You have a great idea. You have the guts. You have the ambition. What else do you need to start and run your business?
Of course, the first step is to officially form your business (there are helpful tools that simplify this part). The next steps, however, can be murky.
The truth about being your own boss is that the learning curve is steep and never-ending.
Fortunately, you don’t have to learn the hard way. Here are seven important lessons that first-time business owners need to know so they can run their businesses like a pro.
1. Starting a business doesn’t happen overnight
With your business formation documents in hand, you’re all set…right? Well, not really. This journey will be a test of your patience and fortitude.
Along with the big-picture tasks, like developing your products and services and setting goals, you’ll have dozens of behind-the-scenes details to manage each day.
Prepare to wear MANY hats, especially in the first year of business. Get used to the idea of spending time on seemingly menial tasks, until you reach the point that they can be delegated.
2. Your bank will become an important business partner
The bank you use for personal finances may not have much impact on your future. Sure, you appreciate good service and low fees, but overall it’s not that big of a deal.
Your business bank, however, can play a significant role in the future of your company. Forming a relationship with your bank may lead to financing opportunities that help you grow.
To get started, look for a business bank that offers features and perks that suit your needs. To open your account, most banks will require your EIN (Employer Identification Number), your business formation documents, and, if you have a limited liability company (LLC), your operating agreement.
Next, build a healthy banking relationship by using products like your checking account, savings account, and any lines of credit in a way that demonstrates reliability and smart financial management.
A good impression is a key to securing business loans before you have substantial profitability to demonstrate to lenders.
3. You need to sweat the small stuff
Most budding business owners don’t picture themselves behind a desk, navigating bureaucratic red tape. However, any seasoned entrepreneur can confirm: that’s exactly what you’ll be doing.
For example, if you’re a statutory entity such as an LLC or corporation, one of your first tasks will be to set up something called a registered agent. State agencies use your registered agent as the established point of contact between your company and government offices, so they can be sure you’re receiving important legal notices and correspondence.
Setting up and maintaining a registered agent can be a hassle. While there are services that simplify your setup, you’ll still need to keep an eye out for important documents and take action in a timely manner.
4. You could be derailed by deadlines
On your list of “reasons to worry” missing paperwork deadlines might be toward the bottom. The truth is, noncompliance can result in costly fines, losing your liability protection if you have an entity like an LLC or corporation, and personal risk.
Those consequences are a headache for any company, but for a brand-new business, they could spell doom. Using a worry-free compliance tool can help you avert disaster by helping keep your business in good standing with state agencies.
5. Social media isn’t enough
Facebook, Instagram, and Twitter may seem like the easy way to reach your audience. Every big company works hard on social media marketing, so it must be extremely effective…right?
While social media is a great way to build engagement with your audience, it’s not going to help you much with the first stage of the marketing process: awareness.
To build awareness and find potential customers, you’ll need a solid website. Your website will act as the hub for your SEO (Search Engine Optimization) efforts, which draw new leads to you when consumers use search engines like Google or Bing.
Establish your online presence with an easy-to-use website builder. You’ll also need to secure and maintain a domain name, which gives you control of your business’s website address.
6. You’ll manage your finances every single day
From invoicing customers to covering bills to paying vendors, business owners always have money on their minds. As you’re just starting out, you’ll need to monitor and manage your cash flow especially closely.
To get an accurate understanding of your cash balance, you’ll want to be keenly aware of your expenses. Small businesses encounter fixed costs that always stay the same, such as rent, and variable costs, such as materials, shipping, etc.
What’s harder to anticipate is your projected revenue. Estimating how much cash you have coming in will help you make important decisions, such as whether to make purchases or scale back on expenses.
To help you stay on top of your cash flow, use solid bookkeeping software and pay close attention to where each dollar is coming from, and where it’s going.
7. Uncle Sam is watching
In fact, he’s probably watching you read this article RIGHT NOW.
Well, maybe not, but he’ll definitely be keeping an eye on your accounting. Almost all businesses need to file quarterly taxes. You’ll need to report your earnings and expenses accurately and on time to avoid being hit with penalties and fines.
As a small business owner, your taxes will cover a portion of your revenue, your social security contribution, a self-employment tax, and taxes incurred by having employees or selling certain types of goods (if applicable).
Most small businesses enlist the help of a reliable, knowledgeable accountant to ensure that revenue is accurately reported and no deduction opportunities are missed.
However, even with an accountant’s assistance, you’ll need to provide detailed financial data. Staying organized throughout the year makes the process much easier and saves your (very valuable) time.
Some lessons have to be learned by experience. When it comes to these seven lessons, however, you can learn from the experience of others instead of your own.
If you have any questions, don’t hesitate to reach out to the experts at ZenBusiness. We make it easy to get started and keep growing.