THINKING OF STARTING A NEW BUSINESS–MUSTS TO KEEP IN MIND

by Ryan Correia

If you’re starting a business, you better have a really good answer to the question: why?

Make sure you have a vision or plan to on where you want to go with it. Throughout the steps of starting and running your business, never forget this why or the vision. Otherwise, you could head into a direction you didn’t intend to. You’ll end up working more hours, or servicing any and all clients, or providing services you didn’t plan to.

2. Plan, Plan, & Plan

Make sure you have a clear plan for everything—what your brand is, what your mission statement and values are, what the customer experience will be like. You need to think about what you will sell, how you’re going to sell it, and what you’re going to charge for it.

If you’re just starting a business and you’re the owner, you’ll probably be wearing all the hats, but that doesn’t mean you can’t think about organizational structure. In fact, you should. You need to think about your upfront and ongoing costs, how you’re going to get the funds to get started, your personal budget, and the minimal amount of money you need to live.

Other things to consider are your target market, your value proposition and how you will communicate that, who will perform the services, who will manage, and who will lead.

At this stage, you should also look to review your plan with any close friends or contacts that have their own businesses, and ask them to be objective with their feedback. You should also consider getting anyone who reviews your plans to sign a non-disclosure agreement.

When you’re done with this stage, revisit your why and your vision to see if your plans still align with them.

3. Pick Your Team

Do not do this alone. Find a strong CPA and attorney that specializes in small businesses. Meet with them and review your ‘why’ and your vision, and review your business plan with them, asking for critical feedback.

Your CPA and attorney should be the trusted advisors you use to help you put the rest of your team together (HR functions, insurance, payroll, vendor supply chain, contractors, realtors, IT, website design, sales, and marketing.)

The more you have your team centralized and familiar with each other, the more effective your team will be, and the easier they’ll be to manage. Your CPA will also help you determine what you can do by yourself and what you absolutely should get help on. For this, every situation is different.

4. Compliance

Compliance is the 4 letter word for businesses (ok, 10 letters). It is boring and painful, but it is super important.

If not done correctly, you will be spending your time dealing  with notices and back issues (and penalties and fees) rather than growing your business. Here are the main compliance items you will want to work with your CPA & Attorney with:

Legal Entity Set Up

What state, what type of entity from a legal and tax perspective.

Operating Agreement or Shareholder Agreement

If it is just you, you will still need an agreement that states how the company is governed, but it can be more generic. However, if you have an outside partner (even your best friend, sibling, or spouse), you need to come up with the big items that need to decided upfront.

You need to know what happens if a partner wants out; if a partner stops working; if a partner doesn’t fund their capital; how the company is valued if you do end your relationship; what decisions should be unanimous; who owns what percentages.

Tax Compliance

Set up of IRS EIN, selection and filing of tax classification, payroll account, state and local accounts, sales and use tax considerations, and state nexus issues, depending on what states you operate in. Have them explain your estimated taxes that may be due to the IRS, PA or local taxing authorities and get a plan in place to get these paid in quarterly.

Insurance

Insurance is super important.  Don’t take this lightly.  Spend time with your insurance broker and explain your business so he or she can explain the risks.  Get the appropriate insurances to protect you and your family (and your employees).

Human Resources

If you do have employees, you should get to know a part-time HR consultant that can at least spend an hour or two explaining what you need to have in place to be compliant.

Your CPA can help with some of this and also should have a good reference for the appropriate professional here.

Payroll

Your CPA can help you identify a cost-effective way to process your payroll and what payroll firm to use.

Open a bank account and set up merchant services for credit card processing

Ask your CPA what they recommend. There are so many options available and everyone’s needs are different.

5. Accounting Set-Up

Get this right. Have your CPA set you up on an accounting system that you and they can access remotely (i.e. Quickbooks Online). Your CPA should then be able to take your business plan and set up an accounting system or process that enables you to track and compare to your plan.

Spend time brainstorming with your CPA on what information you want provided monthly so you can track the success of your business. This could be financial information  such as revenue by product or non-financial information such as number of hours worked by designers.

Identify these metrics or Key Performance Indicators (KPIs) and track them monthly or quarterly. Make sure you are comfortable with how your customers are being billed, too.

6. Accounting Maintenance & Reporting

Work with your CPA to determine who will be maintaining the books and completing the month-end close. This includes the input of the transactions, recording payroll, reconciling the month-end accounts, and finalizing the books for reporting.

Create a monthly reporting package that you will go through with your CPA to review the numbers and the KPIs you want to track. Consider a way to revisit your why and vision on a monthly or quarterly basis as part of your reporting.

7. Operations

What are the workflows behind the scenes to deliver your clients their product or services? Are they streamlined and ‘scalable’ for future growth?

If the answer isn’t a resounding yes, then you need to spend time on your operations so you can effectively grow your business.

8. Sales & Marketing

Develop a sales & marketing plan with an appropriate budget.  Don’t overlook this area as without a detailed and effective plan you will have a hard time selling your service or product.

This area is too often overlooked by startups who are being budget sensitive. The old saying “Sales solve everything” really rings true for startups. Spend time setting up an effective and easy-to-maintain Customer Relationship Management system or CRM.

This is so important and much of it can be automated for a reasonable price. Understand and document your customer experience here and implement that experience with the help of your CRM system.

Find a good firm you can work with that specializes in this area for small businesses, from branding, to website design, social media, and marketing plans.

9. Running Your Business

Remember, you are the CEO. Don’t get caught in the details of your business too long. Business owners can get trapped into the everyday client work that they spend time “Working in their business and not working on their business.”

You should spend scheduled time ‘working on your business’ and getting help where needed.  There are “board of advisory” groups available that you can participate in monthly or you can put your own group of advisors together to look at your business with you on a quarterly or annual basis.

10. Revisit Your Why and Vision and Evaluate

If your why was spend more time with your family, decide if you’re heading in that direction. If your vision was to have three franchise locations within the next two years and all working independently, decide if you are on track.

Most businesses have to recalibrate expectations. You need to decide where you’re at and what it’s going to take to where you want to be.