Start-up your small business - 5 simple steps
by Business Money Today - November 9, 2009
Starting a new small business can be a very daunting and challenging endeavor but it can also be extremely exciting and profitable.
Being your own boss can free you up from the so called 'rat race' adding freedom to your life as well as putting you in the drivers seat regarding your own wealth creation and financial future.
Making the decision to start your new business, while never easy, is usually the simplest step. The real challenges come in actually getting your 'doors open', running the business profitability and efficiently and growing your venture to the point that it will provide the returns of your dreams.
While each business has its own unique path to profitability, there are several common steps that all businesses must follow in order to start, run and grow their operations.
We, at Business Money Today, in search of the perfect short list of items that all businesses must endear on their way to success have asked several experts in the industry what their top recommendations would be to new, small business owners. From those recommendations, we narrowed the list to the top five:
Organization: Mark Johnson of Business Alliance Northwest in Portland, Oregon recommends that all new businesses take the time, "the earlier the better," to properly organize their company. This includes choosing the right business form for the organization based on where that organization plans to be five and even 10 years in the future. Taking the time before you open your doors and maybe even spending a little money on a CPA and attorney early in your firm's development will not only save you money in the long-run but will, "ensure that you have everything in place regarding the legalities of business operation which can really take a lot of the burdens off small business owners should they face future tax issues or possible legal problems." A business owner should always consider, in all decisions including organization, what impacts their choices will have on both their taxes and their potential for personal liability.
Planning: Bryan L. Bankston of Bankston Interactive in Albany, New York stated that after his first business failed miserably, he made it a point to formally plan the development and growth of this latest venture. Business plans are essentially road maps to success that can really help new business owners mitigate much of the risk and turmoil that all business owners face as they struggle to gain acceptance with customers and within their industries. Further, ".once a business plan is in place - it should never be forgotten. It is always much better to formulize the path and steps that one wants to take before actually taking them - then focus solely on executing that plan without distraction. It is always ones first intuitions that are usually the best and having a written business plan helps to solidify those intuitions." This is a very noble concept of thinking and working through all possibilities before opening your doors thus you are not distracted with important strategic decisions as you move forward especially when your whole focus at this point should be directed to the execution and operations of your business and not having to reanalyze where you are going and where you want to be.
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Capital: Lynne Brown of Cliffside Media in Georgetown, Texas told us that her hardest hurdle to overcome was constantly being under-capitalized.
This is an extremely hard credit market for small businesses. Most new entrepreneurs - unless independently wealthy or who have a rich uncle - will be forced to bootstrap their operations. This could mean using personal savings, retirement accounts, credit cards, personal loans, personal assets as collateral or even what we term putting the "cart before the horse" where the business goes outs and drums up customers before they actually have a product or service to deliver.
Given the current funding gap for small business, "It is extremely important for entrepreneurs to have a grasp on their financials to ensure that they have the capital needed to grow and expand, to meet other obligations like payroll, suppliers, utilities and taxes and to be able to pay themselves for their hard work and risk taking."
Moreover, as businesses grow and get their feet under them, new avenues for financing begin to materialize. First, banks will be more willing to listen to your working capital requests as well as other financing companies that can supply the business needed operating capital, equipment or commercial property loans; not to mention the power you gain in negotiating trade credit with supplier and vendors. But, you have to get there first and this requires ensuring that your business is either "well capitalized at its start or has the means to continuously go to the financial well as needed."
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Start-up your small business - 5 steps - Business Money Today