Your small business may be just that—small—but it’s mighty. Over half of America’s sales come from the twenty-eight million small businesses incorporated here. However, only about 20% of small enterprises are in business after the first year. Whether you’re just starting out or have parts of your company up and running, the following ten tips can help you become part of that successful percentage.
Before you do anything, make a business plan. Download a template and go through every section carefully. You’ll be surprised how many questions included in the template can help you figure out details and nail down your plans and goals.
Are you filing for a sole proprietorship, partnership, corporation, LLC, or S corporation? Read up on small business structures and consult with an attorney and accountant once you decide which kind of entity you’d like to be.
An accountant knows the tax code in and out—helping you save thousands of dollars—while an attorney ensures you’re operating legally and securely. Don’t skip this step to save money. Legal and financial counsel is key to setting your small business up for smooth sailing and huge cost savings down the road.
Using your personal bank account for your small business can create a slew of problems. Even if you have an LLC—a status that exempts others from seeking legal action against you personally—you can negate that protection by using funds outside of your business bank account and credit cards. Once you have your EIN number from your attorney and all the governmental paperwork, set up a business banking account.
Then sign up for or invest in software like Xero that tracks expenses, invoices, and payments. Services like these make tax time much smoother and more cost effective, since your accountant won’t waste time tracking down documents and ensuring every expense and claim is accurately made.
If cash flow is tight, you’ll need cash reserves to weather the storm. Calculate the cost of your monthly expenses, multiply that by six, and put that amount of money in the bank. This will ensure you have enough funds to cover six months of overhead during volatile times.
Every company should have a website. Save money and get your brand out there by building a website on WordPress or Squarespace. It’ll cost as little as $18 per month to host (billed annually), depending on the hosting site you choose, and will help you reach more customers by putting your business online.
Many cities have a Chamber of Commerce department with lots of resources; seek out local organizations meant to help entrepreneurs like you. From networking to getting advice from savvy business owners, you’ll tap into a wealth of knowledge that can help you tremendously.
In business, it’s all about knowing the right people. In fact, 85% of small business customers come through word-of-mouth referrals. Get out there and meet customers at events they attend or at gatherings for professionals in your industry. And don’t forget to bring along business cards so people can contact you in the future.
Loyal customers are worth an average of ten times their first purchase. But after one bad, unresolved experience with a company, it takes twelve great experiences to win a customer back. Suffice to say, it’s easier to offer great customer service than playing catch-up. Always respond to complaints within twenty-four hours, offer coupons and incentives, and think of how you’d like to be treated by a company and do that for your customers.
Business is all about the net worth, not the short-term gains. Always consider what you need to make to stay in the green—but see how much you can discount your products and services to hook prospective clients and customers.
It’s easy to get carried away and put the cart before the horse with small businesses. Determine your essential upfront expenses and hold off on everything else until you can feasibly afford those extra items. This will prevent you from getting in over your head and potentially putting your business at risk for failure
Small businesses are a huge reason why the American economy thrives and people are able to pursue their dreams; after all, small businesses provide 55 percent of the jobs across the country. By following these ten tips, you can increase your chances of being one of America’s successful small businesses.
