5 Tips for starting your business on a solid foundation

Small Business

Have you not upgraded your website to HTTPS yet? Upgrade NOW.

Google with its Chrome 68 update to show all HTTP websites as NOT SECURE. Avoid Google's penalty by installing an SSL Certificate. Get a DigiCert Standard SSL and secure your website at just $157/year. BUY NOW

ADVERTISEMENT
DAILY BRIEF
Get daily updates straight in your inbox.

Even a journey of a thousand miles starts with a single step. If we were to try and translate this allegory to the language of the business world, this first step would be your business idea. Whereas an outstanding plan can give you a bit of a head start, there’s still a lot of walking ahead of you and the way in which you handle what comes next will determine the future course of your business. Here are several essential tips for getting your business off the ground.

1. Create a business plan

Every business starts with a business plan. For this to work, you need to follow several simple principles. Firstly, you don’t have to go into too many details from the start, so you should keep it short. Second, you need to take into consideration the audience you’re writing it for. Composing a reminder for your future self is not the same as writing a business plan that you will present to your potential investors. At very least, you need to write an executive summary, as well as tackle the issue of your staff and do some financial planning.

2. Do some budgeting

A lot of people believe that in order to start a business, they need to have enough money. However, they seldom stop to think how much money they will actually need. Sure, they have to register a company, buy some equipment, pay the lease for the office and purchase the necessary supplies, but this is just the tip of the iceberg. For an average business, it takes somewhere between 6 months and 2 years until they become self-sustainable, which means that you also need to have a sizable reserve in order to maintain a healthy cash flow.

Related:

Then, there’s the issue of unexpected expenses and hidden costs. Things like employee turnover during training, the cost of recruiting a replacement should an employee decide to bail on you, as well as payroll taxes and benefits are just some of the things that people tend to omit when budgeting. The most reliable way of making an accurate financial projection for the starting period would be to base it on an already existing model. If you have a niche contact, now might be the right time to ask them for a favor.

3. Get the money

Depending on the amount of money you need, you will have several options to choose from. For instance, those who want to go down the familiar path might want to inquire about the terms of getting start-up business loans. On the other hand, people who have some valuable assets might be interested in selling them. Sure, this idea is not a pleasant one, but a property, a jewelry collection or a vehicle once sold, can always be brought back once your company hits off. Then again, you should never sell an heirloom or an asset you are emotionally attached to.

Those launching a tech startup might want to look into the option of crowdsourcing. This, however, also depends on your ability to present your idea in the right light. Finally, you might also want to keep your day job as a source of side income until your company becomes self-sustainable. Unfortunately, running a startup or an SMB sometimes takes so much time that this won’t even be an option.

4. Choose your business structure

Earlier on, we talked about investors and potential partners, yet, there’s nothing preventing you from starting a business on your own. In fact, most startup and small business owners decide to launch their company as a sole proprietorship. However, this may not be such a great idea. The main reason behind this is the fact that in case of a sole proprietorship, your business and personal assets are hard, if not impossible, to separate. This means that apart from losing your business by going wrong, you could also lose your family home. Still, it also means that you’re paying taxes at a simpler scheme, which is why some people opt for this in the first place.

5. Handle the paperwork

The next thing you need to consider is the issue of paperwork that you need to handle in order to launch your business. First of all, you need to come up with the name of the company and make sure that it’s available. Then, you need to apply for your tax ID number and make sure that you save the document you receive with it. Depending on the industry, you might be required to apply for various certificates, whereas some states may have local laws and regulations of their own. All of this is usually too much to handle without some legal aid, which is why consulting a lawyer is highly advisable.

Conclusion

Once you get these five issues out of the way, you still have a lot of work to do. Finding suitable headquarters, hiring personnel and tackling the issue of marketing are just some of the examples. However, without composing a business plan, budgeting, fundraising, structuring and making your business legal, your company won’t be able to start on solid foundations. Needless to say, this can cause a lot of trouble down the road.

5 Tips for starting your business on a solid foundation