Before You Open the Doors
Build it and they will come. It sounds good, but that’s not exactly how it works in the business world.
Opening the doors of your business for the first time can present a host of challenges, depending on your industry. And in some instances, it gets even more complex upon discovering you’ve overlooked a pertinent step that could put your business at risk.
But don’t fret. Here are five elements you’ll need for your new business to ensure the first year goes smoothly:
1. Business Plan
You may cringe at the thought of drafting up a business plan, but don’t overlook this pertinent document. A business plan can provide you with a sense of direction along with milestones to help track and evaluate your progress. It’s also typically requested by potential investors or lenders should you seek outside funding.
Don’t know where to start? The United States Small Business Administration (SBA) recommends including the following components:
- Executive Summary
- Company Description
- Market Analysis
- Organization and Management
- Service or Product Line
- Marketing and Sales
- Funding Requests
- Financial Projections
Additional guidance on SBA website where you can do a search to find information available about starting a business.
2. Funding Sources
Although it definitely takes more than money to run a business, it can be difficult to get up and running without an adequate amount of cash up front. If you don’t have the funds available, securing a small business loan may be a feasible option.
Not only do you retain complete ownership of your entity once the outstanding balance of the loan is paid in-full, you’ll also develop a relationship with a bank, which can be paramount if you need additional financial products down the line, notes SurePayroll.
It may be difficult to secure a conventional loan, particularly for newer businesses. Look for places that offer less stringent qualification criteria, and be mindful of the potential damage that could result if you are unable to satisfy for your debt obligations.
It’s easy to put the cart before the horse when starting a business, particularly in those instances where demand is high, but a for-profit entity has not yet been established. Avoid costly penalties or legal actions by ensuring the entity is in compliance with local, state, and federal regulations. A few important tasks to complete:
- Claim your name
- Choose a legal structure
- Retrieve an FEIN number from the Internal Revenue Service
- Register for a Tax ID at the state and local level
- Secure business permits and licenses
To make sure you are in compliance, visit the Small Business Development Center in your respective area of residence or contact your state’s department of revenue for additional guidance.
4. Spending Plan
Once you’ve secured a source of funds for your business, the planning doesn’t stop there. The next step is to create a budget. Consider all the uncertainties that accompany the start-up years. And be warned: in most instances, startups generate minimal profits in the first year.
5. Reliable Team
In order to thrive as a business owner, you will need a strong support system to help you through those rough patches. Surround yourself with a motivated and reliable staff, a network of like-minded business owners, and a business mentor to lean on for guidance through the process.