Written by Shalini Dharna
Maybe the idea to become an entrepreneur strikes after you find out about an amazing opportunity that you just have to get in on… Or maybe you just can’t stand the 9-5 grind anymore and want to be your own boss. Whatever the case, going into business for yourself is scary, but it is worth it! Here are some tips to help set yourself up for success.
- Find the right product or service for you. There are a lot of companies you can buy into out there and each one has different rules and restrictions you need to adhere to. Or maybe you have a product you make yourself, or a skill/technical knowledge that you want to offer to others. Depending on what you are choosing to do, do your research on what is allowed by both company/industry regulations and government regulations. For example, you can’t just decide to be a real estate agent, you need to get your license and be part of a brokerage. You can’t just buy from Avon and sell it yourself, you need to buy a business kit and be registered as a consultant.
- Do your research. Don’t just jump right into your new business. Stand back and understand the requirements to succeed in your business. If possible, find someone already in the business and talk to them about how easy is it do business with your given product/service. What are the restrictions (if any) that you have to follow. For example, can you advertise? If so are there restrictions to how you can advertise? Can you work off commission or do you have to offer a fixed fee or hourly rate?Also understand where and how you can find clients. What is your target market? Where are they located? Depending on your chosen business, you need to figure out how easy is it for you to reach your audience.
- Develop a business plan. Even if you have a product that is in demand, take the time to set up a business plan. Don’t have a clue how to do this? Spend the money and get a professional to help you. Doing this wrong will not help you. Your business plan will help guide you as you build your business. Your business plan will outline all the key facts you collected in step #2 but also factor in things like your financial budget, your operating structure, and other key topics. There are a lot of different free templates out there, and choosing the right one depends entirely on the users of the business plan. The user is the person who will be looking at your business plan and using it to make decisions – most of the time the user is an investor or creditor looking to lend money to you. Ask the user if there are any key items they want included in your business plan. This is where going to a professional can be beneficial to ensure your business plan is comprehensive and complete for your needs.
- Create a budget and try to stick with it. A new business means that you really don’t know how much you need to spend to succeed. And this is scary for all business owners. Again, hiring a professional to help with your business plan and budget can take away a lot of the stress of trying to figure out how to do it on your own. The easiest way to do a budget is figure out what are your unavoidable costs – these are called fixed costs. These are costs you have to pay even if you don’t make a single sale. For example: rent, utilities, the buy in cost for any product company you’re joining. Then you need your variable costs – these are costs that you can somewhat control. For example, you can spend $100 or $10,000 on a marketing campaign. The first few years of business your actual spending may not come anywhere near your budget as you need to have some trial and error in figuring out what works for you. This is where #5 is key
- Know your personal limit and do not exceed it. All businesses require personal investment of cash to get it up and running. You’ll either invest your personal savings OR you’ll take out a loan, which as a new business owner, will more likely than not be secured by personal collateral. You need to come up with your end-game number – this is the amount of money you are willing to spend before calling it quits. Obviously no business owner wants to start a business with the idea of it failing, but more often than not, people keep putting in their own money hoping that they will see a return on investment. They think… if I just put in $x,xxx more I’ll be able to turn it around and make back everything I’ve put in. Sometimes they’re right, often that’s not the case. You’ll have a good idea within the first 2-5 years of trying whether you have a good business that will begin to generate income for you…or not. There will be growing pains, and financial mistakes along the way, but if you want to avoid putting too much personal money in, set a personal limit and live by it.
- Jack of all trades, master of none. In the beginning you will have to learn how to do everything yourself. You will become an IT, Marketing, Accounting, and HR master. But eventually, you have to spend the money to hire professionals to help you so you can focus on working your business. This should be built into your budget. The hours you spend learning how to build a website, or doing your own bookkeeping, are hours you can spend building your business by making sales. You need to figure out the value of your time and the hours you’ll spend learning how to do something properly vs hiring someone with the skills to do it right the first time. And especially in the case of accounting and tax, hiring a professional accountant to do your bookkeeping and taxes will make sure you’re not overpaying taxes and that you’re recording all the expenses you can properly!
- Dive in and have fun! Now that you’ve done all your homework and developed your plan… go get em! You will have to come out of your comfort zone to sell your product or service. Join some networking groups or mastermind groups to get ideas of how to succeed, and to make connections with other entrepreneurs probably struggling with the same things you are. You should be having fun along the way building your business. If you find yourself more often than not stressing and getting overwhelmed, take a break and remember why you made this decision in the first place!
Shalini Dharna is an Elite+ Mompreneur® Member based out of Mississauga, Ontario. Her company, Dharna CPA, is a one-stop shop for all your accounting, finance & tax needs!