It is a good idea to share tips on starting a business if you have experience, it’s even better when they’re from a 13-year veteran. Let’s get started.
The first step of anything new is the hardest; it’s not uncommon for self-doubt to creep in or for obstacles to feel insurmountable. Starting a business is no different. Even if you’re incredibly passionate about your prospective business, it can feel overwhelming to imagine making it happen. The only thing you can do is prepare as best as possible and go forth and try. If at first you don’t succeed try and try again.
What you’re about to do is brave, say it with me… “I am brave”. Now it’s time for action. Many people spend their entire lives wishing they would have followed their dreams, you are not them. Once you have decided to go for it, the hardest part is over. Now, don’t think there won’t potentially be hardships ahead, having the courage to face those challenges will be a factor to success. You have taken a leap of faith, you’re sure of what you hope for and certain of what you do not see. You’re exercising your faith. Congratulations, you’ve decided to follow your dreams, but what’s next? You have some big decisions ahead, but you don’t have to do it all alone. Here are some of the key considerations you’ll need to think about when first starting out:
Determine The Type of Business You Start
When you’re first starting out, you’ll have to decide what type of business you want to be. You may know of some of the common options, such as a Limited Liability Company (LLC), sole proprietorship, or corporation. There are many types you can choose from, and all have different implications for everything from daily operations and taxes to liability and leadership structure. If you already know what route you’re going in terms of the type of business you’ll be filing, that’s fantastic! If not, here’s a breakdown of the major types of their pros and cons:
The Sole Proprietorship
A Sole Proprietorship gives you complete ownership and control of your business. In fact, even if you don’t properly register, but you are doing business activities, you are considered a sole proprietorship. Think of this as the “default” option until you select another path to go.
Pros: This is a great option if you’re looking to slowly test your business idea before plunging into something more formal, like an LLC. Some examples of sole proprietors include, computer repair services, photography, videography, financial planners, catering businesses, housecleaning services, landscaping businesses, freelance writers, tutoring services, and the list goes on. The thing to think about is the amount of liability you want to subject your personal assets too.
Cons: Your business assets are not separate from your personal assets. This can have expensive tax consequences and, even more importantly, you’ll be personally liable for your business. If someone wants to sue your business and come after your assets, they’ll also be able to come after all your personal assets…wow, right?
A partnership is a simple way for two or more people to own a business together. Each owner still has profits passed through to their tax returns, depending on how much of the company they own. When it comes to liability, there are two types of partnerships that exist, a Limited Partnership and a Limited Liability Partnership.
- A Limited Partnership happens when one person takes on the liability of the business, while the other partners do not have any personal liability at stake. The partner that absorbs the liability generally has more ownership in the business which is detailed in the partnership agreement.
- A Limited Liability Partnership provides liability protection to all owners and protects each partner from debts against the partnership. Simply put, owners will not be responsible for the actions of their partners.
Pros: Partnerships can offer liability protection, but they also offer a more structured support team for the business. Having multiple people committed to operations and business strategy can be a major benefit for a new business.
Cons: Ownership is shared amongst partners, and you will not have the final say in everything. Depending on the type of partnership at play, one partner may have more power (but also more risk) than the others.
The Limited Liability Company (LLC)
An LLC is the best of both worlds when looking at partnerships and corporations; it offers liability protection to business owners while allowing profits to be free of corporate tax rules.
Pros: LLCs are a great option for medium or high-risk businesses with one or more owners that want to avoid personal liability risk. LLCs are also taxed less than corporations.
Cons: LLCs are generally filed within each state and have limited life, meaning that if partners leave or join the LLC, it may have to be dissolved and re-filed entirely.
There are multiple types of corporations, but at a high level, corporations act as an individual entity that is taxed on its own and offers the highest liability protection to its owners. Corporations have shareholders that own stake in the company and are a great way to raise business capital.
Pros: There is limited liability for all owners involved and raising funds to grow a corporation is much easier than raising funds as a sole proprietor or partnership since it’s more attractive to investors to own a portion of the company.
Cons: Corporations are taxed at high rates and, depending on the type of corporation, can even be double taxed when dividends are paid to shareholders.
All types of businesses can be successful, and one may be a better fit for your needs than the other, so be sure to consider all implications of each before choosing your route. Once you have selected the type of business and filed all the paperwork to make it official, you’re on to the fun parts of running your company! Say it with me… “I am brave”, “We are brave”.
Determine Where Your Business Location Will Be
The location of your business is critical; you’ll need to consider your target market, state and local zoning laws, business expenses, and more when deciding where to locate your business. If you want a storefront for your business, you’ll need to investigate available commercial real estate and decide whether you’d like to buy or lease a place.
Not only does your location have expense implications, it can also impact your profits and business’s potential success. When choosing a location, you’ll want to ensure you’re in a place that will welcome new customers and pique the interest of potential clients. Location, location, location. It’s a good idea to research the previous renters or owners of the location to see if the prior businesses did well in that location. If they didn’t, try to understand why that was the case. All these considerations may seem extensive, but you’ll be glad you thought through everything when choosing your business location.
It would be crazy to be in a location that has 30-50 percent of the traffic your business need to thrive, and your lease agreement is 5-10 years at $4,000 a month. If it doesn’t fit your needs, you can walk away. When it comes to leases it would be a good idea to talk with an attorney to confirm the agreement works for you. If it doesn’t and you’re not able to keep the lease life could go sideways for you quick especially if you agreed to terms. Talk with a business lawyer before you sign, not after.
Here is wisdom… Bring in more revenue than what’s going out (expenses) and you’ll be profitable. That is your mission, keep it basic. Provide good customer service. If you have questions let’s talk more offline. Life happens in cycles, that’s how Yah created things to work.
Hire Employees Or Not
Depending on the type and size of your business, you may need to hire additional employees to support your endeavor. It could be cashiers for a store, customer service representatives, or simply just an extra set of hands to help with day-to-day operations. Whatever number of employees you need, you’ll need to consider whether you want to hire them as employees or as 1099 contractors.
If you hire your team members as employees, you’ll need to ensure proper tax payments and insurance coverage to do so, which can end up being costly. While a contractor may save some money in overhead, having an impermanent workforce can be a major disadvantage. With employees, you can train your team to learn new tasks, take on more responsibility, and grow with the business. Since contractors are less likely to stick around for the long haul, it may not pay off to invest time in their development or growth.
You could work with another business that provides a specific service you’d normally hire an employee for, that can work to your favor. Businesses that have been around for over five years want to continue to stay around. For that to happen they must deliver on the services they offer and provide favorable customer service. There is more at stake for them than an employee who might ghost you. Are you facing a labor shortage or can’t find people who want to work for you? Consider other small businesses to fill the gap.
Website Design Helps With Online Presence
So much information is found online these days that it’s nearly impossible to run a successful business without an online presence. Even if you’re not selling products online, a place for potential customers to go learn more about your company and its offerings is critical. People are used to websites being easy to use and quickly accessible, so it’s critical that you optimize your company’s website.
Since it’s rare that business owners are also experts in website design, we recommend outsourcing this process to a professional contractor or third-party company that can ensure an optimized website. If you need to sell items online, that adds a layer of complexity due to payment information being exchanged, so it’s even riskier to try and set this up on your own.
Create a S.W.O.T. Analysis
As a business owner, you must always be critical of how your business is operating and identify new areas of opportunity. When you first start out, it’s a good idea to conduct a S.W.O.T. Analysis. A S.W.O.T. Analysis is an assessment of your company’s strengths, weaknesses, opportunities, and threats. This can be an exercise you do by yourself, with your partners, or even with your broader team. It can be helpful to have the brainpower of a few invested individuals. To better understand each portion of the analysis, here’s a little deeper dive:
The strengths portion of the analysis is meant to draw out all that you do well. This list can be full of tangible and intangible items like product sales or team camaraderie, nothing is too small to be added. Be honest with yourself and recognize the hard work that you put into your business. What makes your product or service unique and beneficial to customers? Add these attributes as strengths.
While it can be difficult to pat yourself on the back for all that you do well, it’s even harder to honestly outline all the weaknesses surrounding your business. Perhaps you don’t feel like you have strong enough finance and accounting expertise in your business, or you aren’t doing well against your competitors. While this part of the exercise is less fun, it’s even more critical to understand the gaps in your business so you can make a plan to fix them.
Strengths and weaknesses are often things that you can control, while opportunities are external factors that will help your business succeed. Perhaps there is a gap in the market that you can fill, or there’s a competitor who is shutting down, putting potential clients back on the market. Identifying opportunities early on is foundational for strategizing the growth and success of your business in the future.
External factors that may be a detriment to your success are considered threats. When assessing threats to your business, you’ll want to look at competitors, market trends, supplier issues, and more. Anything that you don’t have full control over that could negatively impact your business is a threat. You can’t mitigate a threat if you aren’t aware of it, so spend some time fleshing this out.
Completing a S.W.O.T. Analysis is critical when starting your business, but you’ll want to do a new one every so often to ensure it doesn’t become obsolete. As your business grows and changes with time, you’ll identify new strengths, weaknesses, opportunities, and threats that need to be addressed. Figure out the cadence that makes sense, perhaps quarterly or annually, and dedicate time to this exercise. Let’s do an exercise, create a document and list your S.W.O.T. Now schedule your complimentary 15-minute consultation with us and we can talk it out.
You’re Gonna Need Financial Planning
Having proper finance and accounting support in your business is a huge priority, and not having it is the downfall of many businesses. When you first start out, you’ll need to have a detailed understanding of your startup costs, but as your business gets up and running, the financial side of things can get even more complex. You may want to talk to a local CPA or accountant for consul.
You may need to forecast sales, understand how well items are doing in the market, properly pay your employees, and record information for tax purposes. Trying to do this on your own can be overwhelming and it’s easy to do incorrectly if you’re not familiar with these processes. If you’re not ready to hire a full-time employee, you can find a contractor with the expertise you need to help you get started or double-check your work periodically.
There’s something to Consistency
When the going gets tough (and trust us, it will!) you’ll need to stay consistent with your operations. You may need to pivot your marketing strategy or adjust your pricing, but don’t give up because of a bad month, quarter, or even year. If you’re struggling with one aspect of business, bring in an expert to clear the obstacle. Often, the success of a business can be attributed to that time it got through a rough patch and continued to prosper.
Once you achieve your goals what will you do with your business? You could leave it in the family like Samuel Truett Cathy of Chick-Fil-A or sell it and move on to your next venture. It is a good idea to leave a legacy for your children’s children like the Rockefellers have.
Manage Your Emotions 😒😊😥😠…
Emotions are volatile and can be influenced by many things. Remember that in all you do. What is a good tip for this? Manage your emotions and stick to the business plan. Recall the “why” you started your business and the road you’ve taking to be where you want to be. Let that continue to be your inspiration. If you need someone to talk to look to your closest friends or associates who won’t put your business on front street. You can call us if you like.
Look at the resilience of children, one minute they’re happy, mad, pouty, sleepy, hungry, and the next minute they’re fine. They might have been angry with their playmate one moment and they’re okay the next having fun. You too were once a child but now you’re an adult and have a greater capacity to manage your emotions. Manage them and stay the course.
You Must Care About Your Business The Most
No one is going to care more than you about your business. Surround yourself with people who support your business and want to see you succeed. This includes people who will keep it real with you that something isn’t working and needs to be tweaked. Your business moves at your pace and will succeed and or fail on your watch. The buck stops with you. Late nights and early mornings might be as common for you like someone going to get Dunkin or Starbucks on the way to work. Take it in stride, reflect, adjust, try again. If business ultimately is not your thing, you have experiences you can share that others might be able to benefit from. Maybe you could write a book or teach a class. Nah, go forth and run your business.
Your Dreams Are Yours
At the end of the day, no one is going to do this for you. While it feels like a lot to understand and work toward, taking the first step to realizing your dreams and goals. If you’re brave, willing to learn, and stay consistent, you could have major success on your hands. Don’t let your fears stand in your way of making your dreams a reality!
They say many businesses don’t survive past 5 years, by God’s grace we’ve been in business surpassing 13 years. It’s been a learning experience and there were no blueprints to follow only experiences to learn from and a drive to succeed. Did we learn a thing or two? Yes. It takes sheer will, tenacity, a can-do attitude, learning from your mistakes, being good stewards of business, good customer service, staying humble, and several other attributes to nail it. Running a business can be fun just like life. Life isn’t always fun but it is worthwhile. Go forth and succeed. If you want to talk with us offline give us a call at 404-477-4512. If you’d like additional resources check out My Business Tree or the SBA.
We’ll revisit these tips and add more as time continues to move forward so visit our website or social media channels for updates. 2008 was an interesting year to start a business, who knew that would be when the recession hit. Until then come up with a plan and work your plan like nobody’s business.