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Friday 17 May 2013

Eight Tips for Small Business Owners

This month I have a guest blog from a writer at Nerdwallet. Since I have so many US readers I thought It might be nice for you to get a more local view of the issues surrounding Small Business. Having said that Angie provide some useful common sense advice that is valuable to any small business; especially those who are about to, or have just started as business owners.

"Let’s be honest, owning a small business nowadays is challenging. There are so many things to keep in mind, and as such, many variables to consider. It can get a bit flustering trying to sort out every piece of advice you hear. Let’s look at eight solid guidelines that should be staples of any small business owner’s, “things to remember” list.

1. Save up as much money as you can before starting.

One of the worst mistakes you can make is going into business with no capital saved up. Relying on loans from the bank, the SBA or friends is a great way to get you into debt. What some small business owners don’t realize is that it can take awhile for your business to start providing enough profit for you to pay the loan(s) back. If you business isn’t as profitable as expected your lender might just call in the loan, or you may have to pay it off with your credit card. Save enough to cover yourself for at least a year after you start your business.

2. Minimize costs.

Calculate out how much everything is going to cost you. Find how out how little you could possibly spend, and still be effective. Don’t rent out more space than you need, or hire more employees than you will need. You want to start small and keep your screw-ups small too. Give yourself time to learn and deduce the best way to go about things, before you shell out too much cash on this or that. It will save you money in the long run. 

3. Safeguard your personal assets.

You must understand that once you start a business, you are liable for all debts and judgments that it incurs. This can include any judgments from lawsuits against your business, taxes, loans, or money owed to renters. To protect yourself from having your personal assets seized, you will want to get business liability insurance. This alone will not cover you against everything however, and you may want to consider forming a limited liability company.

4. Know how your business will be making a profit

You are going to want to crunch the numbers, analyze the data, and come up with a figure of how much you will be making, how much of it will be going back into the business, and how much actual profit you will be earning. Don’t forget to factor in all the costs of running your business, and figure out how much product you will need to sell.

5. Find your competitive edge and use it

Not every small business is successful, the ones who are doing things that nobody else is, or doing them better than anybody else is, are the ones who make the profit. Whether it’s a special marketing technique, survey method, or manufacturing short cut, find something you can use that nobody else is. You either have to have higher quality than your competitors, or be smarter than them. Once you find this competitive edge, it’s important to guard it. Don’t let anybody find out your secret to success, because it won’t be a secret anymore.

6. Put everything in writing

Oral agreements or deals made over handshakes are not reliable nowadays and it’s wise to put everything important in writing. Make a habit of giving and getting receipts for everything. You will need many contracts written up for things including storage agreements, service contracts, and leases. Don’t be the guy in court without any paper evidence of your claims.

7. Acquire quality employees

Hire employees who are both enthusiastic and highly skilled at their job. An enthusiastic employee will make your business environment much more friendly and appealing to customers. You want your employees to represent your company well on and off the job, and this is more likely to happen if your business is respectable. Pay your employees well and treat them with respect, the result will be worth more than the effort.

8. Pay your taxes! 

As a business, you will be responsible for more than just your personal taxes. Especially important to pay on time are your payroll taxes. These can levy heavy fines if not paid on time. Stay up to date on everything you owe, and maybe even pay some bills early once in a while, it will pay off for your reputation.

Angie Picardo is a staff writer for NerdWallet. Her mission is to help consumers stay financially savvy, and save some money with the best online checking account."

Exigent Consulting provides specialist services for Managing High GrowthBusiness Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business.