As the economy continues to improve, it’s a positive sign to see more people venturing out to start a small business. Yet it’s important to take time to research and plan so you start your business off on the right foot.
Whether you’re a new or an experienced entrepreneur, there are a number of strategies to help guide you along the way. Here are four tips to consider before starting a small business:
Start with a Plan
Creating a solid business plan is an important first step for anyone starting a business. A well thought out business plan can help you establish and stay focused on your goals and objectives. According to the Wells Fargo/Gallup Small Business Index, business owners with plans were more likely to report that in the next 12 months they expect to add jobs, increase revenues and capital spending, and apply for new credit.
It’s a good idea to incorporate the following four key components in your business plan – company overview, market analysis, financial data and executive summary. To get started, many financial institutions offer free business planning resources.
Share your plan with your business banker, and commit to regular check-ins.
Determine Your Hiring Needs
Many businesses start out as sole proprietorships, while others require support staff and employees from the get-go. If you intend to hire full- or part-time employees right away, make sure you’re comfortable with and can afford the costs associated with hiring staff.
Take time to understand what type of employee is right for your business. For example, contractors can be a great alternative to full-time employees for newly established businesses.
Once you are ready to hire, spend some time familiarizing yourself with the legal and administrative steps associated with the hiring process. After you have employees in place, set up a procedure to ensure you maintain the proper employee records and files at all times.
Understand Your Financial Picture
Every business has different startup costs but they all have one thing in common – the need to have a financial cushion. While most small businesses are initially financed by personal savings and credit, your business will likely face a need for additional financing at some point.
It’s important to have savings to fall back on as you focus on ramping up your business operations. To get yourself in the best position to obtain financing before you need it, establish a relationship with a business banker who can help you understand your initial financing needs and options, and strategize ways to build your credit profile.
You should also pay down any personal debt and work with your business banker to refine your cash flow projections so you have a realistic financial picture.
Build a Strong Network
Having a strong support system in place can make the difference between thriving and failing. Take time to establish relationships and build a network of other professionals who can help you.
In addition to a business banker, establish relationships with a lawyer, a CPA and other professionals pertinent to your industry.
It’s also a great idea to network with other small businesses by joining your local Chamber of Commerce or other business and industry organizations.
Don’t be afraid to put yourself out there and build connections. Fellow business owners can often be your biggest allies and provide sound advice when you need it.
There are a lot of important decisions to make as you venture out on your own to start a small business, and upfront planning goes a long way in preparing your business for long-term financial success.
Heidi Whillock is a business development officer for Wells Fargo Business Banking in Vancouver. She can be reached at (360) 947-7140 or Heidi.Whillock@wellsfargo.com.