The following is a guest post.
One of the most reliable ways to propel a small business to success is to consider the endeavor from the viewpoint of a potential investor. Would you put your money behind the business if you didn’t own it? If the answer is no, then there’s work to be done.
Never Lose Sight of Cash Flow
Any business thrives or dies according to its degree of cash flow. Nothing will kill a new business faster than negative cash flow. Before you even open the door, look at your personal budget. Can you survive for six months even if your business doesn’t make a dime? And by survival, can you say that you and your family will eat and have the necessities, and that the business will be “fed” as well?
Don’t Enter a Market You Don’t Understand
All too often, would-be-entrepreneurs jump into a business sector because the numbers look great, but in reality, they know absolutely nothing about the industry. It’s a good idea to work in the given market before you open your own shop. You need to know how to do every single thing your employees will do, or you will have no clue how to judge their effectiveness, or how to improve either your performance as a service provider or quality as a product supplier.
Get Your Budget, Marketing, and Business Plans on Paper
Even if your working knowledge of these key business documents is in your head, take the time to work them out on “paper.” You will need to adjust each one periodically in reference to successes and failures, so having a written document is invaluable in this regard. Additionally, the act of physically formulating a budget, laying out a marketing plan, and forming the step-by-step goals in a business plan forces you to think about each step and not gloss over areas where you are personally deficient.
Research, Research, Research
Stay current in your field. Read relevant articles, stay abreast of new developments, and research every product or service for which you will be paying a fee. If, for instance, you need to accept credit card payments which undoubtedly you will, don’t just go for the first service you see advertised. Read merchant account reviews and know what you’re getting into. Credit card fees can nickel and dime a business to death, and chargebacks (returns) are even worse.
Hire a Lawyer and a CPA
Don’t miss out on the advantages of proper structure both in terms of limiting your personal liability to the endeavor and in potential tax advantages. Do you need to be incorporated? Is an LLC enough? What can you deduct? If you work from home via the Internet, what documentation do you require to claim your deductions? What kind of insurance do you need?
Perhaps the most important component of any small business is flexibility. Don’t get fixated on any given plan or direction. Adjust according to what works and doesn’t work in terms of profitability and market responsiveness. if you are afraid of change, change will undoubtedly send your business to the bottom.
Be prepared to review and to upgrade your business plan regularly, and be flexible enough to be happy with where your business winds up, rather than unhappy because it’s not where you thought it would be. If you’re in the black, and you’re still happy about going to work every day, you’re already for more successful than most small business owners.
Ms. Bekiroglu is an author, freelance writer and editorial consultant for mobilepaymentgeek.com. After receiving a Bachelor of Arts degree from the University of South Florida, she became determined to eliminate her student loan debt, thus becoming very knowledgeable about money management. Now she seeks to educate others with tips in both personal and business finance.