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21 Nuggets of Wisdom for Launching Your Own Successful Small Business

21 Nuggets of Wisdom for Launching Your Own Successful Small Business

The last decade has proven to be volatile and filled with uncertainty. Unemployment rates remain high while federal, state and local support services diminish. It’s no wonder people of all ages are seeking to become entrepreneurs and solopreneurs. In some cases, it’s the only option available. Small business owners enjoy a genuine sense of accomplishment and contentment. Operating a business necessitates having entrepreneurial spirit, initiative, persistence, tenacity and business insight.

Here are 21 Wisdom Nuggets for Launching Your Own Successful Small Business. They’re some of the fundamental steps for living the life of your dreams.

1. Identify Your Small Business and Products or Services

Select an emerging market niche where demand exceeds supply, one that exhibits long-term growth and strong profit margins. Offer a new problem solver venture, something innovative; secure your trade secrets. Perform your due diligence, and validate that the products and services you have chosen are what people need, want, and are willing to pay for. Determine what it costs to make your product or service, and then set a price. Be certain the business will contend robustly with your competitors. Maintain a competitive edge. Pick a relevant, definitive business name, and follow local procedures to assure it’s available (not trademarked or already popular).

2. Access Your Clients / Customers

Determine who your customers are, how you will locate them, and what their motivations for purchasing your products and/or services will be. Ascertain how you will reach out to them and scrutinize their business needs. Thoroughly inquire of their problems and perceived solutions. Display a genuine interest in them and their successfulness. Make well thought out offers to service their needs at reasonable prices. More than meet client expectations. Keep abreast of new technologies, techniques and standards. Share them with your staff, your partners and with your clients. If you keep your promises and perform with excellence, they’ll be around for a long time.

3. Determine Your Start-up Resources

Use Small Business Development Centers or Women’s Business Centers for business assistance, free training and counseling services, especially if you don’t have a business coach. Check out local, state and federal programs that assist new business startups. Save money by utilizing government surplus items from the Small Business Association (SBA), such as commercial real estate, vehicles, furniture, computers and office equipment. Utilize as much of your own money as possible. Obtain business licenses, permits and certifications as required for your specific business industry. An Employer Identification Number (EIN) may be needed.

4. Determine the Legal Structure of Your Business

The business structure you select affects your business identity, income tax filing status, tax liability, funding status, and even your client’s receptiveness.

Decide methodically which legal configuration best suits your small business: sole proprietorship, partnership, limited liability company (LLC), corporation, S corporation, nonprofit, etc. However, don’t turn the decision process into a major project. As your business grows, change will occur. As your company evolves, so will your legal structure.

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5. Prepare a Business Plan

The recommended business plan is simple, realistic, adjustable, and manageable. It provides focus, direction, clear financial objectives, data for loan requirements and it navigates your business success. It helps you to get well-acquainted with your profit numbers, determine projected start-up costs and marketing strategies.

A formal business plan is needed to incorporate your business or to operate as a partnership. Components for a good business plan include: cash flow projection, break-even analysis, budget, profit & loss forecast; business objectives; marketing plan; description of your target audience (customer-clients).

6. Ascertain Your Business Location

Decide where you want to locate your office, i.e., at home, in a shared office facility, a private office, or a retail area. (Home office space MUST be used solely and frequently for your business activities.)

Establish where you will meet with your client-customers. Be sure your office site complements the type of business you will be conducting. Choose a customer-friendly location, properly equipped, set-up and in compliance with zone restrictions. Retail office space should be in a good area accessible by major streets and public transportation.

7. Register Your Business Name and Domain Name

If you decided to operate as a sole proprietor, register your business name with either your state or county clerk. If you chose an LLC or corporation as your legal business structure, registering your business name when the formation paperwork is filed is generally acceptable.

Pick a domain name reflective of your company name, product and/or service. Register both your business name and your domain name with the state government. Apply for tax identification numbers as required by the Internal Revenue Service and your state revenue organization.

8. Protect Yourself and Your Business

Purchase small business insurance (fire, liability, business interruption, automobile and theft insurance, etc.) to shield yourself as well as your company against adversity and lawsuits. With a sole proprietorship or partnership, your personal assets can be confiscated by creditors, lien holders, and plaintiffs for settlements of claims and remunerations. Consider forming an LLC or corporation for greater personal asset protection; otherwise, creditors could take your vehicle, home, investments, etc. If a client or customer falls or gets hurt otherwise on your property, he can sue and cause you to lose everything.

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Another key to self-protection is that you learn from your inevitable mistakes. Your success depends on it.

9. Create an Accounting System

This task is best delegated to a certified public accountant.

Nevertheless, for the health and survival of your business, maintain an excellent understanding of your accounting system. Remain well-informed, constantly aware of how your small business is operating. The accounting system is the structure for financial statements, performance reporting, cash flow transactions, capital expenditure plans, budget variances, the establishment of fees and rates, and income tax preparations. Open up a bank account in your business name. Keep all of your documents well organized.

10. Monitor Your Finances Often

Watch the business funds – your company’s life-blood – frequently and consistently. Control your cash flow expertly and resourcefully. Review company bank statements and invoices. Put checks and balances in place; have audits conducted. Communicate with your vendors and creditors; keep a good rapport with them. As you prepare your initial budget, try to build in enough savings to cover six to twelve months of business operations, as well as an emergency fund. Exercise prudence and double-audit each expenditure. It is wise for you to share in your company’s money management.

11. Preserve Your Good Credit

Make it a point to pay your obligations on time, preferably early. This includes income taxes and especially payroll taxes from employee paycheck withholdings. Preclude being held personally responsible for paying back payroll taxes. The Internal Revenue Service is known for issuing harsh fines and penalties. Timely bill payments stimulate good business relationships and trust. Keeping a positive credit profile supplies a built-in safety net for meeting challenges and attaining financial backing when needed. Good credit is essential for profitable business transactions and sustainable cash flow.

12. Start Small

Endeavor not to over spend or spread yourself too thinly, limiting both your effectiveness and productivity. Try to do one or two tasks flawlessly.

Beth Laurence, J.D. in her article, Ten Tips for New Small Businesses, says, “Think small. Don’t rent premises if you can work somewhere else, and don’t hire employees until you can keep them busy. People who start their small business on the cheap …and create their first goods or services with more sweat than cash, have the luxury of making their inevitable rookie mistakes on a small scale. And precisely because their early screw-ups don’t bury them in debt, they are usually able to learn and recover from them. (Plus, running your business from home can save you tax dollars, too.)”

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13. Prepare Your Elevator Pitch

This tactical, 30-second speech is given to your prospective client-customers highlighting their needs. Always be ready to deliver it. Personalized as necessary, the elevator pitch simply vocalizes your identity, product or service and business objectives. In the first 15 seconds tell your client-customers who are you, what do you do, and what problems you can help them solve. Use the next 15 seconds to add details about your unique selling proposition, special skills and specific ways you can support them. This technique helps convince your targeted audience that you have the experience, astuteness and expertise to furnish what they need.

14. Get and Stay Connected

Do not wait for business perfection, begin networking and recruiting suitable clients. Get actively involved with community activities, associations and meet-ups relative to your client base. Attend town meetings, join civic groups and the local Chamber of Commerce. Network with like-minded individuals; persons with whom you share common interests and mutual business goals. This will help you develop into a sought after business expert. Make frequent contacts with everyone who is supporting, purchasing and promoting your product and/or service.

15. Market and Promote Your Small Business

Eric Holtzclaw in his article 10 Simple Marketing Tips for Small Businesses says, “Marketing doesn’t have to be hard or expensive. Sometimes the simplest ideas are the most effective…Start a podcast …and interview other business owners. People love to tell their story, and by highlighting them on a podcast you make an instant and meaningful connection.”

Place ads in your local newspaper, in trade magazines and publications. Send out brochures, flyers and postcards to prospective clienteles already motivated to purchase your product/service. Accept a leadership role in an organization, host an event, offer discounts, help with a good cause; support other small businesses. Request an interview on a local radio or talk show. Launch an email campaign.

16. Give Away Some Freebies

One of the greatest ways to attract customers, prove a genuine interest in them and add value to your business activities is to give away free stuff.

Your customers must see usefulness in it, however. For instance, offer sample products or free services like a webinar on how to attract and maintain customer loyalty, a free massage, or a free hour of consulting. Another great idea is to write a marketing book that tells your story and why the product or service you offer is the best resolution for their problems.

17. Get Every Commitment in Writing

Well-written and well-documented contracts make good business sense and are enforceable. They protect your health, your sanity and your business.

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Although oral contractual agreements may be valid, they can be very difficult to validate and impose. They are indeed hazardous to the long-term survival of your small business. Make it a general business rule to give and receive receipts for all business transactions. Even if not legally required, get every contract, commitment, offer letter, purchase order, lease, agreement and procedure in writing.

18. Hire and Partner With the Right People

Employ like-minded professionals, workers with similar goals, personalities and complementary skill sets. Avoid business sabotage and frivolous lawsuits by interviewing potential employees and independent contractors conscientiously. Evaluate their capabilities, work ethic, employment history, credit (where appropriate) and referrals. Establish ground rules and expectations along with clear consequences for violations. Publish these guidelines and procedures in handbooks, and ensure they are read. Administer the rules fairly at all levels and without partiality.

19. Document the Legal Status of your Workers

When you hire workers as independent contractors, make sure they shouldn’t really be taxed as employees. The IRS can impose substantial penalties against you for not withholding and paying taxes for a worker who is really an employee. Preclude this problem by having the worker sign a written service contract, or independent contractor agreement. When hiring an at-will employee, have the employee sign an offer letter that makes it clear the employment relationship is at will.

20. Get adequate rest and relaxation

Small business isn’t for the faint of heart. It’s for the brave, the patient and the persistent. It’s for the overcomer.
– Unknown

Operating a successful business can be tough and demanding at times. To remain alert, energized and cognizant, you need to exercise, get ample sleep and rest each day. Consume the proper diet and nutrition. It takes a lot to keep pressing ahead while maintaining realistic expectations all along the way. Time-out and tranquility are a must for triumph.

21. Know When to Close the Shop

Sometimes no matter how well qualified you are, or how diligently you work, your plans do not materialize as intended. In those cases, you need to cut your losses and move on without delay. Consider where the flaw occurred and how you might have responded differently. Retrieve the lessons learned, rise above the challenge and move on to your next endeavor much more experienced and astute.

When you have implemented these 21 Wisdom Nuggets for Launching Your Own Successful Small Business, you will have accomplished the essential business liftoff actions. Just remember that operating a thriving small business is an expedition, not a sprint. Efficiently manage your income producing, administrative and operational activities. Take great care of your employees and clients.

They will reciprocate to your delight.

Featured photo credit: Take the Plunge and Start Your Own Business – It’s Definitely Worth It! via google.com

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Last Updated on August 20, 2019

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. And that’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways on how to set financial goals and then actually meet them with ease.

5 Steps to Set Financial Goals

Though setting financial goals might seem to be a daunting task but if one has the will and clarity of thought, it is rather easy. Try using these steps:

1. Be Clear About the Objectives

Any goal (let alone financial) without a clear objective is nothing more than a pipe dream. And this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore if you are saving today, then you should be crystal clear about what it is for. It could be anything like kid’s education, retirement, marriage, that dream vacation, fancy car etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives, however small they may be, that you foresee in the future and put a value to it.

2. Keep Them Realistic

It’s good to be an optimistic person but being a pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going out of the line will definitely hurt your chances of achieving them.

It’s important that you keep your goals realistic in nature for it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said – “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman”. And this quote sums up the best what inflation could do your financial goals.

Therefore account for inflation whenever you are putting a monetary value to a financial objective that is far away in the future.

For example, if one of your financial goal is your son’s college education, which is 15 years hence, then inflation would increase the monetary burden by more than 50% if inflation is mere 3%. So always account for inflation.

4. Short Term vs Long Term

Just like every calorie is not the same, the approach towards achieving every financial goal will not be the same. It is important to bifurcate goals in short term and long term.

As a rule of thumb, any financial goal, which is due in next 3 years should be termed as short term goal. Any longer duration goals are to be classified as long term goals. This bifurcation of goals into short term vs long term will help in choosing the right investment instrument to achieve them.

More on this later when we talk about how to achieve financial goals.

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5. To Each to His Own

The journey of setting financial goals is an individualistic affair i.e. your goals are your own goals and are determined by your want to achieve them. A lot of times we get on the bandwagon of goal setting only to realize later on that it was not meant for us.

It is important that your goals are actually your goals and not inspired by someone else. Take a hard look at this step at all the goals you’ve set for after this step, you will be on the way to achieve them.

By now, you would be ready with your financial goals, now it’s time to go all out and achieve them.

11 Ways to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a 2 step process –

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough; and invest those savings wisely so that they grow over a period of time to help you achieve goals. So let’s get down to ensuring healthy savings.

Ensuring Healthy Savings

Self realization is the best form of realisation and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your monthly expenses. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you would be surprised to see how small expenses add up to a sizeable amount.

Also categorize those expenses into different bucket so that you know which bucket is eating the most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pump up your savings rate.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classical mistake which almost everyone of us do. We pay ourselves last!

Ideally, this should be planned upside down. We should be paying ourselves first and then to the world i.e. we should be taking out the planned saving amount first and then manage all the expenses from the rest.

The best way to actually implement is to put the savings on automatic mode i.e. money flowing automatically into different financial instruments (for example – mutual funds, retirement corpus etc) every month.

Taking the automatic route will make us lose control of our money and hence will compel us to manage in what’s left with us thereby increasing the savings rate.

3. Make a Plan and Vow to Stick with It

Budgeting is the best to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be made.

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Nowadays, several money management apps and wallets can help you do this automatically. It’s easy and who knows, you may just end up doing what people fail to do.

At first, you may not be able to stick to your plans completely but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Rise Again Even If You Fall

Let’s be realistic. It’s not like the world will come to an end if you made one mistake. This isn’t called leniency but discipline.

If you fail to meet your budget for a month, don’t give up the entire effort just like that. Instead, start again.

Remember that flexible plans are the most realistic plans. So go forward and try to follow your financial goals as planned but if for some reason, the plan gets out of hand for you, do not give up on it just yet. This has a lot to do with your psychology rather than any material commitment.

All you have to do is to stay on the road and vow to stay on it, no matter how much you fall down.

5. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make Savings a habit rather than a goal. While it might seem to be counter intuitive to many but there are some deft ways of doing it. For example:

Always eat out (if at all) during weekdays rather than weekends. Usually weekends are expensive. Make it a habit and you would in turn be saving a great deal.

If you are travelling buff, try to travel during off season. Your outlay will be much less.

If you go out for shopping, always look out for coupons and see where can you get the best deal.

So the key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice which will be harder to sustain over a period of time.

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6. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission. And it would be rather easy to lose the grip over your discipline.

Therefore in order to stay the course, it is advisable that you keep yourself surrounded with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

7. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

So if you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

Use this journal to write down all essential points such as your short term, mid term and long term goals, your current sources of income, your regular expenses which you are aware of and any committed expenses which are of recurring nature.

When you have a written commitment on paper, you are going to feel more energised to follow the plan and stick to it. Moreover, it is going to be a lot more easier for you to follow you and track your progress.

At this point, you should be ready with your financial goals and would be doing brilliantly with savings; now it’s time to talk about the big daddy – Investments.

Making Smart Investments

Savings by themselves don’t take anyone too far. However savings when invested wisely can do wonders and we are at that stage where we will talk about making smart investments.

8. Consult a Financial Advisor

Investments doesn’t come naturally to most of us therefore rather than dabbling with it ourselves, it is wise to consult a financial advisor.

Talk to him/her about your financial goals and savings and then seek advice for the best investment instruments to achieve your goals.

9. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about them.

Just like “no one is born a criminal”, no investment instrument is bad or good. It is the application of that instrument that makes all the difference.

Do you remember we talked about bifurcating financial goals in short term and long term?

It is here where that classification will help.

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So as a general rule, for all your short term financial goals, choose an investment instrument that has debt nature for example fixed deposits, debt mutual funds etc. The reason for going for debt instruments is that chances of capital loss is less as compared to equity instruments.

10. Compounding Is the Eighth Wonder

Einstein once remarked about compounding,

Compound Interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.

So make friends with this wonder kid. And sooner you become friends with it, quicker you will reach closer to your financial goals.

Start investing early so that time is on your side to help you bear the fruits of compounding.

11. Measure, Measure, Measure

All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments; taking stock of how our investments are doing.

If there is one single step where everything (so far) can go wrong, it is at this step – Measuring the Progress.

If we don’t measure the progress timely, then we would be shooting in the dark. We wouldn’t know if our saving rate is appropriate or not; whether financial advisor is doing a decent job; whether we are moving closer to our target or not.

Do measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

The Bottom Line

This completes the list of tips for you to set financial goals and actually achieve them with not so great difficulty.

As you can see, all it requires is discipline. But guess that’s the most difficult part!

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Featured photo credit: rawpixel via unsplash.com

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