For first-time business owners, the learning curve is sharp. Every year, millions of people start new businesses, and they don’t all make it. Businesses fail for many reasons, such as improper planning, failure to protect themselves from risks, and not getting required licenses and permits.
Even if it’s not your first time, starting a new business is exciting, and you might be tempted to open your doors before you’re ready. But hold up! If you haven’t done these six things, you’re not in a position to open your business to the public.
1. Protect Your Business
Imagine if someone has an accident at your business before you get insurance. Your company would be bankrupt before you even get it off the ground! Furthermore, you could be held liable for the damages to other people’s property, lost wages, and attorney fees.
Protecting your business by transferring unavoidable risks is critical to the success of your business and your personal financial health. Therefore, there are no excuses for not getting business insurance because it is easy to purchase affordable business insurance online.
You will be asked a series of questions about your industry, experience, and location, and in less than ten minutes, you can have insurance for your business. It doesn’t require talking to a broker and is much less expensive than many think.
Filing your claims is easy to do online, too, and you’ll be able to make policy updates and get insurance certificates instantly.
2. Finalize Your Business Plan
Hopefully, you already have a mostly completed business plan and just need to put the finishing touches on it. Sadly, one of the biggest reasons that businesses fail is improper planning.
Check with the Small Business Administration for tools to write a business plan, and remember that it is a living document that is meant to be updated and revisited yearly.
Banks won’t even look at lending money to your business if you don’t have a business plan. If you ever need to secure additional financing, having business plans that date back to the beginning of your business will be looked upon favorably by most bankers.
3. Set Realistic Expectations
You can set yourself up for failure by having unrealistic expectations. Business is likely to start slow and build, so don’t plan on having significant revenues early on.
Some small businesses try to grow too fast. Instead, let your business grow naturally, and don’t rush growth. Then, when you have enough customers, you can add more employees, locations, or products.
4. Sniff Out The Competition
Don’t assume that you don’t have any competition. Instead, as part of your business plan, you should conduct a thorough competitive analysis to see how many competitors you have and if it’s even feasible to operate a business in your industry.
If you’re set on a business idea, find a niche to reduce competition. Of course, you’ll need a large enough target market, but finding a niche can make it easier to reach your target market. In fact, when you do it right, having a niche makes it easier for your customers to find you rather than the other way around.
5. Implement Policies and Procedures
Policies and procedures aren’t just for fun, as evidenced by the fact that they aren’t fun at all. However, they are necessary to operate a business responsibly, and having a set of policies and procedures will help you control many areas of your business.
Often neglected even by larger corporations, policies are used to outline all types of best business practices. For example, companies use policies for safety planning, expense control, and human resource management to make business practices more effective.
There is a method for developing policies and procedures. First, before you write a policy, make sure you need one. Then, describe the policy using language that doesn’t create liabilities, such as saying you will “always” do something.
Be sure to communicate your policies and procedures to your employees and make updates as necessary.
6. Hire and Train the Right People
If your business is small, you might not even need to hire anyone to start. But, if that’s the case, consider yourself lucky because managing employees comes with its own troubles.
If you need to start with additional help, be sure you’ve hired the right people and trained them well along with using free applicant tracking system software. Having a clear vision for your company is excellent, but your employees need to know it, too. Otherwise, how can you expect them to deliver on your brand’s promise?
Talk to your accountant about how payroll will work, and ensure you have adequate cash reserves to cover it. Especially when you are starting, cash flow can be hard to manage, and paying your employees is critical to the success of your operation.
You’re Almost There!
Remember that owning a business is a marathon, not a sprint. Hopefully, you’re in this for the long haul, and you should take your time to ensure you have everything set up before you open your doors.
Early mistakes can cost you in the long run, and most of them are easy to avoid by planning properly, avoiding risk, and having realistic expectations.