You’re ready to take the plunge and start a business. You’ve thought long and hard about it, made a business plan and ready…now what? What should you know before you open your doors?
Five things everyone should know before starting a business:
1. Manage debt
For any new business a certain amount of debt is inevitable. Unfortunately, expenses come before income. Many new companies have to borrow money to finance leaseholds, equipment and initial operating expenses. Financing is an important part in managing and growing your business.
What you need to watch out for is the level of debt you take on. When debt payments get too high they quickly become unmanageable greatly affecting your business. Debt can be a tool to help you grow but it must be within the financial constraints of your business.
2. Find mentors
You might assume an owner at the top of their field has little to learn, but everyone can improve. A new business owner can greatly improve their business by seeking out a mentor with more experience. It will also likely help you not make the same mistake they made. New business owners will have to make decisions they have not had to before. Having a mentor’s guidance and perspective can give you an alternative to the challenges you face.
3. Find stress relief
This is crucial! You will be under deadlines you never imagined, juggling cash flow, employee and customer personalities and a never ending workload. Finding stress relief will sharpen your attention, memory and ability to deal with others. It will also help to prevent this stress from creeping into your personal life. Find something you enjoy doing; running, walking the dog, playing with your kids or mediation. Managing your stress is the best way to improve everything!
4. Think twice and then a third time before hiring
A bad hiring decision is one of the most costly mistakes you can make. It can drain your bank account and suck all the energy out of your daily like. You often don’t realize the effect the employee has on you until they are no longer there. The opposite is true of a good hire. They can transform your business and make you a better leader.
Is a 30 minute interview really enough to judge how well the individual will perform? It is crucial to assess your candidate’s skills by giving them a practical test to give you a better idea of the impact they will have on your business. We know of one company that puts each potential hire through a 2 day paid virtual skills assessment before offering anyone a position.
5. Don’t forget about tax planning
It can be difficult to separate business financial planning and personal tax planning. This is a great reason to work with an independent advisor. Bear in mind that the best business decisions are not usually the best tax decisions. It’s important to be able to manage the two together. Having someone to advise you what the right salary, dividend and retained earnings is worth their weight in gold.
Remember no one is expecting a new business to have all the skills they need day one. Most of these skills are learned the hard way, by making mistakes along the way.
As advisors that have worked with hundreds of business owners, we have seen some swamped in debt make a full recovery and go on to be highly successful. Seeking advice when you need it and finding the right advisor you can trust is the best advice out there.