How to make your small business work?
1. Before starting up on your business, ensure you have stacked up as much savings as possible.
The best plan is to save up maximum possible investment amounts, inclusive of living expenses for a year or two due to the odds of your business not being profitable for one to two years.
Prior savings will enable you to invest most of your profits back into business for equipment, space, marketing and insurance requirements.
2. Think small while starting on your business
Do not rent premises if you can work elsewhere, and do not hire people until you are sure you can keep them engaged all through. (Hire independent (sub) contractors / temps in the meantime).
You can afford to make mistakes and learn from them with recovery avenues if on a smaller scale.
2. Protect your personal assets
When engaged in a business by yourself, even if you take up a business liability insurance, sometimes, you may run up huge debts, and creditors can go after your personal assets, such as car and house to repay the debts. Instead, consider formation of a Limited Liability Company (LLC) or a corporation to protect your business and own self.
3. Ensure you make a business plan & understand ‘break-even analysis’.
The first step of a business plan involves understanding dynamics of your profit numbers and creating a ‘break-even’ analysis.
A business plan presents an idea of what your projected start-up costs and marketing strategies are. Make your numbers work on paper, and you are well on your way to making them work real time.
5. Pay your bills and taxes early and on time.
Pay your payroll taxes, especially those withheld from your employees’ paychecks, on time. The federal and state tax authorities can hold you personally liable for these taxes in addition to strict penalties.
You gain trust, a positive credit profile and a ready-made safety net just in case things go badly.
6. Have all agreements in writing
Although not a legal requirement, putting most agreements in writing (includes leases / rent agreements / service contracts / purchase orders / offer letters) is a wise choice to avoid trouble in the future.
7. Hire and retain competent people
It is essential to treat your employees and independent contractors fairly. Such a workforce will enhance your reputation on and off the job. Most essentially, clients will love the enthusiastic and knowledgeable cogs of your business, stay loyal and provide more referrals!
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