During my time in the professional world of accounting and financial services, I’ve witnessed many individuals start businesses. These businesses range from small-scale arts and crafts to large-scale oil production and transportation. Of those who started these businesses, some know all the ins and outs of registering a business and making it official. But on the other hand, and likely for the vast majority, others don’t even know where to begin. So, if you are starting a business, big or small, the following are some of the most important actions you can take to help you be prepared and successful in your first year:
- Draft out a business plan. Now, this doesn’t have to be an 85-page business plan with detailed statistics and research of your target market and how you’re going to sell to them. For most, this can simply be a few thoughts behind your who, what, where, when, why, and how. It’s essential to start out by writing goals down. This creates action behind what you want to accomplish and enables you to make progress getting there. Plus, during times of struggle, it’s important to look back and remember why you started pursuing entrepreneurship. Over time, a business plan can change and that’s perfectly okay. As your business evolves and you discover the direction you want to go, come back to your original business plan and modify to meet your goals and expectations going forward.
- Surround yourself with a team of professionals. For most businesses, there’s quite a bit of paperwork and registrations to be “official”. These can include getting an EIN from the IRS, registering with the secretary of state, registering with the department of revenue for business tax, franchise and excise tax, and sales tax (if necessary), filing with your city and county for a business license, drafting an operating agreement, opening newly eligible retirement accounts like a SEP IRA, opening a business bank account, obtaining credit, and the list goes on. A lot of this can seem daunting! But, having an accountant, lawyer, and financial advisor in your corner can help make all of this a breeze.
- Keep detailed books and records from day one. I can’t stress this enough. Not only do accurate books and records help you come tax time, but it makes the analysis of how your business is doing so much easier. Keeping up-to-date books and records using an online accounting software can help you always be in the know of how your income and cash flow is at any given time. Plus, your accountant will adore you when it’s time to prepare your tax return. If keeping up with your own records doesn’t sound like your cup of tea, accountants can happily take care of it for you on a monthly basis and can be less expensive than you might think.
- Focus on the skills you do best. I often see a lot of energy from business owners being spent on tasks that aren’t in their skillset. In early stages, it can sometimes be best to grind these tedious tasks out yourself to learn as a new business owner and appreciate all the efforts and behind-the-scenes that make business owners great. If it gets to a point where you’re spending too much time away from bringing in business (sales, networking), pay someone. Even though it might seem counterproductive to pay someone else to do something for you in the early stages of business ownership, the benefits can be more than monetary. Often, the stress of managing a tedious chore can take a toll mentally and keep you from doing your best work and bringing in new business. Allowing another professional to focus on that chore can allow you to fully engage in sales and grow your business.
- Have fun. We often forget the dreams we used to have when we were younger and don’t realize when we’re living those dreams out. Personally, I used to dream of taking my passion for personal finance and using it to help others for my career. Now that I get to do that every day, it’s worth a reminder that I’m living out a career I used to think not possible. Do the same for yourself! Getting the opportunity to work for yourself and build a business to be whatever you want it to be is pure joy. Yes, there will be hardships, low points, and many battles. But that’s life, ain’t it? The overwhelming sense of pride and gratitude towards customers for trusting your business more than another are far more than enough to make those battles worth it.
At David Adams Wealth Group, we have a team of experienced CPAs* and CERTIFIED FINANCIAL PLANNER™ professionals (CFP®)** that can help walk through starting a business and knows the ins and outs. We’re happy to help walk through your personal dream of entrepreneurship and guide you in the right direction.
*CPAs at David Adams Wealth Group: David Adams & Carson Odom
**CFP®’s at David Adams Wealth Group: David Adams, Carson Odom, Spencer Provow & Myles Zueger
While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.