As a new small business owner, the prospect of realizing your goals is exciting. But while entrepreneurship can provide access to more wealth and freedom, it also takes a lot of work to achieve the success you’ve always dreamed of.
While there’s no one-size-fits-all approach to running a business, these nine tips can help you find the right strategy to become an effective entrepreneur.
1. Face Your Fears
There are a lot of reasons you may worry about going all-in on your business dreams. But if you’re determined to succeed as a small business owner, then you’ll have to address those fears head-on and get to work.
That’s not to say, however, that you shouldn’t be cautious. Many new business owners have a lot to lose, and the prospect of success isn’t guaranteed.
So take some time to write down your fears about running your own business. Be honest and realistic with yourself as you address them to determine which fears are relevant and which ones aren’t. Then start taking steps to resolve them.
2. Understand the Legal Requirements
Depending on the type of business you’re running, you’ll likely be required to comply with various laws and regulations.
At the minimum, you may need to register your business with your state and get a business license through your city or county. But in some cases, you may also need to comply with organization or incorporation requirements, sales tax laws and other regulations.
Take some time to research what you’ll need to have in place to avoid hefty fines from state and local governments. If you’re not sure, you can contact your local chamber of commerce.
3. Separate Your Finances
When you’re just starting out, it may be tempting to use your existing bank and credit card accounts to run your business. But that can make things extremely difficult when it’s time to do your accounting or file your tax return.
That’s especially true if you’re using a credit card for both personal and business expenses and paying interest. While you’re allowed to deduct interest paid on qualifying business expenses, the same isn’t true for personal transactions.
Work with a financial institution like SouthEast Bank to get a separate business bank account and business credit card to make it easier to keep things separate and simple.
4. Start Building Credit
It can be challenging to get approved for financing as a new small business. While there are online business loans and options like merchant cash advances available, they often charge high interest rates, which can make it even more difficult to meet all of your other expenses.
If you’re a sole proprietor, you can’t have a separate credit history for your business because you essentially are the business. But if you’re starting a limited liability company, partnership or corporation, be sure to apply for an employer identification number from the IRS.
Next, you can apply for a DUNS number, which is issued by Dun & Bradstreet, one of the major commercial credit bureaus.
Finally, consider applying for a small business credit card that reports your account activity to the business credit bureaus. You may also seek out vendors that report your payments to the business credit bureaus. By following these steps, you may be eligible for a business credit score, which can simplify the financing process for your business.
This process can take time, but it can make a huge difference down the road when your business can meet revenue and time-in-business requirements that most business lenders have.
5. Make Expense Management a Priority
It can take a lot of spending to get your business up and running, especially if you’re selling a product or need a lot of supplies to offer a service.
But when you’re in a flurry of spending, it can be easy to let some unnecessary charges slip through. And if you’re not careful, not keeping track of your transactions could leave you feeling overwhelmed when you go to organize them.
Now that your finances are separate, use a financial management tool like Autobooks to help manage your business. Autobooks not only streamlines your money management but also helps facilitate online payments and digital invoices.
The sooner you set up your financial management process, the better.
6. Don’t Quit Your Day Job
Unless you have a robust emergency fund, it may make sense to continue working your day job while building your business on the side. That way, you can continue to earn money while you build your business and get through the difficult early stages where expenses outpace revenue.
Then, as your business starts earning more money, you can slowly transition to running it full-time.
7. Know Your Strengths and Weaknesses
As an entrepreneur, you have to wear a lot of hats. You’re the salesperson and the accountant; you run the marketing and the finances. Unless you’re in a partnership, you have to do just about everything it takes to build the business from scratch.
Various small business tools can help, but eventually, you may need additional support. Once you can afford it, consider outsourcing some of your tasks to others. This can come in the form of hiring employees or using a virtual assistant or freelancer.
As you work on outsourcing areas where you need extra help, you can give more time and attention to your higher priorities, which can help your business grow faster.
8. Reevaluate Your Strategy
Making a plan for how you’re going to run your business is important, but once you start, you may find that reality doesn’t always align with your assumptions. So don’t be afraid to reevaluate your strategy.
That’s not to say that you should expand outside of your niche too quickly or spread yourself too thin with various product and service offerings. But if you notice that something isn’t working, determine whether it’s a short-term problem or a long-term one, and consider ways you can make changes to stay on the right track.
9. Do Your Research
It’s crucial to research your target audience, your potential competitors and how you’re going to sell your product or service before you even start your small business. But it’s just as critical to continue doing your research once you’re in the thick of it.
Whether you want to pursue another market segment, borrow money, take on investors or introduce a new offering, take time first to do your due diligence and determine if it’s the right move for your business.
The Bottom Line
Building a small business takes time and a lot of effort, but with the right research and tools, you can achieve your goals. As you work to start your own business, use these tips to determine your priorities and avoid pitfalls so you can achieve the success you’ve dreamed of.
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Information contained in this blog is for educational and informational purposes only. Nothing contained in this blog should be construed as legal or tax advice. An attorney or tax advisor should be consulted for advice on specific issues.