Your side hustle is now turning into a possible main hustle. Going full-time with this doesn’t sound like a bad idea! Your numbers are looking good and it is realized that more profit can be made if more time is devoted to this passion. Being known as the person who does great party/event planning or the person that helps with the cool graphic designs is great, but you want more. It’s time to take the leap, so believe in yourself enough to know that you can make this business happen! We came up with a list of 17 things to know about starting a business that we personally feel are important to everyone.
1.) Decide On A Business Name
Think of a business name and claim it. This is the first thing you should do. It’s a good idea for the name to be a good reflection of the product or service you are trying to sell. You want people to hear the name and know what type of business you are in. This is not always the case though. Some people have business names that are personally meaningful to them and that’s a great idea too. They just tie it all together with a great business tagline or slogan. The name could also be catchy and fun and is always good when you are able to market it with ease.
2.) Choose A Legal Structure
When it comes to taxes, personal liability, and how much paperwork is required to be filed, your legal structure determines this. You can choose to be a sole proprietorship, a partnership, a limited liability company (LLC) or a corporation. These have their own distinct way of accounting for how much personal liability the owner(s) are willing to take on and what the business is responsible for.
Make sure you register your business depending on its legal structure with the proper authorities. Depending on the business name and structure, you may not be required to file the name. If you are required to file, it could be as simple as going to the local county register’s office. For corporations, you have to file through the Secretary of State and follow all their requirements and expect to pay fees. For any business formation you decide upon, it may be advisable to establish an Employer Identification Number (EIN). Speak to your accountant or tax professional for what is best for your business.
(This is why establishing your business name is the first step. By doing a business name search, you can see if the name you want is available. The first one to register wins the right to operate under that name.)
3.) Set Up A Bank Account
It’s good to have an account that is used solely for business transactions. It is best practice not to commingle your funds. This helps identify what expenses were used for business and what expenses were used for personal. Depending on the formation of your business, setting up an account may be required. For example, if you have a corporation and you receive a check payable to it, you are not able to deposit the check into your personal account. You must deposit the check into the corporation’s business account due to legal reasons. This is because when your business is a corporation, it then becomes its own legal entity separate from its owners.
You also may be required when opening an account to have all of the original paperwork you received from registering your business with the county or the state(s). This includes having your Employer Identification Number (EIN). This number identifies your business and also used when you have employees.
4.) Understand Your Business Taxes
This is unique to the formation of your business. You may be required to pay self-employment taxes by paying estimated quarterly taxes or corporate taxes. Look at it like this; when employed, every time you received a paycheck, the government took their cut before you even received your money. Now that you are self-employed and your clients pay you directly without having the money to go through and be reported to the government, you are still required to keep track and pay the government. They may penalize you when you file your annual taxes if you don’t. Speak to your tax professional about your unique tax situation.
5.) Health Insurance
Now that you are going into business for yourself, you need to provide your own health insurance coverage (if your spouse doesn’t have coverage with their employer). You may even cover health insurance for your employees (providing health insurance to employees could be an added perk, although not required in some situations). Health insurance premiums paid are tax deductible and also are the premiums paid on behalf for your employees. We advise you to look into individual plans or group coverage. Again, speak to a tax professional for more details about tax deductibility.
6.) Fluctuation Of Income
When an employee works a “9 to 5”, they have peace of mind knowing as long as they worked the hours they were scheduled to work, they will receive a set amount of income on payday. When you are a business owner, this is not the case. Your income fluctuates depending on how much work you put in. Sometimes and it’s even the case that you worked your tail off with longer hours worked than ever before and still didn’t make as much income as you planned. Understand this is the nature of business and properly prepare for it.
7.) Know The Market
The goal of any business you decide to get into, is to assume that you will be in business for a very long time. When you are deciding on what products or services to sell, you must understand the need for it and know all the details if you want to keep your clients coming back. Some businesses fail when they do not properly understand the industry they are entering. It’s important to understand what you are selling, who you need to market to, what the competitors are doing, what costs are associated, and if you have a good shot at making a profit. With the amount of time you need to put in to the business, it is worth it.
8.) Understand Your Capital Needs
Depending on the product or service you are offering, you are going to have to spend money to make money. Do your research to understand what the normal operating costs are to keep your business up and running. What will be the total cost of all the goods you are selling, what does it cost for you to make the item, and the question you must ask yourself is does the opportunity outweigh the costs.
9.) Research Suppliers
If you are selling a physical product or you rely on a supplier in any kind of way, make sure you research and have a plan if that supplier were to raise their prices so you could possibly go to their competitor for lower prices to increase your profits. You may even need to look for a different supplier if they go out of business. If the supplier goes out of business and they were the only ones who supplied this product, guess what? You’re out of business too.
10.) Decide On A Location
E-commerce business transactions over the internet have really taken the need to have a physical business location away. If you want to sell hair products and self-care items, you really don’t need to have a physical location where customers can come in to purchase. They can do that with a click of a button and have it delivered to their house. This is also the case with services. Some businesses that offer services are now driving to their client’s homes to deliver the need, and accountants are now more than ever working remotely. Video conferencing and the capabilities of “The Cloud” has made the overhead costs of running a business decrease. You may think a store front is the best option, but reconsider depending on the nature of your business. Although for some businesses, a physical location is absolutely necessary.
11.) Find A Target Market
Find a niche, which is a specialized section of this world’s population that you can market to by offering your products or services. They need what you sell and love how YOU are selling it. A niche varies and can include, but not limited to, people who are into vintage fashion, mothers, or people who are even looking to remodel their homes. Know what your competition is doing, see how they market and learn about what is working for them. You may find you have an edge that could change up the industry. There are so many people who need you. Go out find them.
12.) Grow Steadily
As you are transforming to business ownership, we know we all have big goals and dreams, but don’t overwhelm yourself at first. Start off small and then make plans to expand after you know you are capable for expansion. For example, people in the business of reselling goods on Amazon or eBay, should not buy a huge amount of product to resell from a wholesaler and then be strapped for cash after the purchase. This could cause stress and could cause your business to fail. It may take some time to resell those goods and make that money back and in return make a profit. Worst case; the products purchased to resell may become obsolete very soon. Start by purchasing smaller, manageable quantities from the wholesaler so you make your money back faster and then use that cash to reinvest back in the business and keep it going.
13.) Know When To Hire Help
Now that your business has stood the test of time and is looking very profitable, now is the time to start looking to hire help. Some people make the mistake of hiring people too soon when they really should be doing those duties on their own. When you do certain duties yourself, it helps you to really understand your business and all it takes to make it run efficiently. You learn what activities are a time waster and what activities bring you more profit. This also helps to save on employee expenses. As your business expands, you personally stuffing envelopes and doing those routine duties may not make sense when you could hire someone to help while you focus on the profit.
14.) Hire An Accountant/Bookkeeper
We strongly advise that you understand your business income and expenses by doing the numbers yourself the first year or two. Start with QuickBooks or some other accounting software and learn how to account for your transactions. After your business has grown in a way that it makes sense to bring on help and you can afford it, then hire a professional. They can then help and report the numbers to you while you are working on your craft and making money.
15.) Find A Mentor
Find a mentor who has success in the area of business that you are going into. They are helpful by answering questions about their best practices, things to avoid, areas of opportunities, and ways to stay out of trouble financially. Sometimes your mentor will even refer business over to you because they may not be able to take on more clients, or they just may not want to deal with that client. You never know. Having a mentor with great influence will help you grow so you can improve so your business can grow.
Some business owners want to and are willing to share all their knowledge to a protégé or just someone who really wants to win. Never be too afraid to ask for help when it comes to the business you are trying to make your mark in. Mentors want to take someone under their wing to provide guidance and they find great satisfaction in doing so. Best part; they do this all free of charge. To see you grow and accomplish great things is an accomplishment for them as well.
16.) Plan For Retirement
This should always be in the forefront of your mind. As a business owner, you don’t have an employer reminding you to enroll in the company’s 401K plan. It is all up to you to prepare for retirement. There are plans specifically for business owners so make sure you get advice on what is the best option for you from an investment professional. We are very experienced with creating a retirement plan for your future.
17.) Build Your Business Muscles
When people go to the gym to work out, they usually do not build their muscles, stamina and physique after the first and only workout. It takes hard work, dedication and commitment to see results. It tends to take a while to notice so we like to remind our clients of this analogy. When you are building a business, remember that good results may not happen overnight. In actuality, a majority of businesses take a while to get off the ground but a good business owner understands and knows how to adjust.
We hope you enjoyed these 17 tips! We also wrote about “Things to Consider Before Starting a Business” and that relates to the emotional standpoint of starting a business. Let us know what business idea you have in mind. We want to know! Comment below.