strategies necessary for your business goals. I recently read an article that said a business plan shouldn’t be a static document you create one time. Rather, it’s an evolving tool that is continuously updated as you think of ideas and achieve results. I have a simple plan in PowerPoint that I update as I have new ideas. I have the following sections in my business plan I refer to a few times per month: Mission, Accomplishments, Goals, Growth Strategy and Financials. Within strategy I have subsections for areas such as content, products, marketing, community building, partnerships and website improvements.
5. Establish a budget and manage cash flow
Your business should have a budget just like your personal finances. Without a budget to manage costs and cash flow, you’ll have a hard time surviving. A good budget will definitely improve your chances of returning a profit in the first few years of operations. I include all of my monthly bills and expected costs in my business budget. I also forecast monthly revenue to determine what my cash flow will be any given month. I track all my expenses in QuickBooks so I can review my books when necessary. I’ve found that running basic financial reports, such as the P&L, are a great way to determine my business growth in terms of revenue and whether or not I’m profitable. I highly recommend getting small business accounting software right away. This also makes things much easier come tax time.
6. Create a consistent brand for your business
I’m still learning a lot about branding, but essentially you want to build brand recognition for your products and services. A strong brand doesn’t come easy. It requires a lot of work and time. The approach I’m taking is to create my major products as websites or blogs. These brands have consistent logos and descriptions across all my social media accounts. In many cases, my personal picture represents these brands. I think it’s important to have a good logo, but I’d rather people see a real person associated with my products, such as OneMoneyDesign.com.
7. Join a small business or niche meet up group
It’s a good idea to find people who have been down a similar path before that are willing to openly share their experiences and ideas. Obviously, these relationship can’t be only self serving. I recommend joining a meet up with people who have similar interests. Share ideas, be open and you’ll probably find a group of people, or a single mentor, willing to help you as you work to grow your own brand. I feel fortunate that I’ve been able to do this in a couple of ways. I belong to a local financial blogger group as well as attend national financial blogger conferences. My friend, Phillip Taylor, who I met when I first started, has taught me a lot too.
8. Determine where you may need professional help
It’s likely you’ll need some professional expertise at some point along the way. I’ve worked with a CPA and lawyer in the past for tax and legal business matters. It’s pretty much a given there will be questions about taxes or legal matters that researching through Google will most likely not provide sufficient answers. You need a conversation. Talk to others in your space to see who they’ve worked with and had good results. This is another great advantage of joining a meet up group. You can learn a lot about starting a business if you’re willing to pay a lawyer and CPA for an hour of their time to tell everything you probably don’t know.
9. Establish a work schedule and set expectations
Finally, you’re likely moving into business because you found a way to make money from a passion or hobby. In my opinion, that is the best way to start a business. The only problem with such hobbies and passions is that you want to work on them 24 hours a day and 7 days a week. This is never possible, nor is it healthy. My recommendation is to create some structure around your work schedule. Unfortunately, I’m not the best person to set an example here as I cut into my sleep all too often. I try to strive for working on my business a certain amount of hours a week. I also set guidelines on when I won’t be working, such as between the time the kids arrive home from school and when they go to bed. Setting a work schedule and the proper expectations with your loved ones is something important to do before starting a business.
Well, you might be wondering why just 9 tips? I decided to leave number 10 to you. As I said, I’ve only been doing this a few years and I want to learn from you.
What are your best business start – up tips?