Five Best Tips For Starting A Small Business

I wanted to have my own business since I was a teenager.  It sort of runs in my family's blood.  My great-grandfather and grandfather owned businesses.  My parents have owned several.  On my mother's side, my uncles owned an ad agency where I got my start.  Along the way, I started out with a paper route when I was 12.  This led to selling comic books, graphic design freelancing, and then web design.  I've never liked working for anyone else, so when I got the chance, I became a business owner.  If you are starting a new business, there are a few things that you may want to consider.  Too many fledgling entrepreneurs go into their new business not knowing these important details.  From trial and error, hundreds of hours of reading, and observing the successes and mistakes of others, I'd love to share what I've learned with you.  Please, feel free to let people know your tips on starting a small business.

Don't Count On Loans
Many times, people who want to start a business start off by taking out loans.  They can get these through the Small Business Association, a local bank, or taking out personal loans from family and friends.  They do this on the expectation of making money right away and all too often, they find that it is easy to become buried with having to pay back those loans without reaping any profits.  The realization is that it can take several months or years to make your business profitable!  If the lender finds out you aren't making a profit, they may want to call their loan in.  You then find yourself taking out a second mortgage on your home or using credit cards to pay off your bills.  This is a slippery slope that can ruin your credit ranking.  Remember, you have to invest money back into your business to keep it profitable.  This includes items that won't make you money.  Think about the added expenses that you will need: equipment, insurance, space, utilities, advertising, and software.  The best way to go about affording these things, without selling your life away, is to save up the money ahead of time.  When I first planned to go into business for myself, I was working as the Director of Marketing for a shoe company.  I had my goal to go into internet marketing and I scrimped and saved for over two years before making my move.  Sometimes you can't get everything you want right now.  I can happily say the only person who has invested in my company is me and that I don't owe money to any other investor or bank.

Watch Your Pennies
One important tip I can give someone is to think small.  Very small.   If you don't need to hire an employee, don't hire them.  Don't rent out a beautiful storefront property unless you absolutely need to.  There is nothing more disheartening than to let someone go because you don't have the business to keep them working.  Once again.  Think on a small scale.  If you can run your business from your living room or the back of your garage, do it!  The reason I say this is you are going to make mistakes in your business.  If it is your first business or your twentieth business, you are going to screw up in some way.  When you make a mistake, it is much easier to recover if you aren't paying out $2000 a month in office space.  If you are working inexpensively, you will have the opportunity to bounce back from disaster.

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Use Protection
If you own a business, you open yourself up to all sorts of legal issues.  You are personally liable for all debts and mistakes that you make.  If you take out a business loan, purchase equipment, default on a contract, or fail to pay your taxes - you're responsible!  This is enough to make business owners want to fold up before they even start.  If you don't protect yourself from the get-go, someone can go after your car, your investments, and your home.  One layer of protection is business liability insurance.  This is good if something happens to you or your product, but it won't help you from business debt.  The absolute, best thing you can do when starting your business is going to an attorney and forming a corporation or limited liability company (LLC).  You can do this under sole ownership if you are starting a business on your own or with partners.  I state going to an attorney over buying into one online because you know it is going to be done right.  Online legal papers might save you a couple of hundred dollars in the long run, but with something this important, why go cheap?

Make Sure You Have A Business Plan
If you read any of the marketing or business gurus, they are going to tell you that you need to write down what you want to achieve.  This counts for anything in life, not just your business.  With your business, you need a plan.  The plan doesn't have to be 40 pages long, but it has to give you an understanding of when you will break even.  How much do you need to charge to make a profit?  What is your cash flow projection and how do you know your profits and losses?  This may seem like alien talk to you right now, but you really should know the course your business needs to take to be profitable.  Read as much as you can on this.  Go to the library and take out a book on business plans.  Look up free information online.  I thought I could let this part slide one year and it almost put me out of business.  I was spending more than I was bringing in and I didn't know where my money was going.  If you want to succeed, you need a business plan.

Keep Yourself Clean
When you start your business, you need to make a name for yourself.  You can be really good at what you do, but if your reputation stinks, you won't succeed.  While the word of mouth is extremely important with your customers, there is a second layer to this advice.  Pay your bills on time.  If you get the reputation of being a slow payer or even defaulting on bills, your credit rating is going to fall and that means you won't be able to get loans that you are going to need in the long run.  Don't wait sixty days even if the credit allows you to have it.  This will outweigh the interest you will make by holding onto the money.  With employees, pay them on time.  Most importantly, pay your taxes!  You don't want to fall short on these, because the IRS is very unforgiving if you don't pay the money you owe them.  They can even bypass your LLC or corporation and hold you personally liable for not doing your civic duty.

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