Congratulations! Finally you have decided to start a business doing what you love. You do need to step back and make a game plan. Since you will be charging customers for this service you need to come up with appropriate methods to estimate the costs of jobs.
You need to know the difference between fixed and variable expenses. How to pay yourself while generating an income for the business can quickly become overwhelming.
A successful business generates enough revenue to pay all of its expenses while providing the business owner with a comfortable living wage (salary) and still has left over money to put in reserves. It also establishes a track record with numerous satisfied customers and jobs performed on time and on budget.
You are Not an Employee
Most small business owners start as an employee. You were paid an hourly rate to deliver a service for a company. After a few years you dreamed of opening your own business after learning the trade.
Your old boss appeared to live comfortably, while physically working very little. It was easy to be jealous and envious. Running a business had to be easy, right?
Once you started your business you quickly learned that it was not not as easy as it looked. In reality you will realize how simple life was working for someone else. The responsibilities of running a business can be overwhelming.
Understand Your Finances
Most small businesses fail within the first few years. In order to have a successful business to provide a good life for you and your family, you will need to get good professional advice from an accountant or a lawyer before starting up.
A good accountant will help you understand how to manage cash flow and finances. They can teach you, what to charge for your services and so much more. This simple step is often overlooked. A lawyer can help structure your business to protect your assets in case of unforeseen events.
It is important to remember that just because you completed a job there is no giant cash register in the sky that pays you. There are many issues that can arise that can cause problems such as:
- Client refuses to pay/slow pay- There are many times that a client does not pay or takes a long time to pay.
- Issues with Work- There may be disputes between parties as to the work performed causing payment to be delayed.
- Misquote or bad estimate- Your original quote may have failed to include the correct prices causing you to lose money or request the client to pay more at the end.
Anyone of these or countless other variables may have a significant impact on your cash flow. Without the proper planning these issues can put you out of business.
Remember as the owner not only do you have to do all the work you also have to collect the money.
The Goldilocks Problem
In business there are booms and busts. Your business most likely will expand and contract many times over the years due to economic situations.
How big should you get, how fast should you grow and how many employees should I hire are similar to what Goldilocks faced in the 3 bears cottage. No buddy can tell you what is right for you. That is for you to decide to build a smaller and leaner company. Focus on profits and not the quantity of work. This should allow the money to come flooding in. So staying small and keeping it all is one strategy that has helped countless small businesses .
The Golden Rule
Treat others with respect. Your reputation if it is good can go a long way in making your business profitable.
Keep Improving Your Business and Yourself
You should always be expanding your horizons. You can take a class or attend a workshop on increasing your knowledge. You can try new processes to streamline your business. You should treat your business as a living thing. You should always take every opportunity to learn.
Just Say NO
Who is your ideal client or clients? What do they have in common?
Think back to your best customers and worst customers. Make a list and then write down some characteristics about each one.
You will soon find that there are common elements that define both good and bad clients. Even though it may be hard, especially when you are starting out, you need to turn down work that your past experience has shown is not worth the hassle.
Revise and Update Your Systems
Most new business owners fly by the seat of their pants. This can work in the beginning. If you want to grow your business you need to implement certain systems so your business can operate efficiently.
There are many books and seminars that you can use for a better understanding of how creating systems and processes will help improve your business.
Start out by writing down a flow chart of steps that need to be accomplished to complete a task. Refine and simplify them as best you can.
A successful business will have systems for aspects of the business such as marketing, sales, finance and hiring.
Do Not Lose Sight of What is Really Important
It is easy to let a business overwhelm you with the day to day operations, especially if you are not operating your business correctly.
Many people have learned the hard way that life can pass by quickly when you are not paying attention. Do not forget to cherish the time you can spend with your family and friends.
Benefits of get insured by SmallBusinessLiability.com
SmallBusinessLiability.com has created a comprehensive guide to the insurance required before starting a business for each of the specific professions listed below.
If you have any questions, we are staffed with experts in the insurance field willing to help.
With our expertise we can guide you to the right coverage for your business.
We know your time is really tight, but you can set up a call at any time, we are 24/7.
