It's the American Dream, isn't it?
Starting your own business, becoming your own boss -- it's something we all hope to achieve one day. But the truth is, not everyone can do it. It requires patience, attention to detail, hard work and understanding what you should know when starting a small business.
However, without the right financial planning in place from the beginning, all your hard work could go up in smoke. Here's how you can make your new business a success with proper financial planning for small businesses.
Keep Your Personal Finances Separate
It's important to know where your money comes from at all times.
Because the simplest reason a business fails is that they run out of money. If your personal bank account is also your business bank account, any number of issues can arise that can cause you to end up with less money than is required to maintain that business. Plus, you can run into all sorts of hurdles to leap during tax season that may become overwhelming.
In other words, the moment you start your business, you should keep any money meant for the business and any received as a result of doing business in its own proper bank account. Then write yourself a paycheck!
Create a Business Plan
When you learn how to start a business, you will discover that every business needs a plan. If you do not have a list of goals and expectations and a roadmap for how to meet them, then your business may not live up to its full potential. Your business plan should cover:
- Why you are starting the business
- What you plan to produce or services you plan to provide
- The management structure for your team, even if it's just you at first
- Your financial goals for your first, second and third years
- Any marketing plans you want to follow
- Competitors in the marketplace and how your business will differ from them
- Your eventual exit strategy, such as giving the company to your children when you retire
If you don't write down your business plan, it can become hard to remember why you originally started your business as the years pass. You may find yourself feeling uncertain and not following up on the right leads if you lack a clear path. Your business plan can, and should, expand as your business grows, too. You should always be refining your plan, building on your accomplishments and thinking about the future.
Do Your Own Research Into Applicable Laws
Is your business involved in hard labor, heavy machinery and equipment, manufacturing, etc.? If so, you need to be absolutely sure you are in compliance with OSHA regulations.
This is but one example of the many laws and regulations your business will bump into on your way to success. By studying up and familiarizing yourself with the legal code as it applies to your business, you'll have a smoother path to success and know what to do before starting a business in this field.
Create an Emergency Fund for the Off-Season
The vast majority of businesses large and small have a specific time during the year when the cash flow that was previously rolling in slows down. That means in addition to figuring out what it takes to start a small business, you also need to make sure your funds can sustain you throughout the entire year.
For instance, if you're an ice cream company, you may have fewer customers during the winter months than the bakery and pastry shop next door.
That's why you should identify the time of year when you know business won't be booming -- the off-season -- and ensure you have money set aside to keep everything afloat. One easy way to create an emergency fund is to apply for a quick and easy online personal loan or from your nearest Houston or Longview, Texas Atlas Credit location. Such a loan can be paid off during the months when business is strong and relied upon when business is slow.
Stick to a Business Budget
Any longtime reader of the Atlas Credit blog knows how much we love this one. For individuals and businesses alike, a budget is both extremely helpful and critical to your success.
However, it is rarely as important as it is when you are starting a business. Without a budget in place, you may not be able to limit your spending properly and could see devastating overspending as well as failures to make payroll and pay your basic bills on time.
So don't make that mistake. Sit down and calculate your budget as accurately and frugally as possible. It could mean the difference between a roaring success and a colossal failure.
Pay Yourself for Your Hard Work!
If you can't afford to pay yourself a living wage while building your business, you'll quickly find yourself sleeping on the couch in your office. Sure, maybe all that money you could be using on yourself is going toward growing your business, but it's not good for your physical or mental health to short yourself when you could be living more comfortably. Your business will continue to grow (though perhaps a little slower) even if you pay yourself what you know you deserve.
Get a Personal Loan From Atlas Credit
There's also one last thing you should keep in mind when beginning a business: New companies can take some time to become established. That's why you may need a backup plan for slow times, and Atlas Credit can provide it.
For more fantastic advice that's relevant to your life and finances, remember to read the Atlas Credit blog each week!