Opening a business is one of the best decisions you can make to add extra income to your household. If you plan on operating a business in addition to your job, it can be easy to balance financial responsibilities and simply use the money from your current job to support your business. For instance, if you want to knit clothing or make other unique items for sale, getting the money for your materials is as simple as paying out-of-pocket for them. Or, if you work as a self-employed contractor, such as for driving services like Uber or Lyft, you can easily use your own vehicle to deliver food and earn income from this gig.
Risks of a Business
Though owning a business on the side or having a side-gig can be a great supplemental source of income, it might not be enough for some people to sustain a living off of. This might be due to the part-time nature of a gig, or because there is no way to expand their business. Because of this, some might choose to take on the financial responsibilities of running a full-time business and quit their full-time job. Doing so has incredibly great outcomes if done correctly. Being your own boss, doing something you’re good at and love full-time, and being able to track every cent that comes in and out of your business can be exhilarating. Running a full-time business requires a tremendous amount of discipline, effort, and knowledge ahead of time to make your business function. However, if your business takes off, and you get offers to buy-out your business, or for sales deals and contracts, the possibilities are endless.
Unfortunately, data from the Bureau of Labor Statistics shows that approximately 20% of new businesses fail within the first two years of being open, 45% during the first five years, and 65% during the first 10 years. In fact, only a quarter of all businesses survive past 15 years. If you are unsure of how to market to your audience, have declining sales, get involved in a lawsuit, or simply don’t have enough money to maintain your businesses, having your business fail and filing for bankruptcy are all very real possibilities. Because of this, it’s important to understand the financial responsibilities that come with running a business, and what to invest in in order to allow your business to succeed.
Investing for the Future
It can be easy to think that your product or service is superior to others, and this alone will allow you to be a step above the competition. However, simply because a product or service is superior does not mean that a business will survive. Poor spending habits and other flaws in financial responsibilities can cause your business to fail despite a superior product. To prevent this from happening, enlist the help of trusted professionals and partners. Plan for start-up costs and make the best decisions during the start-up phase of your business to avoid any interruptions and failures in the long-run and later on. Here are 15 start-up costs you should invest smartly in order to ensure your business succeeds.
1. Business Consultants
Business consultants are the backbone of any start-up business. A solid business consulting team can help point you in the right direction and help you understand the ins and outs of your business. Whether that’s the fashion market, public relations, real estate, or anything in between, a business consulting service can help ensure you make a solid business plan to detail goals and a timeline for the start of your business. More importantly, business consultants can help you understand the financial responsibilities that will come with owning a business in your field, and what you can do for an exit strategy if your business does not take off.
2. Legal Help for Licenses
Owning a business means owning several business licenses. Whether that’s a license to operate vehicles or sell at a certain location, food safety licenses if you’re selling food, and other licenses in your county or city, it’s important to get all proper licenses before beginning a business. Failure to do so can lead to your business being shut-down completely and possible criminal charges filed against you. Get the help of a business lawyer to help you understand what licenses you might need and how to go about obtaining them.
3. Market Research
Before you start a business, you’ll have to invest in market research in order to ensure your business will be profitable. What kind of people are in need of your product or service? Where will be the best place to begin selling to them? Will it be in person or online? How much are people willing to spend? These are just some of the many questions you’ll have to answer when conducting market research. Not doing so will make you start a business that might fail sooner rather than later due to a lack of research and knowledge.
Financial responsibilities don’t just stop at start-up costs. As a business owner, it’s important to always invest in making your product or service better and to develop great proto-types along the way. In investing in the integrity of your product, customers will be willing to pay more. Think of brands such as Dr. Martens shoes, Louis Vuitton bags, or Canada Goose jackets. Millions of dollars were spent in not just research and formation of their products, but also for copyright and patenting legal fees. Make sure you put enough money aside to develop your product to be better than the competition, and also for legal fees relating to copyright and trademark development.
5. A Solid Location
Finding a solid location is one of the most important aspects of creating and running a business. The perfect market place involves having a location that garners a lot of foot traffic, is easy to access, and has low overhead costs if you’re just starting off your business. If you’re running a traditional brick and mortar shop, think about other financial responsibilities such as rent, maintenance, and bills such as light and heating. In addition, consider getting an affordable office space to allow you to work comfortably if you have more than a couple of employees. A comfortable and good-sized location is essential for any business.
6. Great Realtor Team
Once you’ve found the perfect location, you’re going to need a great realtor to be able to get you your dream commercial property for lease. A good realtor will work with your budget and loan options to ensure you can enjoy your location without being overburdened by the financial responsibilities of rent, overhead costs, and hidden property taxes. A realtor can also be a great mentor if your business involves the real-estate market, and investing in a knowledgeable realtor is worth their weight in gold.
7. Solid Accounting Pros
Running a business means you will have to understand the ins and outs of financial responsibilities business expenditures, financing options for your business, employee income and benefits, and most importantly: taxes. It can be a great deal of information to take in. Luckily, with the help of an amazing accountant, organizational skills, and proper documentation, you can ensure your business never runs out of cash and is meeting its profit goals and margins. In addition, come tax season, you want to ensure you have an accountant handy to ensure you are reporting all business income in addition to writing off all appropriate expenditures to pay the least tax possible. This will save your business thousands of dollars in the long run.
8. Legal Help for Lawsuits
Whether you cooked food that made someone sick, had a spill in your lobby that made a customer trip, or any other reason, lawsuits are bound to happen to your business at one point or another. Hire a lawyer to help you navigate the muddy waters of customer lawsuits. One of the most important financial responsibilities you should not ignore is hiring professional legal help to protect your business from failing if a customer ends up winning a lawsuit.
As mentioned above, lawsuits are rife, and it’s important to stay protected with not just legal help, but also insurance. Small business insurance companies can help protect you not just against lawsuits, but also from commercial property damage, workers compensation claims, and other unforeseen events and emergencies. Consider the kind of business you want to run, and get all necessary insurance. For instance, if you run a limousine service, remember that on average, a driver will have an auto accident claim once every 17.9 years, making it a possibility that your driver will get into an accident at some point during the lifetime of your business. Prepare ahead of time with the right insurance!
10. Business Security
If you have a business that might be prone to robbery, such as jewelry, a car sales company, or even an art gallery, it’s incredibly important to invest in business security services. Not only do you want to keep your inventory safe, but also your employees and yourself safe during business hours. Hiring security guards can also be a big help, and is in fact essential for some businesses such as owning a night-club or even a bar. However, security breaches can also happen after-hours, so getting the help of CCTV cameras, real-time security footage, and updated alarm systems are all helpful. Don’t skimp on the financial responsibilities of business security. It could very well cost you your entire business!
11. Great Employees
When you’re running a business, it’s important to remember that the customer comes first always. When starting off your business, investing in stellar employees is incredibly important to sustain your business for the long run. Without great employees, your business will not be able to gain a great reputation, and customers will be turned off by the lack of expertise. Being able to hire, keep, and make a great employee thrive in your business is one of the most important financial responsibilities you can have for a successful business.
12. Advanced Technology
No customer wants to do business with a store that is not up-to-date with technology. Technology in a business ranges in everything from having a working cash register that accepts modern forms of payment such as Apple Pay, a working online website for customers to look at, and even an updated interior. In addition, if your customers can order products online, their information must be protected using the very best technology. Without investing in updating your business’s practice methods, it can be difficult to gain the trust of customers, and you risk losing your business altogether.
13. Solid Customer Service Team
No one wants to have a bad experience at a business. If you followed the advice above, you can prevent bad customer service by hiring great employees. However, some tough customers won’t be satisfied no matter what you do. Because of this, it’s important to hire customer service agents that are trained in handling bad transactions, customer dissatisfaction, and even mistakes that are bound to happen. A dedicated customer service team should be in place at all times, whether online, via telephone, or in the store itself to handle these dissatisfied customers and prevent your business from plummeting. Investing in customer service representatives as part of your staff can greatly increase the chances of your business keeping a good reputation, and keep customers flowing in.
14. Traveling Costs
You might be traveling quite a lot not just to handle financial responsibilities, but also for business meetings, meetings with lenders, possible investors, and even expos to showcase your product or services. Set money aside to attend important meetings and to support your travel ventures.
15. Advertising and Marketing
Once you have your business up and running, it’s nothing without investing in advertising and marketing. Consider getting the help of a social media team to put your business on the map. Invest in graphic artists and public relations specialists who know how to construct advertisements and commercials to attract customers to your business.