As a problem solver, I am always listening, observing & analyzing when speaking with clients.
While assessing their needs, I come across common issues or circumstances that a lot of small businesses share.
To name a few:
1. Incorrect or Lack of Knowledge about their business structure
"I did an S-corp because they said it's better tax write offs"
2. No financial or strategic plan just "I want to make money" or "I want to be my own boss"
3. Not being mentally or emotionally built to be an entrepreneur
4. No record keeping systems in place. Therefore no proper tax planning & compliance.
Let's touch on these in depth & apply some solutions:
1. There are certain basics about starting a business that you are responsible for learning. Even if you are hiring a professional to set you up, understand that you have options in the entity structure. Also, that whichever you select, it should include your future plans for your business.
Which brings us to...
2. Imagine, you have bills due on certain days & expenses.
You receive your paycheck and you just randomly pay some of them until the money runs out. No checking the due dates.
This wouldn't make sense with your personal finances, don't do it with your business.
Create a budget. Create a financial plan where over time those line items and amounts increase over time. Have direction for your finances. Strategize.
The moving parts and their placement is how you get from one level or stage, to the next. Positioning is crucial, so make sure your business has a path of where it wants to go by setting goals, objectives and milestones.
3. YOU DO NOT HAVE TO BE AN ENTREPRENEUR IN ORDER TO BE A BUSINESS OWNER. Yes, I'm yelling because taking a leap of faith does not necessarily mean quitting your job to pursue your business ventures. Especially not a job that you actually like and generates sustainable income. And this is coming from someone who quit their job with no savings and landed on their feet, in a better situation and hasn't been an employee since. No luck. No wishes. I was born for this. Not everyone is.
There's a mental and emotional posture that you have to possess in this lifestyle. There is an energy that has to come from deep when everything around you is unclear, uncomfortable and unpleasant. With every next level, you & fear have a standoff that only one of you survive.
You can start a business while working a 9-5, you can also become an investor, look at employment as another stream of income. Don't allow the pressure and unrealistic gratification of some of these success stories, lead you to impulsive decisions.
4. Bookkeeping is not only for Bookkeepers & Accountants. The biggest part of Tax Preparation, is the part where your finances are prepared beforehand.
With all the software, applications and affordable options, there is no excuse as to why in December, you have no clue how much you've made or how much you've spent since January. Then having to dish out more money to pay someone to figure it out end of year or on a time crunch to do it yourself and have to backtrack 12 months.
I see people spend thousands on marketing but won't invest $4 a month and 30 mins on Sat morning to organize their books.
Where no marketing, no social media or no endorsements exist, financial management is a key factor in every successful and profitable business.
Do not be cheap or try to cut corners where it counts most, download an app/software, learn & do it yourself or hire someone to maintain your finances while you run your business.
There's no way around it.
All of these topics, if ignored have to be remedied at some point. Better to put systems in place at $0 than to have to undo and unlearn at $100,000. Or wonder why you aren't getting past $1,000.
Whether you do some research and learn to do it yourself or do some research and hire someone.
Be prepared, be informed, Be great!