Tips for the Small Business Owner

Do you own a small business? Are you planning to start your own venture this year? 2014 is a good year to start your small business. The economy is starting to recover after the recession. If you start a small business now, there is a good chance that it would succeed. That’s why we have listed here
a few ideas that you can use if you are a small business owner or you are planning on becoming one.

Save Money First

Many small business owners venture without saving money first. They go on with their venture and they use funds that they get from loans or from what they can borrow from friends and family. But relying on borrowed funds is not a sustainable practice. This is why many new businesses fail at the early stages.

First of all, it is important that you realize something about small businesses. You cannot expect to make money right away. Typically, it would take years before you can make any profit. For the first few years of your business you would be losing money. That’s why it is important that you have deep pockets during that period. You should have enough funds that you can draw from. If you don’t, then you will probably have some trouble. Relying solely on loans to fuel your business will spell trouble. You should save money first before you start your own business.

Start Small

When you are starting your business, you should start small. That would keep your expenses down. Do not rent a place if you can do your business at home or somewhere where it would be free. Don’t hire full-time employees if you can’t find enough work to keep them busy all the time. Others make the mistake of starting out big and spending on things that are not necessary. When you start out small, you don’t lose a lot when you make mistakes. But when you spend a great deal and your business fails that means a great deal of loss. When you make a mistake on a small scale, you would have more chance to bounce back.

Protect Your Personal Assets

Many small business owners start their venture without thinking how it would affect their personal assets. Many are unaware that when they establish a business, they would be personally responsible for any debt or any judgement that the business might incur. If your business should fail, then the creditors might go after your personal asset. You can protect your personal assets by establishing an LLC or a corporation. Find out more about the different types of business that you can establish and how you can properly protect your personal assets.

Understand How Your Will Make a Profit

Many small business owners start out without knowing how they can make a substantial profit. They are unable to explain that in simple terms. You should have a clear idea on how much your operating costs will be and how you will be able to attract customers. If you cannot explain the process in a few simple terms, maybe you need to go back to the drawing board and look over your plan for your business.

Have a Plan

Do you have a business plan that you will be following? If you don’t and you just plan on improvising as you go along, then you might be in trouble. When you have a plan, you know how much money you need to save before you start your business. A good plan will also allow you to tinker with your business even before you start it.

A good business plan would need to have a break even analysis and a cash flow projection. The break even analysis is important so that you have a clear idea on when you can say that you are making money from your business. A cash-flow projection is important so you know what it is that you have to do as the money starts coming in. Even if you are getting plenty of clients and customers but you are not getting paid soon enough, then your business might not last. That’s why it is important that you can plan for those events. Having a plan will also help you to determine how much money you would need to start your business.

Be on the Cutting Edge

Being able to come up with something unique these days is hard. That’s why chances are that the business that you will be establishing has some sort of existing competition already. You will be at a disadvantage against those competitors because they have a head start. It is important that you should have an edge over them. By having the edge over your competitors you would be able to win over more customers.

The most important part of having an edge over your competition would be making sure that you secure your trade secrets. Trade secrets can include your client lists, manufacturing methods, marketing techniques and basically anything that you use to get clients and make your products and services unique. The bigger your business is, the harder it becomes to secure your trade secrets.

Another important means of keeping your business on the cutting edge is by reacting to changes and developments quickly. If there is something bad that happens which can affect your venture in a negative way, you should be able to react quickly to it, so you can minimize its impact.

Hire Good Employees

As your business starts to expand, you would need more people in order to run it properly. It is important that you hire good people to help you out. Don’t just settle for someone with mediocre skills. If you need to spend a long time on looking for an employee, then do so. A highly skilled, enthusiastic and intelligent employee can be more valuable to your company than two or even three who are just reasonably competent. The bottom line is that you should not settle for anyone less than an excellent employee.

Watch Out for the Legal Status of Your Employees

When you start to hire employees for you company you should watch out for their legal status. This is important so that you don’t get taxed unnecessarily. When you hire independent contractors for example, make sure that they will not be taxed as full-time employees. The best way that you can do that, is by having them sign a service contract.

Another important thing to make sure is that you protect your rights to terminate their employment. Do not make promises to your employees that they would only be fired under certain conditions. That might limit your ability to end their employment in case some problems arise later on.

Pay Your Bills and Taxes on Time

When you establish your business, you will have additional bills to pay, plus there are the taxes as well. You need to make sure that you pay those on time so that you do not end up in trouble in the long run. The IRS can hold you personally liable for those taxes.

These are just some of the things that you should know when you want to establish a business of your own.