How to Start a Successful Small Business

Write a business plan, any business plan

When you are passionate about something such as commercial real estate, you would want to make it your profession. Just like starting a business that is related to your hobbies. No matter how eager you are about your small business venture may be, you need a good business plan for how to start and run it to make it successful.

The business plan does not need to be very comprehensive, but it must have a few important points like break-even analysis, a profit-loss forecast, and cash-flow analysis. A cash-flow analysis is especially essential to make sure that your capital is rolling. You could be selling your products like hotcakes through credit, but if payments are not made for six months, you could be forced to close your doors due to lack of funds.

Your customized marketing strategies can be experimented before implementation if you have a business plan.

Determine how you’ll make a profit

The ultimate goal of any successful business is the profit earned.  To start the break-even analysis, you need to study your business’ overhead costs and then figure out how much sales is needed to cover the costs and start profit generation.

Start with as much of your own money as possible

New entrepreneurs often times take loans to cover their start up costs, expecting that they will begin paying back the loans with the profits from the business. Unfortunately, it could take months for new businesses to generate profit and might not be able to keep up with the loan obligations.

Saving up for the start-up capital yourself before you open your doors ensures that your new business will not be pulled down because of loans. Take note, that there’s a possibility that a lender will call a loan or add unfavorable terms if your business isn’t as successful as you initially planned. Raising a personal capital for the start-up will lessen the odds of a nasty surprise that could hinder your business.

Protect yourself

Sole proprietorships or partnerships types of businesses are nice and easy to form. However, they also expose their owners to liability for business debts and judgments. Creditors or stakeholders can easily come after the owners’ personal assets if the business is not able to pay back the investment.

Business structures such as a corporation or limited liability corporation (LLC) can shield owners from personal liability, but there are more rules and requirements associated with them.

Start small

Entrepreneurs want their small business to thrive among its completion, with multiple locations, lots of employees and great sales, but you have to learn to walk before you can run. It is not advisable to spread yourself too thin or take on too many expenses at the beginning such as decking out the area with metal display stands and the latest and greatest in interiors. Anything could happen along the way and your income might take a while to catch up to your business.

To ensure that you can survive the inevitable hiccups associated with running a small business, it is best to start small. Businessmen who start with modest operations can easily recover and create an alternative strategy. All great things start from small beginnings.

Get it in writing

Although handshakes close deals, there’s no substitute for a well-written contract. Most contracts are not valid unless they are in written form as a proof of the transaction that took place. There are a variety of types of contracts for every state, but here are a few common examples:

  • Sales of goods worth more than $500
  • Contracts lasting more than a year
  • A transfer of ownership in copyrights or real estate

Since oral contracts or agreements are harder to prove and enforce ensure that you get everything in writing — it will save you headaches down the line, and potentially save your business.

Keep your edge

Standing out from the rest of your competitors may be due to your specialty in the industry such as wire furniture or selling the latest frannas. You could have products with higher quality, a more efficient manufacturing or distribution process, a more accessible location; provide great customer service, or a better understanding of the changing marketplace.

Keeping your trade secrets is the best way to hold onto your competitive edge. The best way to hold onto your competitive edge is to protect your trade secrets. This information should not be shared with others so that only your business could offer this exclusive type of service. Some owners even take extra lengths like getting legal protection for their trade secrets to keep them secured such as marking confidential documents or requiring partners and employees to sign nondisclosure agreements.

Staying proactive is another way of keeping your edge. If you know that your business is going to face challenges don’t wait until you’re stuck, strategize and plan ahead and you’ll stay ahead.

Hire the right people

Don’t settle for the first applicant who has the basic qualifications for the job. Look for someone who is highly motivated, creative, and the right kind of personality to make it in your industry and fit in with your business. Once employed, treat them well, earn their trust and loyalty and motivate them to do their best. It is also important to hire individuals who have a sound understanding in the business industry that you trade in. Individuals in the crane industry need to have an understanding of compliance and equipment maintenance codes such as as2550.10 and as2550.1.

Make sure you create the right kind of employee relationship

Lots of businesses try to save money by hiring people as independent contractors to undertake some of their jobs like renewable energy projects rather than full-time employees that work with the company. The IRS will impose large penalties on businesses that do not withhold and pay taxes for their full-time employees. Here are some things the IRS will look at to determine whether a worker is an independent contractor or a full-time employee:

  • The worker holds an important role in the company
  • The worker works exclusively for the company
  • The worker completes up to 40 hours per week on the job
  • The worker receives orders and training from you, and you exercise control over how the worker does their job

Be transparent about the “at-will” relationship with your employees, which is necessary if an employee isn’t working out. Include this information in the employee handbooks and through offer letters to make the employment relationship clear. Refrain from making any promises especially about the length or terms of their employment, since these could become binding on you later.

Not only are these important but creating a sense of warmth and belonging for clients invited more business. Commercial real estate companies can either do this very well or stumble here, with the interest of quick sales or great customer service at crossroads.

Pay your bills and taxes on time

A business owner who doesn’t remit payroll taxes on time could face harsh penalties from IRS, including the confiscation of personal assets. It’s important to pay what you owe — especially when dealing with the IRS.

It is also advisable to keep up with your debts. Future business relationships could be ruined due to a bad reputation, especially if you are known as someone who stalls on a debt. Additionally, you can avoid being overwhelmed by cash flow problems if several debts come due simultaneously if your payments are updated.

Get Your Business Off to a Strong Start: Talk to an Attorney

A lawyer can help give your business the best chance at success. While you will have to get acquainted with the laws and regulations that will impact your business, it’s important to leave the details to lawyer who can provide the best advice. Don’t take any chances. Get professional help. This also applies with understanding the laws and regulations surrounding the many services you might provide such as renewable energy sources.