When you started your small business did you set things up in a logical order? Most entrepreneurs find out the hard way that there is a logical order to setting up your small business. Most businesses start out so small that they don't think it is important or worth the time and money to set up their business the right way from the beginning. Like most new entrepreneurs they focus on sales and making money because otherwise they will be broke and their business will fail. If they have success they find out later that they may not have set up their business the best way from the beginning. This often results in lots of consulting to restructure the business and fix all the mistakes that were made. Here is some advice on setting up your business correctly from the beginning and handling things in a logical order.
Legal, Taxes, and Insurance
Many small business owners don't think about the legal and tax structure of their business when they start. Most file a simple LLC or DBA and call it good. However, it is important to structure your business correctly from the beginning to handle the growth that you anticipate. Do you think you will eventually have employees? What about your tax situation? Using a good lawyer and CPA from the very beginning to help you properly set up your business is not a suggestion; it is mandatory. Don't skimp in this area and be sure that your business is properly set up.
While I am on this subject the three most important advisors I believe you will have as a business owner is a good lawyer, CPA and insurance agent. Make sure after you have your legal and tax structure set up that you find a good insurance agent. You want to make sure that you are properly insured to protect yourself from a liability aspect, but also to handle future growth.
Business Processes
Solid business processes are the key to scaling a small business. This is another area that most business owners will skip when they are small because they don't see the point of it. What is the difference when you are the only employee? However, what happens when and if you decide to hire employees? Do you have a written set of policies and procedures for them to follow? Do you have a formal training process? How will they know how to act if you don't show them?
Business processes that are written down promote scaling. Most people hire employees because they are too busy to handle all of the work they are generating. However, without formal written procedures you may soon find yourself having major operations issues. I was talking to a small business owner that had this exact experience. One of her longest running clients called her and said, "I liked you better when you were smaller." She said the complaint was all due to poor training and lack of procedures. Don't underestimate the importance of a formal written business process because I guarantee at some point you will have one. It is difficult to convince a new business owner of the importance of written business processes because they look at it as a non-billable activity that is just wasting time.
Small Business Marketing
If you have followed along to this point you now have a business that is structured correctly and has formal detailed processes written down. So we are missing something right? We need some customers. I don't believe many small business owners think about how important marketing is until they are hit with it head on; I know I didn't. Many entrepreneurs start their own business because they are good at something, but that doesn't necessarily mean that they are good at marketing. Marketing is a crucial step that can make or break your business. I have learned to market my small business through tons of different marketing consultants as well as spending lots of time reading and practicing marketing. Graduating with a degree in finance I thought marketing is the absolute last thing I thought I would get into. However, I quickly learned that without marketing there are no sales and without sales you are out of business.
Growing Sales
Like marketing, sales is another area that new business owners don't think about until they are in the thick of it. I think many people think they will naturally be good at selling their business because they are so passionate about it. However, closing sales can be a major roadblock to small business growth for many entrepreneurs. I know that we wouldn't be where we are today without the expert help of our small business sales consultant. If you "can't close a door" (as our sales coach said to us this morning) then you better find some help before you find yourself out of business. If your marketing efforts are creating prospects and leads, but you are not converting them into customers then you have a problem.
Financial Analysis
If you have got to this point then you have done everything right because you are still in business. You have structured your business appropriately, set up documented business processes, marketed your business successfully and converted leads into sales. At this point your business should run itself. However, don't sit back and relax yet. Are things going well? How do you know? Could they be better?
A huge part of running your own business is analyzing your small business financial reports. Also, it is important to develop sales goals as well as a budget for your small business. It does no good to develop goals and a budget if you are not measuring your results. Are your marketing efforts producing enough leads? Is your conversion rate in line with your sales goals? Financial analysis is the only way to tell if your business is doing well. Additionally your goals are just that; your goals. Everyone has different goals so you need to set them to meet your needs and desires. Measure your results, communicate them to your team, and make the necessary adjustments to keep on track.
When you set up your small business make sure you do so in a logical order. Organizing your business the right way from the beginning will save you headaches down the road and ensure that your business is ready to grow.
What advice do you have for anyone looking to set up their own small business?
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