Making the right choices early on about raising a baby helps ensure that the child grows up to be a happy, productive adult. By the same token, getting things right in the early stages of a small business’s life can have a significant impact on its health and revenue down the line. Here are six tips that can grow your future small business.
6 Tips When Starting A Small Business
1) Put a plan in place: Having a business plan that takes into account as many factors as possible helps ensure that you won’t start a business that’s doomed from the beginning. Business plans should account for many factors, including products, people, the marketplace, the competition and finances.
When you put that all in one place, you’ll see what your business needs to be successful and how you’re able to meet those needs. You can also see weak areas that you might not have thought about. Be honest with yourself when creating the business plan — “To thine own self be true,” as Polonius says in Hamlet. Check out Bplans for lots of examples and a wizard that will help you get started.
2) Know your banker: You want to establish a relationship with a banker, or preferably multiple bankers, before you ever have to ask for a loan for your small business. When you start an account, don’t just set it up with the clerk at the front counter. Ask to meet the loan officer and chat about your business, along with any services the bank might offer that could help you. Ask for recommendations about a CPA or lawyer. Have lunch. Then, when you go to ask for a loan, the banker knows you as more than just someone who wants to borrow money.
3) If you work from home, do it right: The ability to work from home is often a great boon for small business owners getting started, because it allows them to spend precious capital on only what’s absolutely necessary for the business. If you decide to work from home either to get started or indefinitely, try to set aside a room for a home office, and decorate it appropriately. Get into a routine of waking up, getting ready and going to work, just like if you worked in an office building. If you need a conference room or a business mailing address, you’re usually able to rent those as-needed.
4) Watch your cash flow: Cash flow is the lifeblood of any company. While the goal of a business is to make profit, it can survive for some time without profit, but a lack of cash flow is deadly. If your average days payable is 15 and your average days receivable is 45, you need to have the cash available to operate for the difference, in this case 30 days. Using financial software or just a spreadsheet, create a 12-month cash flow projection and you can tell months in advance when you’ll be low on cash, so you’re able to take pre-emptive measures and avoid problems.
5) Tap your resources: Being a small business owner is daunting, but you don’t have to go it alone. Anybody starting a small business should join the local chamber of commerce or Rotary club. It’s a great way to give back to the community while also meeting other business owners and taking advantage of services offered by the chamber. Also consider joining a local or national industry organization in your field to network and get advice on regulatory, legal and other issues.
6) Know when to grow: While you want to grow your business, keep in mind that growth comes with bigger inventory and expense. If you don’t have the capital to sustain that, growth can actually hurt your cash flow and put your business in jeopardy. Sometimes you’ll have to say no to growth opportunities if you don’t have the capital.
There’s no way to guarantee success, of course, but following these tips is a great way to help your business grow up happy and healthy.