7 Things To Consider Before Going Into Business
Being your own boss can be exciting and motivating, especially if you’re a person who is tired of the 9–5 lifestyle, someone who wants the freedoms of working on their own time and, not having to report to a boss, and the possibility of endless profit. However, starting a business can also be stressful, challenging, and highly depressing. I’ll tell you about some of the pitfalls I experienced along the way and hopefully give you insight into situations you never planned for that could come up on your entrepreneurial journey.
1. Find A Damn Mentor
Honestly, if you do steps 1 and 2, the rest will take care of itself. The importance of mentors cannot be overstated! Please re-read that sentence again! A good mentor inspires you, quickens the learning curve, and CONNECTS YOU to people in the right places. Mentorship is the best way to soak up the wisdom of someone who has successfully done exactly what you’re trying to do. Why spend six years trying to figure it out yourself when a mentor already has a client list, connection with lenders, a solid reputation, etc. Use those resources to get ahead! Have multiple mentors, watch how they navigate their business, and emulate them! Good artists borrow great artists steal.
2. Don’t Quit Your Day Job
Capital or lack thereof is the biggest killer when starting a new business. So many people want to quit their job at McDonald’s to start their company. Only to quickly learn they don’t have enough capital saved up to advertise and invest into their product and have to go back to McDonald’s eight weeks later only to get the “I told you so’s” from their coworkers. Don’t be that person, Instead do both, If you want it bad enough, you will do both. Work your job, and whenever you are off work, your business. This also means you can’t go out; those shaking your ass or picking up drunk bitches at the club days are over. So many people want to be successful but aren’t willing to sacrifice what’s needed to become. We’ve all met that 65 year old would’ve, could’ve, should’ve person. All of this should be planned. Don’t make emotional decisions work your 9 to 5 job as you grow your business and once your business income can cover your living expenses, then quit. Put in your two weeks notice and leave on good terms; you never know when you may need that contact in the future.
3. Understand Business Financing
Prepare a budget and try to stick to it. Have financial projections to help avoid financial pitfalls. How do you plan to fund your business? Will you raise capital, or do you need a small business loan? If you decide to go the business loan route, make sure you start a legal business entity, borrow money under your business name, not your personal name. What’s your credit score? You’ll need good to average credit to secure a loan — the better your credit, the lower the interest rate. Now I wouldn’t borrow money to start a business, but with interest rates as low as they are, I couldn’t blame you if you did. Look into SBA loan options https://www.sba.gov/Loanprograms. Again borrowing money is risky, and it might not be right for you. Know your options and the risks of each. Make sure your personal and business finances and accounts are separate! Have a budget for your personal finances and live frugally until your business allows your lifestyle to change.
4. What’s the Best Business Structure
Now I’m not a tax professional or lawyer, so be sure to speak with someone who gets paid for providing legal information before deciding on filing. Are you a sole proprietor, a corporation, or going into a partnership, or LLC? These terms are tossed around, but what are the benefits and challenges of each? Understanding the basics of business structure and how it affects your tax and personal liability. Other questions to ask yourself will you need a brick-and-mortar storefront or a commercial location? Or is this an internet-based e-commerce business where you will mail candles out of your basement and adjust as you scale? These considerations will determine your startup costs, your business projections, and your marketing strategy.
5. Identify Suppliers
Depending on the type of business, this may or may not obtain to you. Identify potential suppliers needed to produce the service or goods that you will be selling. Consider their price, reliability, location, and operating hours. Learn how long shipping takes for you to receive your product. If it takes 35 days for it to get to you, you may have to stagger your shipments from the suppliers to ensure your customers aren’t waiting weeks to get their items. ALWAYS buy wholesale.
6. Banking
Consider opening a separate bank account for your business. Doing these accounts separately simplifies your bookkeeping and avoids mixing your personal to your business.
7. Government Compliance
Another critical item to consider, but often neglected by new business owners, is the government reporting you need to comply with. I’ve seen many businesses succeed but later on faced with government penalties due to neglect of this important item. Hell, I’ve even forgotten to report to the Secretary of State at year-end and received a letter saying I must comply or the business will be dissolved. Government Compliances include at minimum filing and payment of taxes. I think the best way to ensure that you always file those annoying reports is to set reminders on your calendar that will alert you a few weeks before they are due.
When starting a business, ensure you have a reliable accounting and financial reporting process in place. With Youtube and all these free courses out there, you could learn the basics of accounting over a weekend. Starting a business could be the most liberating thing that you ever do in your life or it could send you into a shit ton of debt where you have to sell your house and live in a van down by the river. I say all this to say do your research and know exactly what you’re getting into before you start. I hope this blog has given you some insights on the fundamental items you need to consider when starting and running a business.
