Planning to start a business? Here are some tips which can surely help you if you are about to own a business.

 

1. Most important of all - you should have a business plan. 

 

You got the passion and you want to make it big. No matter how enthusiastic you may be, your launch would not be a success if you do not have a plan in place for how you are going to start and run your business.

 

May it be detailed or not, for as long as your plan covers the main points of business ownership, then it’s good to go. These points include the break-even analysis, profit and loss forecast, the cash flow analysis et al. Researching more on these points will prevent you and your business from running out of cash, and eventually - closing down.

 

2. Try to determine your profit

 

Profit is the ultimate goal of any successful business may it be big or small. Expenses should be examined; that includes rent, materials, compensations, benefits, etc. Figure out how much you really need in a week, or in a month, then figure out where would you get the money for such expenses. Will the sale be able to cover such? Will there be more than enough to cover both the expenses and the profit? This procedure is also known as the break-even analysis.

 

3. Start your business with your own money… yes, with your own money.

 

Many startups tend to cover the expenses through loans. They are thinking that it is fine, and that the loan will be paid within a few months or so - that they will be able to pay the loan back from the profits of their business. However, this mindset should be avoided.

 

New businesses sometimes take months or years before they generate profits. Not to mention that every month, you have to settle the expenses that you listed down in number 2, and that these expenses will also be deducted into the actual business income.

 

Moreover, loans have corresponding terms and interests. Such interests will definitely add up to the expenses that you would need to settle. Hence, penalties and more interests can occur if for instance, you unavoidably skipped a scheduled payment. So saving up and using your own money as a startup capital is far better. It is definitely less stress, and less responsibility on your part. This is one way of securing your business, and ensuring that your business will not sink financially.

 

4. It may be great to fly, but for now, try to start small.

 

Everyone wants their small business to be successful, with lots of branches, locations, revenues, teams and employees. However, remember that it is better to learn how to walk first before you run. Do not spread yourself too thin and take on too many expenses in the beginning. Your profit might not be able to catch up.

 

Always remember that by starting small, you are ensuring your business’ survival. Those entrepreneurs who begin with modest operations can recover and learn from their mistakes without taking on a lot of debt. Starting small will help your small business grow into a successful enterprise.

 

5. Document everything.

 

While, it's nice to do business with a handshake, there's no substitute for a well-written contract. Indeed, many contracts are not valid unless they are in written form. So make sure that for every transaction you make, there is a corresponding signed document, and that both parties do agree.These documents should then be legally notarized and filed. Documenting your agreements will save you from headaches down the line - and will definitely save your business. 

 

6. Choose and hire the right people.

 

Don't just hire the first person to come along with the basic qualifications you need. Look for someone with motivation, creativity and the right kind of personality to make it in your industry and fit in with your business. Then, once you've found that person, treat them well, engage them and make sure that you create the environment that they will thrive and give their all in.

 

7. Pay your taxes and bills on time.

 

Remember; it is important to pay what you owe - especially when it comes to taxes. IRS imposes harsh penalties and they even come after the business owner’s properties and personal assets. So make sure that payroll taxes are remitted accurately on time.

 

It is also important to pay your debts on a timely, regular basis. If you get a reputation for stalling on a debt, you could find it difficult to form business relationships in the future.

 

8. Do not forget to protect yourself and your business.

 

Most small businesses are sole proprietorships or partnerships. While these types of businesses are nice and easy to form, they also expose their owners to liability for business debts and judgments. Creditors and judgment holders can come after the owners' personal assets, like savings accounts and homes, once the business' money is depleted.

 

While insurance can reduce this liability somewhat, it is worth it to consider forming a corporation or limited liability corporation (LLC). These business structures will shield owners from personal liability, but there are more rules and requirements associated with them. Try to contact a professional lawyer to know more about the requirements for LLC.

 

9. Consult a Professional Lawyer.

 

There are rules and regulations in line with starting up a business. So it is best to know them all in order to be able to plan ahead and know the steps to take. Contact a small business attorney in your area for help. You can start with a free case review at no obligation.

 

Lastly, try to keep you edge.

 

Remain competitive. There are many ways to gain a competitive edge over other businesses in your industry: you could have a better product, a more efficient manufacturing or distribution process, a more convenient location, better customer service, or a better understanding of the frequently changing marketplace.

 

Do not forget to protect your trade secrets. A trade secret is that information that isn't known to others that gives you a competitive advantage in the market.

 

Also, it would help if you will stay proactive. Know the strategies to take if it seems that the business will fall into a challenge with an upcoming competitor. Do not wait to react. Always learn to plan ahead.