Financial Advice for New Businesses
Have you ever thought about starting your own business? Be your own boss? Have a great idea for a new product or service? Are you retired and want to explore another profession or do some consulting?
There are many reasons to start a new business, but before you jump in, take a good look at the whole picture so you’re prepared and understand how to handle issues such as tax preparation and proper accounting.
First, you need to go through the idea phase to focus on what service or product you will be promoting. Will it be multiple products or several niche items? How does the product or service go from the idea inception to the final product?
Second, ask yourself if you have the psychological makeup to start a business. Owning your own business is rewarding, but is also risky. It requires you develop new skills, such as becoming comfortable with selling your product and your own credibility to others. It means taking risks that might cause you to lose money as you learn how to move forward successfully.
A new business also involves long hours, distractions and sacrifices. Consider how these things will affect you and those around you including your family. Also consider whether this can be mitigated by finding financial service providers.
Now, think about the business itself and how it needs to be put together to make it efficient and work well.
You’ll need a business plan, the blueprint for the formation of the business, its operation and its success. A business plan takes time to write and research, but it will greatly improve your chances of success as a startup owner.
The business plan includes your mission statement, a company description and overview, financial review, funding requirements and an action plan.
Before you start writing your business plan, you should make decisions on the following items:
Business Organization
- Develop your mission statement, goals and objectives along with your business culture.
- Decide who is going to own the business and what the organization will look like.
- Find a location or facility that will work for your business and can easily be found by your customers.
- Cash is very important to every business. How are you going to protect it? Plan on delegating different tasks with cash to different people.
- Do you have the funds to finance the startup costs or do you need to find a lender?
Your Product
- What are you going to sell? What does it look like? How are you going to get it? Make a plan on how to sell it.
- Determine what it will cost to make the product and the selling price.
Product Marketing
Your marketing plan should address your logo and product brand. Identify potential customers and know your competitors.
Financial Organization
- Find a business accountant to help you obtain the identification numbers you need for the business, income, payroll and sales tax.
- Then have them educate you on bookkeeping, financial statements, payroll, sales tax, and income tax.
- They can also help you learn how to keep good records of all of your business transactions.
- Set financial budgets and goals. Plan on reviewing them on a regular basis.
- Decide what legal entity is best for you such as a sole proprietorship, a corporation or a partnership. Talk to an attorney to find out which one is best for you.
- Locate an insurance agent to discuss the types of insurance you need to protect the business.
Starting a business can be risky and challenging. Educating yourself and doing the planning will increase the potential that your business will be the success you want.
By MARCIA CAMPBELL | Contributing columnist with THE PRESS ENTERPRISE
PUBLISHED: June 4, 2018
Marcia L. Campbell, has worked as a CPA for 25 years specializing in seniors, trusts, estates, court accountings and probate litigation support. Reach her at Marcia@MCampbellCPA.com