Launching a New Small Business? Start with These 5 First Steps!
Starting your own business is both exciting and daunting. While the idea of turning your great idea into a profit-generating reality can be invigorating, it can also feel like a logistical nightmare. One of the specters looming large in your imagination may be an all-too-familiar statistic: Only one-third of small businesses survive the first five years after starting up.
If you feel like you don’t know where to begin, but you want to start right, use this list. Once you tackle these key topics, you may be surprised at how quickly your fledgling enterprise gains momentum.
Speaking of To-Dos: Does your business accept card payments?
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Become a Cash-Flow Expert
Did you know that 82% of small businesses fail simply due to poor cash-flow management? The U.S. Small Business Administration (SBA) emphasizes that to succeed, business owners need to understand not just accounting, but the impact of cash flow on a business.
Cash flow isn’t just about the dollar value of funds coming in and out of your account. It’s all about timing. How long will it take for you to collect payments from your clients? Will they synchronize with times when you need to buy new inventory? It’s essential to plan for these eventualities realistically.
Since only 24% of Americans pay in cash for what they buy, it’s unlikely that paper money will be a large part of your cash-flow equation. Credit card payments, on the other hand, will. Thankfully, there are cutting-edge credit card reading technologies available that make payouts available to business owners quickly. With SumUp’s point-of-sale mobile card reader, for example, transactions take only 1–2 business days to process. This $19 reader can be paired with your existing phone or tablet, keeping the cost of using it extremely low.
An added bonus is that the corresponding free SumUp app has features that promote proper cash-flow management automatically, such as inventory reports, payout monitoring, and sales tracking. The more time that you invest in good cash-flow management practices and robust digital tools, the better chance you have of creating a flourishing business.
Define Your Legal Structure
If you are launching a business without partners or employees (at least to start), you can begin with a sole proprietorship. With a sole proprietorship, you can start to do business straight away. There is no need to register the business legally, although you can register a business name if you want.
What a sole proprietorship does not create, however, is a separation between your personal assets and liability and those of your company. If your sole proprietorship were to close its doors, you would be personally liable for your business debts. You would also be personally vulnerable to lawsuits.
To lower your risk, you can set up a Limited Liability Company (LLC). If you have partners you are going into business with, you will want to register for a Limited Partnership (LP) or Limited Liability Partnership (LLP). If you aren’t sure which kind of entity to create, the U.S. Small Business Administration website lays out all these legal structures clearly.
Create Smart Bookkeeping Practices from the Outset
As a small business owner, you will have to wear many different hats, including that of Accountant. The time you invest learning about best accounting practices is always well spent. Consider this a priority from the moment you open your business bank account.
A crucial aspect of that equation will be understanding your tax obligations. Those will depend on the legal structure of your business and whether you have employees. If you are going to be selling products (rather than services), you will also need to understand sales tax regulations.
Luckily, the software solutions available today make day-to-day bookkeeping, big-picture accounting, and taxation as painless as possible. Accounting solutions like QuickBooks for Small Business are smart enough to help you. If you prefer a human touch, outsourcing your accounting to a part-time remote worker is an increasingly affordable option for startups.
File for Licenses and Permits
Almost all small businesses need a combination of federal, state, and local licenses and/or permits to remain compliant and profitable. The regulations that apply to your business can vary depending on your location, so it is vital that you do your homework. The SBA website is the perfect place to start.
It might be necessary to set aside a day to perform your research and fill out all the necessary forms. Each license or permit will have fees associated with it and a time frame of validity. Schedule reminders for the expiration dates of your licenses and permits diligently because it is often easier (and cheaper) to renew them than it would be to initiate a new application.
Establish Your Digital Presence
Since it isn’t 1995 anymore, let’s assume the bulk of your target customers have already recycled their Yellow Pages. Most customers will be learning about your business—or at least learning more about it—electronically.
Cover these two bases first:
1. Create Your Website. Internet domain registrars, such as Name.com or GoDaddy, have tools for searching registries so you can determine whether the domain name you want is already taken. Once you have registered a domain name, you can start building your website or commission it to be created for you.
2. Create Social Media Profiles. At a minimum, you should create Facebook, LinkedIn, Instagram, and Twitter profiles for your business. The marketing power of these social media profiles can’t be disputed.
Once you have taken these key steps, you can start nurturing your business growth from a place of strength. With the nuts and bolts out of the way, you can embark on new adventures—like marketing and recruiting—one step at a time.
Ready to launch? Don't forget a solution for taking payments!
The SumUp Card Reader is a simple and affordable way for your business to accept debit, credit and contactless payments. No monthly contracts. No hidden fees. Ever.Buy It Now