If you're a potential entrepreneur who has experienced financial setbacks, you may wonder if starting a business is appropriate. However, past difficulties don't have to define future successes. You can start your dream company by planning for achievement.
Create a Business Plan
A business plan is a map to guide you through starting and managing your company. It includes critical elements such as:
- Short-term and long-term planning
A business plan is vital to managing your company's finances. It ensures you have strategies for raising capital, understanding feasibility, managing day-to-day economics, and gauging success.
According to the Small Business Administration, a business plan can be traditional or lean. A traditional plan is detailed, consists of several categories, and is more common. The lean plan is less common and quicker to compose. It is structured but focuses on key elements.
You don't have to go it alone if you're unsure of composing a business plan. Free and low-cost resources are available through organizations or online templates.
Part of a business plan is determining your company's structure. Forming an LLC can offer you several advantages. An LLC limits your personal liability because it is a separate legal entity. While you can still lose company assets, it protects personal ones such as your bank account or property.
An LLC can also reduce paperwork. You won't be required to file annual reports or maintain other lengthy records. An LLC also takes advantage of "pass-through" taxation in which the company's expenses and income go through the owner's personal returns. Therefore, LLC owners don't pay corporate taxes.
LLC owners have management flexibility, too. They aren't tied to a formal structure consisting of shareholders and board members. An LLC can simplify your business model, especially if you're the sole owner.
Your business plan will also need to detail how you’re going to market your products and services. Pay special attention to creating an appealing, functional, and SEO-friendly website, how you’ll market on social media, and creating a logo that properly represents your brand. You can hire professionals to handle these tasks, but if you’re operating on a shoestring, you can find ways to save. For example, you can design a website using a free builder. Another option is to use a free online logo maker to create your logo. In this case, you can find a logo through a logo template library and then customize its size, font type, and text.
Establish a Cash Reserve
Unplanned expenses happen all the time. Equipment breaks down, invoices go unpaid or sales are lower than anticipated. One way to prepare your company for such costs is to establish a cash reserve.
If you've had financial crises before, you understand the value of savings. A business cash reserve is an emergency fund. According to experts, the ideal amount covers six months of expenses. However, your circumstances may vary, so it's best to calculate your optimal amount. Too little cash can leave you unprepared, while too much can tie up funds. Cash reserves should be short-term investments and liquid assets that you can get to immediately when necessary.
Maximizing your business’s income and assets requires complex strategies and specialized knowledge. The trusted professionals at Reardon & Associates can help you meet your financial goals and objectives.
Rely on Your Network
Family, friends, acquaintances, and business contacts are your support network when you start a business. They can provide you with critical help during this precarious and unpredictable stage in your career.
Tell everyone about your new company. The more people who know about your venture, the more resources you have. They can network on your behalf by recommending your product or service to others or become customers themselves. You may find that one of your contacts is willing to mentor you through your startup period. Perhaps most importantly, trusted people can offer emotional support as you navigate the details of entrepreneurship.
If you plan well, past financial circumstances don't have to define your company's future. Solid preparation can be your best strategy, allowing you to learn from the past while focusing on the future.
Please contact us if we can be of help with anything from the planning, operation and transition of your business. A business operation can be one of the most powerful difference makers in your ultimate Retirement. Don't go it alone.
David Reardon, RICP®
Retirement Income Certified Professional