Starting a new business can be a very exciting and stressful time. The decisions you make early in the process can be the deciding factor of whether your business succeeds or fails. There a few sure fire things you can do and/or avoid doing that will give your business a much better chance to succeed.
- Seek input from trusted advisors – Selecting the right professionals to assist you in your business is critical. Your accountant, lawyer, banker and insurance professional can all have a big impact on your business. Use them as a resource. Their experience with similar businesses can be a great asset in guiding you. Some of the decisions which will need to be made include: the type of entity structure and accounting method which is appropriate for your business; the type of lease you should enter into; and the type of insurance and amount of financing your business will need.
- Know your numbers – You should monitor your margins and profitability. A small change in gross profits can be the difference between being profitable and losing money. Keep close tabs on your costs and adjust your pricing accordingly. If your costs increase, you will likely have to raise your prices to offset them. Ask if you can receive discounts for buying in larger quantities or for paying your suppliers early.
- Develop strong relationships – Satisfied customers pay their bills and happy vendors can help in many ways. It may lead to more favorable payment terms or discounts. They can also provide you with valuable advice on trends within the industry or insight into what your competitors are doing.
- Borrow from the government – Always pay your payroll taxes timely. This is extremely important because not only does the government charge a much higher rate of interest than banks, but you are also personally liable for these taxes. Payroll taxes are considered trust funds and the owner’s personal assets can be used to satisfy this responsibility if the business cannot.
- Undervalue your employees – One successful person does not make a successful business. Surround yourself with a good team. Pay them fairly and hold them accountable. Trying to save a few dollars on pay for a good employee and losing them could end up costing you greatly in the long run. Retraining is significantly more expensive than retaining your valuable employees.
- Accept the status quo – Don’t be stagnant. Monitor your business and adapt to market trends. Grow at a healthy pace. Don’t over-expand and don’t assume things will always be consistent.
Adapt to the environment in order to succeed. Although there is no magic formula, following these tips will put you on the way to having a successful small business.
*Originally published in the August 2015 issue of New Jersey Business.