Just a few minutes of online research will provide a wealth of tips for starting a new business. However, many of these tips are noise or might not apply to your particular business. Moreover, you must be wary of tips for starting a new business from sources that are trying to sell you some unnecessary product or service. In other words, you should always consider the credibility of the source before you rely on any business advice.
Instead of taking tips from random bloggers, surround yourself with professional advisors who benefit from making you successful. For example, find a good accountant, marketing firm, banker, and lawyer. These professionals only benefit when they give you good advice.
However, even with professional tips for starting a new business, you should always integrate your knowledge and the tips from all your advisors before making a reasoned decision. Some of the advice may conflict or you may need to defer some actions until your business is more mature. Here are some tips for starting a new business to consider when you develop your plan.
Understand the Business You Want to Run
Enthusiasm is essential to being able to run a business. If you do not love your work, you will be more likely to provide substandard services and experience burnout. In the long run, your investment could be lost.
To make sure you can maintain your enthusiasm from the very start of your business, one of the most important tips for starting a new business is to understand the business from top to bottom. For example, you might have a burning desire to become a bounty hunter, but to do so, you have to understand how bail bond services work. Without that knowledge, you will not be able to master your profession. Worse yet, you will not be able to grow with your business and be pigeon-holed in your industry with no hope of advancement or expansion.
You have a few options for understanding exactly what you are getting into:
- Work in your industry: Experience is one of the best teachers. Working in your industry will teach you what works, and what does not. When you open your business, you will have the ability to identify those practices that will make you money and jettison those practices that waste your time or money.
- Hire experienced employees: Surrounding yourself with more experienced or more educated employees will allow you to benefit from their knowledge and understanding. Again, these employees will be able to help you quickly develop business practices that work and ignore the ones that do not.
- Buy an existing business: One of the secret tips for starting a new business is to not start a new business. Instead, find an existing business that you can purchase and make your own. This not only gains you experienced employees and tested business practices, but the business will have existing contacts, customers, and vendors to give your “new” business a head start.
Develop a Business Plan
A business plan is more than busywork. A business plan is a way for you to organize your business’s goals and develop the pathway to reach those goals. Moreover, even though this is one of the most common tips for starting a new business, many business advisors neglect to tell you that investors and lenders often use the business plan to decide whether to provide capital to your business. Without a business plan, you might not be able to get funding for your business.
A business plan will vary depending on your industry. However, some of the information your business plan will incorporate includes:
- Owner information: You should consider how you will structure your business ownership. This will affect your ability to repay lenders or produce a return for investors.
- Business model: You should know how you will earn your revenues, where you will get your supplies, and what your expenses will be. Here, it is not necessary to have exact numbers. Instead, you are just identifying the sources of your revenues, supplies, and expenses. For example, if you plan to run an office equipment store, you need to figure out where you will get your office equipment from, how you will use equipment sales and leases to make money, and what your overhead expenses will be.
- Revenue projections: You will probably not have exact numbers at this point, but you should have an idea of the scale of your revenues and expenses. Moreover, you should be able to project the growth in revenues and expenses over time.
- Capital needs: Investors and lenders will need to understand what you need to get your business off the ground and keep it going until your business becomes profitable. They will also want to know where their capital is being spent.
No guide to tips for starting a new business would be complete without mentioning funding. When you start your business, the source of funding can come from one or more places including:
- Personal savings: You can use your personal savings to start your business. This is an easy source of funding and would not rely on qualifying for loans or satisfying securities laws. However, using personal savings is risky because your business may take a while to become profitable and without your savings, you risk not being able to meet your living expenses.
- Bank loans: Bank loans are a good source of funding because you do not need to share ownership and control of your business like you would if you take on investors. The drawbacks of bank loans are that you have to pay them back (unlike investors) and you may be unable to qualify for a loan if your personal credit history is poor.
- Small Business Administration (SBA) loans: The SBA is a government agency that supports small businesses — businesses with fewer than 500 employees — with government-backed loans. The benefit of SBA loans is that they generally have lower closing costs and interest rates than bank loans. The drawback is that you may need a small business administrative lawyer help you navigate the SBA loan application process.
- Investors: Whether you attract investment from the public, an angel investor, or a venture capitalist, investors provide an infusion of capital in exchange for an ownership share in your business. The benefit of taking on investors is that the investor shares your risk of failure. As a result, you are not required to repay the investment. If your business succeeds, the investor benefits by an increase in the value of the ownership share. The downside of investors is that you have a legal duty to protect their investment.
- Co-owners: One of the easiest ways to share the risk in a business is to have a co-owner. Each of you can contribute your talents and working capital. The benefit of having a co-owner is that you have someone to share responsibility with. The downside is that each of you has a say in how the business is run and this can lead to conflict.
Find a Location
Your location will depend on a number of factors, any of which might influence where you locate and whether that location has an impact on your business:
- Transportation access: Almost every business needs access to transportation. Whether you are a manufacturer that ships goods by rail or truck, a professional services firm that requires employees to commute, or a retailer that needs both access and visibility to your customers, you need to understand how access to transportation affects your business.
- Cost: The cost of your lease or purchase will depend on the location and the type of property you need. For example, warehouse space will have a lower price per square foot than office space. Remember to include your overhead expenses, such as parking, heating and cooling, and security, so you can compare apples-to-apples.
- Zoning: Some businesses are required to be located in certain areas. For example, businesses that use toxic chemicals like printers or produce runoff like livestock farming may be restricted in where they can be located.
- Improvements: Leasing unimproved property allows you to tailor the space to your needs. The downside is that you need to arrange for commercial lighting, electrical, and plumbing contractors to build your tenant improvements.
Staff can make or break a new business. One of the critical tips for starting a new business is to hire carefully and fire when needed.
Before you begin hiring, make sure you know exactly what you are looking for and do not compromise on your standards. If you need someone with specific qualifications, find someone with those qualifications. Working around an unqualified or unlicensed employee will likely become more trouble than it is worth. For example, if you need licensed commercial HVAC contractors for your HVAC installation and repair business, make sure all your applicants know they need a license to be considered.
On the other hand, when you have the opportunity to hire someone with experience and management skills, you should try to find a way to meet their salary demands. Experienced managers are hard to find and can cover their costs by making your workers more productive and freeing you up to manage the business.
Have a Legal Compliance Plan
Many businesses make the mistake of assuming that they only need to worry about legal issues after they receive a nasty letter from a regulatory agency. However, in many situations, that point is too late to avoid fines and shutdowns. For example, operating without a license, failing to file sales tax reports, or even having dirty vents can have government regulators itching to shut you down.
A compliance plan is a set of business procedures to stay on the right side of the law and avoid getting an enforcement letter in the first place. Your exact compliance plan will depend on your industry. Thus, a retailer needs a plan to make sure sales tax is properly reported and paid while a bail bondsman must have a current surety agreement to back the bonds written. However, in both cases, a local lawyer can research the laws you must comply with and develop a plan to make sure you remain in compliance.
Develop a Marketing Plan
Regardless of what your business does, you will likely need a plan to attract customers and clients. Unless you rely strictly on referrals, you will need to identify how consumers search for your services and put yourself in front of them.
There is no more effective marketing channel than online marketing. With properly targeted digital marketing services, you can reach the exact consumers you serve and convert them to paying customers.
For example, as many as 93% of online experiences begin with the search results from a search engine. By using search engine optimization on your website content, you can substantially increase the likelihood that your website appears in the search results of your desired customer base.
Get an Accountant
One of the most overlooked tips for starting a new business is to hire a good accountant. A good accountant can help you design your accounting process from the start. This will allow you to save money on your accounting fees at tax time if you have all the necessary records and your books are accurate and complete. This will make your accountant’s job easy and reduce the likelihood that your tax filings will attract the attention of auditors.
Moreover, a good accounting system will give you an accurate picture of your business’s performance at all times. More than a few businesses have been taken by surprise when a quarter or two of poor performance sends them to a bankruptcy attorney. With an accurate and complete financial picture, you can build up your reserves to survive during slow times and reduce the risk of going out of business.
Understand Your Customers and Clients
Your customers and clients are critical to your success. Understanding what they want and delivering it to them is one of the most important tips for starting a new business.
If you are delivering standard goods or services, think of ways to improve on your competitors’ processes. If your business has developed a new product or process, consider hiring consultants, like a product design consulting firm, to make sure you have not overlooked any of your customers’ or clients’ needs.
Opening a new business can be stressful. Although it is not among the typical tips for starting a new business, finding a way to manage the stress of running the business will be important to its long-term success. Some examples of managing stress include:
- Stay healthy: Exercise, a good diet, and a clean environment can keep you in good health. Remember that your business can be a vector of disease transmission, so keep it clean and hire commercial furnace cleaning services to keep the air clear.
- Delegate responsibility: Stressful situations can be avoided by delegating tasks to employees rather than shouldering them all yourself.
- Take breaks: Although you are ultimately responsible for your business, you do not need to be tied to your office desk. Take breaks, vacations, and days off. Do things you enjoy. Your stress levels will be much lower.
Starting a new business can be rewarding. It can also be stressful. Just remember to have a plan, surround yourself with experts, and stay enthusiastic.