Post-2020, it’s still a tough time for small businesses. So, if you’re passionate about stepping out on your own, it’s more important than ever to start your journey on the right foot. Here, we share five tips to help you prepare for opening day, plus three financial management steps you should tackle now for the future.
Five start-up tasks to tackle
1. Refine your business idea. Define why you want to start this business, what need you’ll fill in the market and how you’ll fill it and who you’ll be selling to. Put these pieces together to create a vision or mission statement for your business. Conduct market research to understand your competition (and look for competitive advantages) and your customers (to effectively market to them). Then develop your brand identity to reflects the personality you want your business to portray. Use it when developing a company name, logo and collateral.
2. Establish a financial foundation. Estimate start-up costs, as well as the fixed and variable costs of running your business. Decide how you’ll fund these expenses and support yourself until your business makes a profit. This might include business loans, grants and equipment financing as well as investments from family, friends or crowdfunding.
Next, open business checking and savings accounts to help store and manage your money. Be selective about your banking partner. Consider both financial aspects — such as low fees, secure direct deposits such as easy access to your funds through secure online banking, flexible deposit and loan options, and affordable fees. And flexible loan options — and the personal side. For instance, does the bank know the local community and does it have prompt, friendly customer service?
3. Create the business foundation. With the above knowledge, you can move forward with creating a business plan. This will act as a roadmap to guide you in starting, running and growing your business; and will help you convince people that your business is a good investing or lending prospect.
Along with the information you developed in step 1, your business plan should include:
- Your estimated start-up costs and funding choices
- Product pricing
- Sales numbers you’ll need to break even
- A promotion plan for attracting customers
- Specific goals for growing your business
- Your legal business structure, such as corporation, limited liability corporation, partnership or sole proprietorship
4. Do the paperwork. The details of what you’ll need to do depend on the type and location of your business. In general, though, you’ll probably need some form of the following:
- Employer identification number from the IRS
- Registration with federal, state and local governments
- Licenses and permits — search for state and business-type requirements through the Small Business Administration database
- Seller’s permit, also known as a resale permit or permit license; visit the IRS for more information
- Business insurance policy, which may include workers’ compensation and unemployment insurance, general liability insurance or a business owner’s policy
5. Line up your team. Get support and important advice from mentors or business consultants. They can help with everything from your business plan to business development strategies, sales tips and legal advice. Here are some resources you can turn to when seeking out advisors or looking for small business assistance:
U.S. Small Business Administration
Small Business Development Centers
Your team also includes your employees, of course. Consider the roles you need to fill and define the skills and personalities needed for each. Use this as your guideline for evaluating candidates. Choose your vendor partners just as carefully — they’re like an extension of your staff. Finally, network with other small businesses inside and outside your industry. And get involved with small business associations and events in your area.
Three financial steps to take
An important part of setting your business up for success is establishing certain financial management tasks and processes, including the three below.
- Set specific, realistic financial goals and attach a timeline to each. For instance, you might want to meet a specific profit margin, or increase sales volume and revenue, by a certain amount within a certain timeframe. Or you may want to buy or replace a certain piece of equipment by a specific date.
- Establish financial routines. This should include setting aside time at least monthly to review your finances, such as income, expenses and outstanding invoices. This helps you maintain an understanding of your business finances and may help you spot early signs of risk or fraud.
- Create a billing and collections strategy. This helps you manage cash flow. It should include protocols for when you invoice, when invoices must be paid and how you handle unpaid invoices. For instance, how long will you follow up on a late payment before sending it to collections? And how will you encourage clients to pay on time — for instance, by charging interest on outstanding balances or offering a discount for early payment?
Look forward to find success
Part of staying in business for the long-term means having a vision for the future, making a plan to reach it — and being nimble enough to adapt your goals and your business as times change.
You can count on Hancock Whitney to support you in pursuing your business success, with expert guidance and innovative solutions.
Call, make an appointment or stop by. We’re here to help
“How to Start a Business: A Step-by-Step Guide,” Joshua Stowers, Business News Daily, updated March 16, 2021, https://www.businessnewsdaily.com/4686-how-to-start-a-business.html, accessed May 10, 2021
“How to Manage a Business in 4 Simple Steps,” Paul Esajian, FortuneBuilders.com, https://www.fortunebuilders.com/how-to-manage-my-own-business/, accessed May 14, 2021
“How to Run a Successful Small Business (SME) in 12 Steps,” Benedict Chidiele, LinkedIn, published March 17, 2015
“10 Steps to Start Your Business,” U.S. Small Business Administration, https://www.sba.gov/business-guide/10-steps-start-your-business, accessed May 17, 2021
“10 Tips for Managing Small Business Finances,” Matt D’Angelo, Business News Daily, updated Jan. 7, 2021, https://www.businessnewsdaily.com/5954-smb-finance-management-tips.html, accessed May 17, 2021
“Examples of Financial Goals for Small Business,” Devra Gartenstein, Houston Chronicle, posted March 11, 2019, access May 25, 2021
Hancock Whitney Bank does not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors. This material is for informational purposes only.
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