7 Vital Steps to Help Your New Business Start, Grow, and Profit
It can be easier than you think to learn the details of how to start a small business. It doesn’t take that much at all — you may need a state license and possibly a county or local license. And you’ll need to find out about charging sales tax, if that is required, and about other tax issues.
Depending on what your business does, special licensing may be required. For example, if you were opening a garage, you would need a special license for the handling and disposal of hazardous materials. Once you have dealt with those legal and tax issues, you might then want to learn about what kinds of insurance is necessary. A moving company, for example, needs insurance for their trucks, and their employees must be bonded. Special insurance covers damage done to customers’ personal possessions.
How many employees will you need? If you were running a home daycare center, you might not need another employee. You could choose to file taxes as self-employed, but it is usually smarter to create a company. There are instructions online that concern creating a corporation or LLC.
There are many other things to consider too, including the source of start-up costs and potential sources of income. Online businesses typically have lower start-up costs, simply because there is no need for a storefront. So, if you can do business online, it’s a great way to get started.
Step 1 Summary: Get clear on the legalities and accounting set up right from the start.
STEP 2 — Get good advice!
This may all sound a little complicated, and if you’re new to business – a bit of a muddle! I strongly suggest you find an accountant and lawyer you feel comfortable dealing with and speak with them. Some do offer initially free consultations. And frankly, if you’re looking into starting a business, you’ll have start up costs, and accountants and lawyers are one such cost.
Now, this is just my personal preference so definitely isn’t a hard and fast rule — but I’ve always preferred dealing with smaller accounting and legal firms as much as possible. In fact, my current accountant is just a father and son team. My reasoning for this is I find they’ll give you more attention, they’ll be more patient with your questions, and they’ll take the time to understand you and your business. In my experience, larger companies do NOT do this.
Another rule I have regarding lawyers and accountants is I ask for clear estimates on how much any work will cost. I’ve been stung in the past by an ‘open ended’ invoice. That’s where they say “We’ll let you know how much it is, once we’ve done the work.”
You then find they’ve charged you thousands! This is exactly what a fledgling business does NOT need. This is what I always do now and strongly recommend you consider it. With a bit of searching, you can find great companies to work with, so that research is time well spent. Because once you’ve found an accountant or lawyer you’re happy with, chances are you’ll keep dealing with them for years!
Step 2 Summary: Get good advice from a lawyer and accountant that you feel comfortable working with long term (and that won’t overbill you!).
STEP 3 — Where does the internet fit in?
Okay, the internet; let’s say you provide a service that requires a conventional store, it’s still highly recommended that have an online presence. Many people have stopped using their phone books and even Yellow Pages in favor of searching on the internet.
In fact, getting traffic for local phrases like “accountant in XXXXX” (where XXXXX is that person’s home town, or district), is relatively easy right now as there’s really not that much competition for such niche searches. If you’re able to do such online marketing yourself, or can hire someone to help you with this, targeting such relevant, yet relatively low competition phrases can easily bring you new customers.
I really would say that now most people, young and old alike, enjoy the internet and that’s where they often go for information. Whether they are looking for a restaurant or computer parts, they may well go online first to do some research, and maybe to see what’s in their area. But that said, don’t completely ignore other ways to advertise – people still do check the Yellow Pages and their local paper!
Okay — today, learning how to make use of the internet is a vital part of starting and growing a small business. While many conventional businesses fail within the first year, many online businesses turn a profit within the first few months or even the first few weeks! Especially since start up costs are lower, so there’s less risk, and insurance is generally not required and even licensing is a simpler issue to deal with (or perhaps not at all necessary – again, get good advice from a lawyer and accountant).
Step 3 Summary: Don’t ignore the internet as a promotional tool, but depending on the kind of business you have, don’t necessarily depend on it either! It’s possible to advertise to find local customers surprisingly inexpensively online, but don’t ignore the ‘old fashioned’ ways to advertise – many still work great!
STEP 4 — Hobby Business = Hobby Money
The lower the required investment in a new business or project, it can cause people to treat that business as a ‘hobby’. With low investment comes less incentive to HAVE to make it work. Don’t let that happen to you. If you treat your business as a hobby, you’ll make ‘hobby income’.
I’ve seen this first hand. Especially with internet based businesses. For example – I was asked once at an internet marketing seminar “Do you dabble?” (They were talking about running an internet business.) If you dabble in business, you don’t get anywhere! Make a real commitment to your business.
Step 4 Summary: Treat your business like a hobby, and you’ll make hobby money. This is especially true when the business starts as part time.
STEP 5 — The More You Know…
So in a nut shell (and you may find this a running theme in some of my articles!) — DO THE RESEARCH. The more you research before starting a business:
* The legalities
* The best structure for your business
* How to organize your accounts
* Your competition
* Your business and marketing plan
The greater you put the odds of significant success in your favor. And remember that you certainly do NOT have to be an expert at everything — do bring good advice on board from other people… start building your ‘business team’ with an accountant and lawyer you’re comfortable working with.
Step 5 Summary: The more you know about your future business, before you even get started, the more you’re putting success in your favor. But on the other hand – Paralysis by Analysis is a really danger for many people, so do give yourself a firm cut off date, for when the research stops, and the action starts…
STEP 6 — Make Every Dollar Count
A business is a sum of it’s parts, and a big percentage of those parts are you, and the people you work with. I actually tried doing everything myself at the start, and because of that my business grew VERY slowly for the first few years. The more you distribute work to the right people (accountants, lawyers, freelancers, staff members…) the more your business will achieve, and the faster it will grow.
However of course, at every step do keep a close eye on cash, and make sure all investments in your business are designed as much as possible, for a maximum Return On Investment. So saying that, it may actually be necessary for you to start off doing everything yourself, spending as little money as possible, starting to understand every aspect of the business, paying yourself a low salary from the business (the more money left in a company, the healthier it is), and then re-investing profits into future growth, whether that’s for:
* Staff members
* More advertising and marketing
All this depends of course on your initial investment amount… the smaller the amount, the more you’ll have to do yourself at the start, and then by keeping cash in the company, you can grow more and more over time by re-investing.
However, if you start with a larger investment, you can potentially grow quicker by bringing more people on board immediately. That said, and I know this is a bit of a running theme in this article… but do bring on an accountant and lawyer you’re comfortable with, right from the start — that’s VITAL. Make sure they’re within your budget and that you feel you can work with them long term — this really is important if you’re serious at all about your business, and it’s future growth.
And if you do have a decent investment amount to start your business, don’t let that make you sloppy with costs! Just as if you were starting on a shoestring – every dollar much be accountable! Why do you think so many dot coms went bust? Because they wasted money like crazy.