Basics, Self-Employed

5 Tips for Starting a New Business

Are you ready to make the jump from employee to self-employed? If your dream of owning your own business is beginning to become a reality, there are a few steps you can take early on to help make your business more successful. Let’s review five tips for starting a new business.

  1. Have a Plan

Whether it’s a full business plan, marketing plan, or plan of action, having a clear idea of some basics about your endeavouris important. Think about

  • How much time per week will I commit to the business?
  • How much start-up capital do I need? Do I have enough cash or do I need to borrow/find investors?
  • How do I measure the success of the business?

Set goals with a timeline to meet each. For example, if you’re starting a pet-sitting business, commit to adding a certain amount of new clients each week. If you’re in the direct sales business, aim for a rise in sales. For example, set the goal of a 10% rise in sales each week for four weeks. Then review your goals and adjust as needed.

  1. Research/Be Prepared

Do you need a vendor’s permit to sell your handmade sweaters at the community centre’smarket? Is an inspection of your kitchen required to start a catering business or bakery from your home? If you’re thinking about earning extra cash from ride-sharing, do you need extra insurance on your vehicle?

Doing your research before starting your business can save you a bundle. Breaking city/county bylaws can result in hefty fines. Consult your local government offices to ensure you’re complying with all municipal, provincial and federal rules.

  1. Open a bank account to use solely for your business.

One of the biggest mistakes new business owners make is mixing personal and business funds. By co-mingling your money, you’re making it almost impossible to tell how well your business is doing overall. Having a separate bank account for only business activities makes gauging your business’s success much easier. And, banking fees for your business account are tax-deductible.

  1. Establish a record-keeping routine from day one – and stick to it!

Along with keeping a tidier office and being able to track your income and expenses easily, having a good recordkeeping system is a blessing at tax time. Instead of having to sort through dozens (or hundreds) or receipts next spring, total your expenses periodically – based on the amount of paperwork you have. If you sell goods every day to multiple clients, recording daily income expenses might work best for you. If you have fewer clients and few expense receipts, just a weekly or monthly record on your business activities might be more appropriate.

Regardless of how often you track your income & expenses, the important thing is that you do it regularly (QBO-SE reference perhaps?)

  1. Set realistic expectations

Small business owners hope that they’re endeavoursare successful but the harsh reality is that many businesses take years to turn a profit. Are your expectations realistic?

  • How many hours a week are you willing to devote to your business? Is that number realistic based on your other obligations?
  • Should you start small and keep your 9-5 or jump in with both feet? If your 9-5 provides insurance that covers your child’s medications, perhaps easing your way into self-employment is a better choice.
  • If the business doesn’t take off as you’d hoped right away, do you have a backupplan?  Do you have additional funds available if needed? When it comes to being profitable, how long is too long to wait?

One last piece of advice – don’t be afraid to ask questions! Reach out to your local Chamber of Commerce, small business development center, banker, or friends & family for input. Network with other small business owners. When it comes to starting your own business, knowledge really is power.