Starting a business can be overwhelming. Running a company often requires learning new skills, and for many entrepreneurs, legal contracts, bookkeeping and financial statements are uncharted territory. At Wymer Brownlee Wealth Strategies, we’re passionate about helping business owners start off on the right foot, so here are our tips to dodge difficulties during your first year of business.
Define the end goal. What does success look like for the company in one, five and 10 years? What’s the long-term vision and purpose? Establishing clear goals and organizing them into a strategic plan will not only help you prioritize where to invest time, energy and money into your business but also could affect how you set things up initially. Do you hope to grow the business so you can sell it to someone later for a profit? Bring in equity partners down the road? Pass it on to family members? Few people want to work until they die, so it’s wise to think about how this new business plays into the future you picture for your life and family.
Structure the entity correctly. Whether to establish your business as a single-member LLC, partnership, S or C corporation is an important decision. It affects everything from accounting and record keeping requirements to liability, taxation and fringe benefits for owners. Read more on the topic here.
Separate personal and business. Protect yourself and your new business by establishing separate accounts for business and personal assets. Maintain and clearly label records like credit cards statements and receipts, noting the date and purpose for each expense. And avoid using a business credit card to pay for personal expenses.
Budget for everything including the unseen. Having a budget for your business will highlight how much you have, how much you can spend and how much you need to bring in to stay afloat. When building a budget, it’s important to plan for unseen expenses and preventive measures to minimize risk. Start building a rainy-day fund – with enough money to cover three-to-six months of business expenses – and account for infrequent costs like legal fees, payroll taxes and building maintenance.
Find a professional and reputable accountant. Most startups don’t make an in-house accountant their first hire. So, the job might fall to you or the team member who first learns your accounting system. Unfortunately, many people know just enough to be dangerous when it comes to accounting, and mistakes can end up costing money down the road. Not to mention, without proper training, you’re sure to miss advantages and opportunities to be more profitable! Get professional referrals from people you trust, conduct your research and interview potential accounting partners.
Carve out time to work ON – not IN – the business. When you’re first starting out, it’s easy to spend all your time trying to please clients and produce revenue. However, working on your business, which oftentimes is not related to producing revenue, is important for growth and long-term success. Carve out time to streamline processes, solicit feedback, develop new skills and network with peers.
As a new business owner, your personal financial success could be largely impacted by the profitability of your new venture. So, make sure to talk with a financial advisor about how to weather these early years and put a long-term plan in place for your financial future.
Category: Financial Service Team