First sparks an idea. Next, create a vision. Now you have the blueprints of your small business laid down and ready to roll out. Before you cut the red bow and celebrate your launch, take a second to triple-check quadruple-check this list of tips to ensure you have all the wrinkles ironed out and that your business plan is as close to fool-proof as possible.
Too many entrepreneurs trip over their own feet by running too fast; pause and read through these essential pointers before starting your small business.
Refine your idea
Pursuing your passion as a profession is romantic, but passion alone cannot keep you afloat. You may have an idea of what you want to offer, but you need to create something that makes you entirely unique (and better!) than your competitors. Do research online and in the area to see if any companies offer something similar to your business and, if so, what you can implement or innovate to be different.
Plan, plan, plan
A business plan is essential because it allows you to play around on paper with various strategies before you have to play for keeps. Your plan can be as detailed or simplistic, long or short as you’d like, so long as it covers some essential items, such as:
- Profit-loss forecast: Used to predict profit and losses over the coming financial year due to a variety of variables.
- Break-even analysis: Represents the number of sales required to cover startup costs.
- Cash-flow analysis: An analysis of the inflows and outflows of cash during a specific period.
You can be the next Mark Zuckerberg with a groundbreaking idea, but without the right framework in place, fall flat on your face.
Set your legal structure
Most small businesses are sole proprietorships or partnerships. These are easy to form but offer essentially no protection for the owner. In the event you cannot settle an outstanding company debt, creditors can come after your personal assets and property as collateral. To avoid personal liability, consider forming a corporation instead. LLCs have more rules and requirements, but they can shield you from personal liability.
Going into business is inherently risky; if you don’t form an LLC, be sure to purchase insurance to offset liability. You never know when an accident may occur or a lawsuit filed, and an unfavorable settlement could leave you bankrupt of all your worth. In addition to property insurance, there are several forms of personal small business insurance you should research, including:
- Worker’s compensation
- Umbrella liability
Assess your finances
Always fund your small business with as much of your own money as possible. Too many small business owners cover their start-up costs entirely through loans and angel investors, expecting to pay back their debt with the profits soon to be made. However, it can take months or even years to generate a profit, and loan repayments may become an insurmountable burden that sinks your business. Use as much of your own capital as possible to mitigate this risk.
You need to walk before you can run. Sure, every entrepreneur envisions multiple locations, many employees, and loads of revenue, but you need to take baby steps before launching your startup on a large scale. Consider operating your company online until you begin experiencing organic growth and build a loyal customer base before spending money on rent at a brick-and-mortar location.
Build the right team
Once it’s time to expand, do so by hiring only the cream of the crop. Pre-screening any potential employee is imperative for maintaining building the best team. If you’re asking yourself, “How do employers do background checks?”, it’s probably much easier than you expect, and perhaps not as expensive as you’d assume.
Create a brand and company culture
Finally, before launching your startup, make sure you’ve established a company brand and culture. Yes, this includes visual recognition by creating a logo and catchy business name; moreover, you need to establish your company’s personality which customers can identify and relate to. How do you promote your unique mission statement? What are your company ethics? Customers are much more likely to gravitate towards a business that stands for and believes in something relatable to their own belief systems.
These eight tips by no means exhaust the list of everything you need to do before launching your small business, but by following these pointers along the way of your step-by-step creation, you’ll be much more equipped for success.