If you find yourself just starting out in business, then the chances are your endeavour can – and will for some time – be classed as a “small business”. Perhaps you have ambitions to grow into something bigger; maybe you merely want to set up a manageable endeavour that returns healthy margins year on year. Regardless, there are certain tips associated with small businesses that apply whatever ultimate scale you have in mind.
Businesses usually start out small, some stay small, but very few get anywhere at all without checking each of these particular boxes. These are the essentials, the things that you pretty much have to do in order to get anywhere at all, to turn any kind of profit or to avoid being undone by legal regulations.
Set Up a Distinct and Official Business Entity
One of the most important things to do if you find yourself setting up a small business is to ensure it exists as a separate taxable entity from the get-go. To many small business owners – especially if their business is 100% self-owned and employs no additional staff – this might seem like a superfluous step, or something best saved for later. Rest assured that this is not the case.
The thinking behind creating your business as an LLC or some other form of separate taxable entity is that you will want to keep your personal and your business finances completely separate. Even if you have a creative business and are still ramping up your client base, this is something to do straight away. There are many things that could go wrong – from accidentally using copyrighted material to being sued by a client.
Keeping your business and personal finances completely separate will ensure that the worst thing that can happen is your business will be dissolved and you will not be involved in a financial car crash yourself.
It is usually quite cheap to set up your business as a separate taxable entity, and its certainly something that can and should be factored into the start-up costs of any small business venture you may undertake.
If for some reason this is not possible, then at least find some other way of keeping your personal and business expenses separate. For many very small businesses, it is fairly common to at least have a separate bank account for business transactions. Not doing this can lead to a muddle that can very quickly become a disaster.
Invest in Accounting Software
Once you have your business finances, at the very least, being controlled in one place and comfortably separate from your personal finances, it’s time to do something about your accounting needs. Many small businesses, especially those with revenues on a low scale that is in the ballpark of your personal finances, think that complex accounting is something that comes later with growth. This is a mistake. It is best to get in the habit of meticulous financial management from the start.
Something that certainly isn’t necessary at the beginning of a business venture (or indeed at all for any small-sized business) is to hire a staff accountant. This is largely a waste of money. For small businesses, a far better alternative to this plan of action is to invest in some accounting software.
There are a great many options where this is concerned. They are all exceptionally cheap and, if invoices are something your business will regularly send, those produced by accounting software have an air of professionalism that cannot be matched by invoices made on Excel.
Investing in accounting software will ultimately help you keep track of your in-goings and out-goings, as well as help you keep a meticulous record of all transactions in the form of receipts. Accounting software is one of the best ways to lend an air of real professionalism to a business of any size – at a surprisingly low cost.
Respect Data Regulation from the Start
Data regulation laws are sets of regulations that are constantly being updated and developed as the environment in which digital data is shared changes. This is such a dynamic field that it can often seem quite difficult to keep abreast of everything that happens. Nevertheless, there are services that can audit your business to ensure the right boxes are being ticked.
For international business in Europe, the GDPR (General Data Protection Regulations) is a particularly important legislation that is likely to affect your business if online work and clients’ personal data is something your business deals with. In the USA, there are a series of federal laws that are designed to protect a user’s personal data. Keeping on the right side of the law in both cases can be tricky, especially in the latter case.
GDPR auditing services and professional advice for hire regarding federal data protection laws is something that can, and should, be invested in. It is not overly expensive and is the best way to ensure that your business practices are, and remain, above board.
The general trend towards online commerce, which is more likely than not to be an essential part of any small business, has made data regulation an important part of any business, large or small. Keeping on the right side of the law on these matters is important, even if your business is a small one.
Invest in Marketing
Whether it is clients or customers you are after, investment in marketing is essential. This is yet another cost that many very small business owners consider something to worry about further down the line. However, there will not be much progress along that line unless marketing is considered from the start.
For purely online businesses, this is especially important. The internet offers businesses the potential to reach many more people than almost any other means. And yet with that, comes the far greater risk of anonymity, and merely becoming a faceless body in the crowd. Marketing is the way to avoid this.
Of course, marketing can take many forms, whether that be a renting a booth at a festival or trade fair or investing in online content marketing or networking. Generally speaking, it should be fairly obvious which type of marketing will work best for your business. If it is clients for an online service that you’re after, then online marketing is the way to go; if it’s a product that you sell, then perhaps a presence at trade fairs and festivals is what you need.
With marketing, as well as the other essentials on this list, you simply cannot afford to dispense with it until later. These are known as the essentials of small business ownership for a reason; and there are a host of pitfalls waiting should they be ignored. Yet cover these bases right from the start and your business has the best chance, whatever your ultimate goals.