6 STARTUP BUSINESS TIPS YOU MUST HAVE
1. Just because you are starting a business on a budget doesn’t mean you have to do EVERY job!
You are an excited entrepreneur on a small budget that wants to dive in and get your startup going. It is very tempting to do the “easy” jobs because you think it can save you money. However, unless you are an expert already, it will take time for you to learn the task and it will then take time to accomplish this task on a weekly or monthly basis. Let’s assume that you are thinking of managing your bookkeeping.
I have found that when I do my own books, it is easy to get lost in the details and the task takes longer than 4 hours a month. This is especially true if you don’t like the task at hand. The point is, do the math first!
2. Avoid using a lawyer as long as you possibly can
THIS IS ONE OF THE BEST STARTUP TIPS YOU WILL GET!! Let’s face it, business attorneys are expensive and self-serving. The best asset you will have at your disposal is a good Certified Public Accountant (CPA). Many of the things you need to know fall under the realm of a CPA and your CPA will be happy to answer. Additionally, they will most likely charge much less than a business attorney. Most likely, your attorney will tell you to ask your CPA for any tax related question (they usually refuse to answer) and many of your questions will relate to taxes or business establishment (which relates to taxes). YOUR CPA WILL BE THE MOST IMPORTANT PERSON TO YOUR BUSINESS, SO DON’T MESS AROUND!!! Additionally, make sure you like them because you will be communicating a lot with them.
If you need help setting up your company, drafting nondisclosure agreements, writing job offer letters, filing for bankruptcy, or other similar tasks, it is more economical to find a good paralegal firm that is willing to do the work independently. In reality, these are the people that do the actual work for most (if not all) law firms. They are significantly cheaper and know just as much (if not more) about the process than your attorney. Make sure you find a firm that is familiar with the laws in your state.
3. Avoid banks as much as possible
Your bank is ripping you off. You can guarantee it! In the blink of an eye, you will be paying fees after fees after fees. It is almost unavoidable. Your best bet is a credit union but their minimum balance requirements for business accounts are often quite high (above $5000). You can probably get away with using your personal account for business expenses for several months to a year (just do a good job keeping track of your business expenses). There is no law that legally requires you to get a business account, but for the IRS to see you as a legitimate business you need to show that your business is operating as a real business (which means opening a business account). In the case of a LLC or corporation, if you run into some legal issue, you must show that you as an individual are separate from your business. This protects you from being sued personally.
Opening a business account is a “catch 22″ – you cannot open a business account without your legal entity paperwork (Tax ID/Employee Identification Number and your company’s formation documents) yet often you may not want to legally form your business until you are generating income. Just remember, the more business you do, the greater chance you have of running into a legal problem.
4. Trust no one? Trust everyone?
What does this mean??? It is very easy to become paranoid of everyone’s intentions when you start a business. The “vultures”, as I like to call them, will come out to feast. Your fear of making the wrong decision can lead to business paralysis. What do you do? If you trust no one, you may save yourself from being taken advantage of but you will probably lose out on some great opportunities. If you trust everyone, you will get taken advantage of. This is just a fact of life in today’s business world (see Big Business for more discussion on this). This isn’t necessarily a bad thing. It will probably be the best lesson you will get. So, my advice here, instead of spending your time worrying about the intentions of everyone (and this can literally drive you crazy), trust everyone. It will lead to better business relationships, more peaceful sleep, and some good business lessons.
5. Put your website up as quickly as possible
Most people know that anyone can create a website. My original opinion on this (my business was not a website based business) was that people would not see this as valid proof of being a business (and it is NOT). Yet, most people are not knowledgeable about starting a business (this includes your customers). The first question everyone asks is “do you have a website”? It is very frustrating to answer the question with “not yet”. In my case, I had the domain and I was working on a reservations system and database that linked to my website. I was unwilling to post anything until I had it somewhat together. This was a mistake on my part. I underestimated the perceived value of a website. It is relatively cheap and can shut down most nosey inquiries. Valid or not, others perceive a website as an indicator of legitimacy.
Note: The first thing you should do before ANYTHING is establish a name and grab the domain (often the availability of the domain will drive your name). You can always change your name (or establish a “doing business as”) but the domain you want is often not available. Reserving a domain is cheap and easy.
You have the choice of many hosting sites but I would steer clear of free hosting sites! Your free hosting site can shut down tomorrow without any notice to you.
6. Failure is good….bask in it!
Failure is inevitable in starting a business. Don’t let this get you down. It is hard to have everyone watch your every move (and many are more than happy to pounce on your failures as validation of why they don’t start a business) but stand tall and bask in what you have accomplished so far. You are attempting to do something a very small percentage of people actually do. Let the first mistakes be your guide. You are courageous! You are awesome! Don’t let other’s negativity get in the way of doing something great!