Owning, operating, and building your own business provides satisfaction and pride. There are also risks and challenges. Not every start-up business succeeds.
Many small business start-ups fail in just a few short years, if not sooner, according to the Small Business Administration. Don’t let that happen to you. The time and effort you invest in working on your business before you get started working in your business will pay off handsomely.
The Global Entrepreneurship and Development Institute ranks the United States as the best place in the world to start a business. If you want to start in the Golden State, you’ll find yourself with another leg up. California boasts the highest startup survival rates in the nation at 82.3%. California has one of the highest rates of new entrepreneurship as well. Couple that success rate with year-round perfect weather, the most beautiful beaches in the world, Disneyland, and you’ll wonder why you never considered a startup in the first place!
Of course, starting a new business on your own isn’t all sunshine and rainbows. There are many things to take into account. There’s almost no way you’ll be an expert in all (or even most) of the skills required to start a successful business. Topics will vary depending on the type of business you intend to start. But here are 5 things which are an absolute must!
Protect Yourself
That 9-5 you’ve been slaving away at for so long did one thing well; it provided a level of stability. Starting a business on your own for the first time introduces profound levels of risk. There’s not a lot of safety net.
Before starting a business on your own, you’ll want to have some working capital. As an entrepreneur, you’ll want to maintain enough to cover expenses for 6-12 months. It’s a good idea to have a fund for emergencies or hard times in your infant business.
Building a business into a successful operation doesn’t happen overnight. There are always unexpected expenses and not all of your customers are going to pay on time. It’s not mandatory, but it’s always best to pad yourself where you can before moving on to the rest of the list.
Healthcare is on You
Ok, now that the boring prerequisite is out of the way, let’s get on with it! Once you decide to start your own business, you’ll no longer have the benefit of employer-sponsored healthcare. That’s not a bad thing since now you have the freedom to choose your provider. There’s also the potential to pay less money for a more appropriate plan.
The goal is to make sure that you’re protected from an illness or injury that could otherwise be devastating. Find an insurance plan that works best for you. Consider things like your family and life insurance. Get enrolled.
Business Contracts & Invoices
Finally, make sure you’ve got a plan for litigation scenarios. Reach out to an entrepreneur attorney. Make sure they know business law. Work with them to draft documents that are necessary for your work. These will be things like contracts, agreements that limit liability, guarantee ownership of intellectual property, and clearly define terms of payment. Business documents of this kind, especially in the service industry, are an absolute must before you begin your new business.
Sure, it may be a lot of money upfront. But the investment will be worth it. You’ll be equipped with what you need to be professional and it will give you peace of mind. Working with a business attorney will also establish a relationship in the event you need legal help in the future.
Alright, so we’ve made sure that you’re ready to chase your dream. You have a little pocket change to offset financial risk. You have professional business documents. And you have made sure you and your family are protected in an emergency.
Product, Product, Product
Every great business starts with an idea. What’s yours? Make sure your concept translates into goods or services that your customer base will want. You’ll need to ensure your business is scalable. Be able to deliver on your promises without compromising the quality of your work. You’ve already got a great concept. Let’s make sure the idea has the best available delivery possible.
Be aware, that, at some point, your market will change. It might mean another product. It could mean offering a value-added service around an existing product to remain profitable. Short and sweet, make sure your idea translates into a marketable product. The more you understand the industry you’re in the better equipped you’ll be to identify and respond to changes within that space.
All the Right Tools
We talked about how quitting your 9-5 doesn’t amount to less work, right? How do you start your own business? How do you accomplish everything within a reasonable amount of time? How do you find good talent before you’re financially able to hire someone? How do you take care of the necessary specialized skills like accounting, marketing, sales, or managing a supply chain? These are skills you may not currently have under your belt? You need to make sure that you have the resources you need on hand before diving in too far.
Of course, there are “known unknowns” that you may encounter on the way. Every business has basic needs. Fine if you don’t have copywriting skills or know-how to close deals to get customers. If you don’t do it, you’ll have to figure out who is.
Partner with freelancers or outside consultants to fill those gaps. Use the Internet. Websites like Fiverr or Upwork can help you find professionals with just the right skill set you need. These are an excellent way to get the professional help you need. You will then be free to focus on doing the work you know how to do. The business that you love.
Manpower isn’t the only thing to consider. You’ll need to ensure your tools are modern and effective. If you’re a delivery service, you may be starting with your own vehicle. You may need to buy something else for the first time. Ask yourself? Does this resource pay for itself? Is it fuel efficient? Does it have cargo space? Make sure your tools work as hard as you do.
Your Dream, Your Image
You’ve taken the time to dream big. You have mobilized your resources. Sacrificed to get away from the grind. Reach out on your own. Make certain your work represents the heart and soul you are pouring into it. Have a marketing strategy designed to get customers and build your brand.
You may not be a pro, or know where to start. Consider cost-effective options and establish an online presence for your new business. Know your customers. Who needs your product or service? Why should they buy from you? Tailor the delivery method to your ideal customers. Where do they get their information? Position your product or service so that your customers will find it. Do your best to get your name out there for others to recognize. Offer something your competitors are not. Build your brand.
Have strong branded imagery to use on web billboards and banners for your websites. If you don’t have the talent yourself to create the images, let’s go get someone! Again, look for a freelancer or a consultant to step in ad hoc and help you out.
Because you no longer need to be chained to your office chair for 10 hours a day doesn’t mean you’ll work less. You’ll work more. At least in the beginning. Stay motivated and remember why you started. Put in the work. Your passion will drive the outcome you want. Keep the dream alive and stay focused on your goals.
Start Your Business!
We’ve taken time to outline some necessary risk mitigation, product vision, marketing, and resource considerations. Starting your business in California is the easiest part. California does a decent job providing the necessary forms and some filing tips here, but it’s a little wordy. In short, domestic residents just need to file the LLC-1 form. They also need to fill out the LLC-12 within 90 days of submitting the LLC-1. This is a recurring obligation as long as you own your LLC. There’s a small one time fee for completing the forms and then an annual tax of $800.
It’s possible to go to CA.gov and complete the necessary forms, but it’s much easier to simply go through a vendor like Legal Zoom. Legal Zoom will digitally file your forms and get you started.
Instead of wading through pages and pages of information that may not be relevant, a service like Legal Zoom will provide only the pertinent information so you’re well informed when you complete the necessary forms.
Another great resource to know about it is SCORE. They are a non-profit organization that has been around since 1964. As a resource partner of the U.S. Small Business Administration (SBA), SCORE has helped more than 11 million entrepreneurs navigate their way through starting a business. They offer free business mentoring, low-cost or no-cost business training, and numerous templates and tools to help you start or grow a business.