A Plan for a Successful Launch
Many people dream of starting their own small business, but few actually take the steps to do so. There are many reasons for this, but one of the biggest is simply that it is hard work to turn a dream into reality – and more than a little intimidating.
Even those who make the decision to go from idea to achievement find the process daunting, and are easily discouraged by the overwhelming number of things that need to be done.
As is true of so many projects worth doing, it is often best to stop looking at the process as a whole and instead to break it down into a series of small tasks that need to be accomplished.
If you are finding yourself a bit panicked, the first thing to do is to take a deep breath – you can do it! Unpack the big picture into five manageable steps, and then go through them one by one.
Step One: Create a Simple Business Plan
Even the idea of writing a business plan can feel like a big project, but once you get started it will immediately seem easier.
More importantly, having a one-page business plan in hand will provide you with an important tool that will help you to keep your costs low and prevent you from getting ahead of yourself on the projects you take on.
A business plan may sound like a document that is heavy on financial information, but this is really only necessary if you are looking for outside financing.
Though seeking investors may be something you plan for the future, if at the start you are simply looking to build a great small business, your plan should be more of an overview than a detailed construct. Here’s what you should include:
- Your vision – Define what you hope your business will look like
- Your mission – Define what you hope your business will accomplish. This can be written in emotional, philosophical terms rather than financial terms if that is appropriate
- Your objectives – List the steps that you need to take in order to make your vision and your mission a reality
- Your business strategies – How are you going to address each of the objectives? What do you need in order to get them done?
- Your action plan – A list of the specific steps you need to do and things you need to accomplish in order to get to each objective
Though this is not what most people envision when they hear the words “business plan”, putting together this simple list takes a lot less time than a formal business plan and can prove to be a valuable tool to keep you focused.
Step Two: Establish a Budget for Yourself
We all know how easy it is to spend money, and this is especially true when you’re excited about something. By sitting down and determining what your budget will be – and sticking to it – you will be able to keep your costs from going unnecessarily high, and control the amount that you are willing to lose. Having a budget will also enable you to more easily determine when you are actually making money.
Budgets are just as important when you are self-funding as when you have to report your expenses to somebody else.
Though overages happen, they should not amount to more than 20 percent, and you should build that number in so that you can be realistic about your expenses, and particularly your monthly expenses (known as a burn rate).
The more accurate you are in anticipating, monitoring, and controlling your month-over-month expenses, the more realistically you can gage your business’ viability, as well as forecast when you will break even and when you will be in the black.
Target three to six months for profitability, but prepare for it to take longer by having cash in reserve.
Step Three: Choose What Type of Legal Entity Your Business Will Be Classified As
Opening up a business is a complex proposition that involves more than you, your suppliers and your clients. You need to be mindful of state and local municipal requirements regarding business licenses and fees, as well as state and federal tax ramifications.
This means that you need to investigate what the various laws are and make sure that you have budgeted for these expenses, as well as taken care of all of the paperwork and filings that are necessary.
Additionally, you will need to decide whether you want to establish your business as a sole proprietorship, a partnership, a corporation, or an LLC. In many cases, small businesses opt for beginning as a sole proprietor as this reduces the required documentation and initial expense and provides the opportunity to gauge whether the business will be a success.
It is important to remember that in addition to the advantages of testing the business’ viability as a sole proprietor, there are also some downsides, including opening your personal assets to the business’ liability.
Though waiting a few months before making a firm decision is prudent, it’s generally a good idea to also discuss your options and the pluses and minuses of each option with a professional such as an attorney or accountant.
Step Four: Separate Your Business Accounts from Your Personal Accounts
This may seem like an unnecessary step, and particularly so when you are operating as a sole proprietor, but it is an important one.
By opening a separate checking account for your business (which is usually free at your local bank branch) you make it much easier on yourself when it comes time to add up expenses and determine profits.
The hour or so that it will take to get this new account set up will end up saving you a tremendous amount of time at tax time, and will be particularly important if you ever get audited.
Step Five: Market Yourself
Once you’ve taken care of the details you need to focus on sales and letting people know that you are open for business.
Though there are a lot of expensive options available to you, there are also a lot of creative and effective methods of getting the word out without spending a lot of money.
You can join your local chamber of commerce and attend some meetings so that you have the opportunity to meet other members and let them know what you’re doing.
You’ll be amazed at how much valuable information sharing goes on at these sessions and how generous people will be in telling you what has worked for them.
If you are a business that provides a product, offer free samples at community events, or take out a booth where you can display your wares – and if you are a service you can do the same and talk about what you offer.
Finally, take advantage of the availability of free marketing via social media. Send out emails, open up a Facebook or Instagram account, and if you’re feeling flush you can even take out some Facebook Ads or buy some Google advertising to try to get traffic to your website.
There are a lot more steps to opening a small business then the five listed above, but if you make sure that you have addressed each of these individually you will provide yourself with a sense of control, as well as a sense of accomplishment as you take care of each.
For additional help and guidance, contact our office to see how an accountant can assist you in managing your business’ books and keeping costs under control.
If you need help starting your business contact us at (513) 713-1152 for a convenient appointment.