Starting a small business is exciting, but it's also nerve-wracking when there are so many things to do to get your business off the ground. From creating a business plan to separating your business and personal finances, here are seven things you should do when starting a small business:
A solid business plan is the foundation of any new business venture. And planning is critical whether you're interested in keeping the business small or have dreams of creating a business empire. A business plan lets you map out what you want to achieve and how you plan to achieve it. Your plan will cover areas like:
- Company mission and vision
- Products or services
- Financial information (including if you plan to take on financing to get started)
- Competitive analysis (and how your business will differentiate)
- Sales and marketing plans
- Hiring plans and organization structure
- Operating plans
Once you dive into the specifics of the business and your plan is well-thought-out, it's time to establish the business.
Each state handles business registration differently, but the purpose remains the same. Registering your business gives your company legitimacy and helps you protect your brand, and it also comes with personal liability protection and tax and legal benefits. In most states, you can easily find the information you need to register your business online.
If you're thinking about starting a business where you're the only employee, it may be tempting to use personal accounts for business purposes. But separating business and personal finances is important for many reasons, like:
- Managing expenses will be easier
- It will be simpler to gather transactions needed at tax time
- You'll avoid mixing up personal and business funds
- Keep your personal assets protected if legal action is taken against the business
When assessing when to use your business credit card vs. personal, ask a simple question, "Is this expense related to my job, and could I justify it at tax time?". Nobody would likely make you defend a transaction, but asking such a clearly black and white question can enable you to quickly decide if you feel confident in marking any expense as business-related.
A business credit card is a great way to keep spending separate from personal expenses. A business card will help you make purchases for your business and build your business credit history. It can also give you access to perks and rewards that align with your spending. For example, if you plan to spend a lot on travel or advertising, you can find a card that gives higher rewards in that particular category.
If you're the only employee of your small business, you may not feel insurance is necessary. But a business insurance plan can help you protect against liability claims or damages. For example, say you're working at a coffee shop with your laptop with all your client information. If your computer is stolen, your business insurance policy could help cover the laptop's financial loss and potential losses that could arise from compromising customer data. Without proper insurance, you could face paying those expenses out of pocket.
An idea for a small business is great, but what makes it real is getting the word out about your business. Doing so is the only way to attract customers or clients. There are plenty of ways to promote your company, including word-of-mouth in your network, online marketing, pamphlets, billboards, flyers, and more. Think deeply about where your customers are and the most effective way to find them. Then, plan marketing strategies that align.
The early days of a small business are about constantly iterating and making changes. Keeping track of progress can help you quickly pivot when something isn't working. For example, say you start by selling five products. But after six months, two of your five products have no sales. The ability to quickly view your sales per product would show you an opportunity to drop back to three products or make changes to those two to promote sales. Without tracking progress, you may never have known which products to put effort into and which ones to let go of.
There will be plenty of hurdles you'll need to jump as a brand new small business owner. But following these seven steps can help you off to a great start
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