Do you think it’s time to strike out on your own and start your small business? It’s one thing to have an idea, and it’s another thing to put that plan into motion and start your business. For most entrepreneurs, taking the first steps to creating your business can be one of the most challenging processes along the way. Read the top questions we ask individuals when they are considering starting their small business.
1. What Kind Of Business Are You Starting?
The very first step you take before you start your small business is to decide how committed you are to it. Are you prepared to quit your full time job and devote your full time attention to it? If you want to start slowly (and that’s ok!) and work on your business part-time, it really changes the commentary that follows. Assuming you’re going to make this business your full time job, one of the first things you’ll need to decide is how you are going to structure it. Should you incorporate your small business or start off as a sole proprietor? Click here to read a thorough explanation of the pros and cons being a sole proprietor or incorporating as a small business. Do you still have questions? Contact Kent Accounting for a one-on-one consultation, to make sure you start your new venture on the right foot.
2. Getting Off the Ground
What Are You Willing To Risk: When I first started my business, it was humbling to reach into my personal bank account, withdraw $50,000… and then spend it on cards, furniture, website, etc. You’d be amazed at how fast $50,000 disappears when starting a business. More than once I had thought about the other things I could have purchased with that money. Furthermore, most businesses require anywhere from $150k – $300k of startup funding to pay for key equipment, leasehold improvements and other necessary business items. If you’re going to borrow that money from a bank, they will want a personal guarantee (i.e. they take everything you have, including your home, if you don’t pay them back). Are you certain you’re willing to risk it all? Be certain before you move forward.
Do you need additional investors for capital to get started? If you do, you’ll need a well-written contract or agreement in place before you accept funds, and you’ll want a solid plan for accountability regarding how you’ll use those resources. Kent Accounting can make sure you maximize the investments your partners are making. Talk to us today about how to organize the financial aspects of your business plan.
Business Development: Every business owner is first and foremost a salesperson. Can you sell your product/service? Do you know who will buy your product/service? Sales and marketing should be covered in detail in your business plan, which is discussed more in the next point. I separate it here to draw attention to the importance of clients. A business is nothing without its clients.
Write a Business Plan: There are a million clichés about why having a plan makes sense, but I’ll keep it simpler than that — any business that I have come across that was struggling had no actionable business plan. While a plan in and of itself doesn’t guarantee success, it is my opinion that the absence of a plan dramatically increases your odds of failure and/or creating a business you don’t actually want. The latter is the more concerning; I have met many entrepreneurs who work 60+ hours a week in their business and they are not happy with what they get out of the business (i.e. crappy clients, poor pay, etc). Furthermore, they are trapped in their business due to large debts that have personal guarantees attached to them. I will be writing a separate blog on what to put into your business plan.
Quality Control: How can you ensure you are delivering the services you are offering in a timely and professional manner? How can you ensure that the services you’re offering are the high standard you’re setting for yourself? What hiccups or roadblocks can you foresee in accomplishing that?
Customer Service: Who’s doing the basics, like answering the phone calls, responding to emails and checking the mail each day? These might seem like small parts of your daily routine, but once your business gets off the ground and you start getting busier, these customer service jobs might get lost in the bustle. Be sure you have a team member in place from the start to handle your incoming inquiries and basic day-to-day operations. For more information on how to set up your small business, contact Kent Accounting.
What Kind Of Licensing Do You Need: Your business could need a municipal, provincial, or federal license (or all three). For example, if you’re looking to provide health and beauty services, care for children, or serve food, a municipal license is a must. Spend time researching and understanding if your business requires specific licenses, certifications or permits to operate.
Liability Insurance: Keep your assets and property safe from any potential damages or obligations that could occur from your business. If there is an accident, or someone gets hurt on your jobsite, liability insurance will help keep your business and personal assets protected.
If you read the above and feel a little overwhelmed, then you’re in good company. I think that any entrepreneur who is being honest would tell you that starting a business is not easy and involves a great amount of uncertainty. That said, it is also one of the most rewarding experiences a person can experience. At Kent Accounting, we help folks get going and operate highly successful businesses. Would you like to chat? We offer everyone a free hour of time, so give us a call and we’ll help you any way we can.
Disclaimer: Tax and legal rules change frequently and can depend on your individual circumstances. The above is not to be relied upon as legal nor tax advice and is meant for information purposes only. Please consult a legal and/or tax professional.