Starting a new business is an exciting and challenging time, and can often seem like a daunting task to build a strong base for your financial future. Whether you are starting your new business as a side gig, or launching a full-time business and looking for investors, there are a few things that every future business owner needs to do to get started.
Refine your idea
Your idea for a new business is brilliant and you want to get it to market immediately, before someone else does, right? Of course! But it is critical for your business’s future success to do some market research to discover critical information, such as what elements have caused similar businesses to thrive or fail, or if someone already has your idea in the market already. "Entrepreneurs are often so passionate about their ideas, they can lose objectivity," adds Nancy A. Shenker, president of the ONswitch LLC. "Rather than taking the time to thoroughly plan and research, they sometimes plow ahead with execution, only to spend valuable dollars on unfocused or untargeted activities."
Be willing and able to accept thoughtful criticism and feedback on your product and services during this phase, as the experience of your product or service end-user can differ significantly from your visions. However, when it comes down to making final decisions, trust your gut. This is one of the reasons you’re starting your own business!
Write a business plan
Henry Kissinger is quoted as saying, “If you don’t know where you are going, every road will get you nowhere.” When starting a new business, even a brilliant mind and superb work ethic won’t be able to overcome poor planning. Creating a detailed business plan is essential not only for keeping you focused as a business owner, but is instrumental in helping you obtain funding, either from a bank or from private investors. If you’re not sure where to start with your business plan, there are several resources online that can help guide you on your way. Once you complete your plan, share it with people you trust and get their feedback. Having a second set of eyes can help you identify something you missed or get advice on areas for improvement. For a neutral, experienced opinion, reach out to your local Chamber of Commerce to see if they offer any small business support services or mentorship programs. The Massachusetts Small Business Development Center Network and the U.S. Small Business Administration also has resources available to you.
Make a financial plan
One of the most enticing reasons behind building your business in a part-time fashion is that there is less of a need for formal or significant funding, whereas a larger undertaking could require more formal funding. However, starting a business of any size will require a lot of the same financial planning.
One of the first financial decisions you make is choosing a business structure, which is usually necessary before taking the steps to formally register your business. There are several different structures, such as a sole proprietorship or a limited liability company (LLC) which will influence the way you can fund your business, and be held personally responsible for business happenings.
Meet with a trusted accountant that specializes in small businesses to make sure you are taking the proper steps to build your business and protect yourself.
Make your business official
Once you have a business plan and financial guidelines, it’s time to make your business official. In Massachusetts, you can file a “Doing Business As” (DBA) Certificate as a quick and simple way to begin setting up your business. This is done at the local level, and, once complete, can be used as part of the process to open a bank account in the name of the business.
You’ll also need to register your business with the state, obtain a federal tax ID, and identify any permits or licenses you may need for your business.
It may be beneficial to consult a small business lawyer to be sure you take the correct steps in formally establishing your business, as well as any future steps regarding patents or copyrights that you may need.
Market your business
Just like your business plan and your financial strategy, you should take the time to develop a brand for your business before you start making business cards and building a website. Consider the emotions that the color choices for your business inspire, instead of just picking your favorite color. Select a font or two that you will use throughout your client communications, everywhere from your website to your business cards or prospecting emails. Decide what social media channels are best to launch based on your target audience and start building your website to act as your digital storefront.
If you have many talents, but creativity is not one, consider hiring a fellow entrepreneur to help you! There are many creative freelancers looking to help you with your creative needs, often for a much smaller budget than established businesses.
Before you actually begin conducting any business, make sure you protect the plans you’ve worked so hard to put in place. If you are held liable for property damage or personal injury while conducting any sort of business, there is a good chance that you will not have any coverage under your personal policies.
For small, part-time, side gig, or freelance businesses, consider Home Based Business Insurance, a new to market product that will offer your new business property and liability protection for an annual premium of around $300.
If you expect to be making over $50,000 a year or will have property (such as a store front or vehicle) in your business name, you will need more traditional business policies. An experienced member of the Eastern Insurance Commercial Lines Team can help you identify the specific types of insurance your unique business will need in a free consultation. Many small businesses will need general liability, commercial property, and workers’ comp insurance if they will have employees. A Business Owners Policy (BOP) can be created for you as a convenient package for necessary liability coverages. You may also need a commercial auto policy if you will be using a vehicle for business purposes.
Businesses of all sizes should also consider a Cyber Liability Policy, which can help provide coverage for your computer equipment in the event of a hostile act, or help with liability and reparation costs in the event of a security hack.
Have faith and patience in growing your business
The average small business takes two to three years to become profitable, so if you don’t immediately turn a profit, try not to panic. Have faith in your ideas and your hard work, and don’t be afraid to ask for help. There are many networking opportunities in your community and national resources online that are designed to help small businesses, and their owners, thrive.
To learn more about protecting your personal financial liability and the small business you’ve worked hard to establish, contact a member of the Eastern Insurance Commercial Lines team by calling 800-333-7234 (Option 3),or visit us online.