Monday Morning Money Moment: July 10, 2017
Checklist for Starting a Small Business
Welcome back to the Monday Morning Money Moment here at Budget Boss. I hope you all had an amazing weekend and it was full of fun and relaxation. I know some people who did not get to relax, and they own small businesses. This week at Budget Boss is going to be all about small business. Owning your own business can be challenging, frustrating but also very rewarding and exciting. A lot goes into it and it is important to know that it won’t be a walk in the park. This week I will have some tips for those wanting to open their own business but also those already in it for themselves. There are many factors you have to take into consideration before taking the plunge. In today’s post, I will go over a small checklist before starting a small business.
1) Have Business Plan
Creating a business plan with financial projections will force you to think through the details of what it will actually take to make it happen. Just like a personal budget, your business plan will be a living, breathing document. Things will change, often drastically, so having a plan in place will allow you to roll with the punches. Make sure before you start that you also research the viability of your business in your area. Search out competitors and see how they are doing and what they are doing right and wrong. Many factors go into making a successful small business and a great idea is just one of them. Do your due diligence.
2) Money Management
Many people think about what is the number that it will take to make their business profitable. They, however, neglect to think about what they need to survive outside the business. You have to remember that you have to live while starting this business and you have bills to pay. The first few years of business can be lean ones even running negative some months. Do you have the backup necessary to survive these lean times? A lot of businesses fail not because they were bad ideas, but because the money ran out before it could be recouped. Your business plan should include a personal money management plan as well and make it for a minimum of 2 years.
3) Business Account
Tying into the last post, keep your business and personal accounts separate. It becomes all too easy to pay for business expenses out of your personal account but then makes things confusing later on. Along that account having a business line of credit and credit card is important as well. Just like for yourself, remember that credit has to be paid back. Getting that line if credit approved from the bank shouldn’t be a glorious day, it should be business as usual. It is not free money so don’t go shopping like you just got out of jail. Budgets for the personal account and the business account are necessary so make sure you have them both.
4) Website and Social Media
You have to have a website these days. It is your brand and your “resume” to your potentials clients. Make sure you develop an eye-popping website but also know that for a good website it will cost. Anticipate this cost before getting into the business. Just like your business plan your website will be a living breathing thing that needs to be updated constantly. The web is full of dusty websites that haven’t been touched in years, don’t be one of them. Also, a website is important but it is only useful if people are going to it. Use social media to drive people to your site. It’s great because it is free and can be updated super easily. A strong web presence will help your business but it isn’t easy and requires time. Take some time every day to stay current and it will pay off.
5) Know your Partners and have a Plan in Place
If you have started a business with a partner make sure that you hammer out the details in regards to your relationship. Have a share ownership plan in place and expenses plan in place. Both parties have to be giving to the relationship evenly for it to work. If your business takes off you want to know what is owned by whom. The reason this is important is that if something happens to one of the owners the remaining owner will have to compensate the fallen owner’s survivors. Many businesses have fallen apart from owner turmoil and you don’t want yours to do that same. Have everything on paper so it can be brought up if needed.
6) Insurance
Owning a business requires insurance on many levels. Liability insurance and worker’s comp will definitely be necessary. Also, remember that when you are on it on your own that your health and well-being are vital to the business surviving. Have a plan in place that includes insurance if you get sick or hurt or your business may go under. Buy/sell insurance is also necessary along with the business plan if you are in a partnership. If your partner dies do you want his wife to now have control over half the company? Setting these plans in place beforehand and incorporating insurance is vital.
7) Seek out Experts
Having a mentor is HUGE. I have one that helps me daily with my business and it is invaluable. Having someone on your side that has been there and done that guiding the way is vital. The same thing goes for anyone who can help you in aspects of your business that confuse you. I have web experts helping me with my website and social media and they have done a great job. When you start a business you know about a tenth of what you need to know if you are lucky. Don’t be afraid to admit your lack of knowledge and seek out those in the know.
A big question you have to ask yourself when going out on your own is: Are you ready to devote your life to this business? Work weeks when self-employed are 70-80 hours a week. Forget the 9-5, it’s all day every day so make sure you are prepared for that. Use all the valuable resources that can be found online and in your community. Make sure you are ready for the sleepless nights and missed nights out. Starting your own business is tough, scary, frustrating and exasperating. It can also be liberating, rewarding and the best choice you ever make. Make sure you are ready to take the plunge but never let fear stop you from pursuing your dreams!
Thanks for reading my post today and don’t forget to tune in tomorrow for my “Tip of the Week.” Have a great day friends!
“If you’re going to run a small business, you need to know what everyone is doing, be the first one in and the last one out, and work weekends.” – Glen Mazzara
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Joseph James Francis is a Financial Advisor. You can find him on various social media platforms and at www.budgetboss.ca.