I’ve worked with clients so wide and varied over the years you could say a lot of them have shared nothing in common. Not personally, not physically, not culturally or politically. Yet, in one crucial way, so many of them are alike. They are small business owners. And they share a dream: to build a successful business.
Yet, over the years I’ve seen too many of them fail. In many instances, it did not have to happen.
That’s why I’ve put together this list, based on my observations and my experience as a business owner, of five tips that can help you build your business and live your dream.
1) Understand what you’re getting into. Start with a budget. A single year budget is good, but just as important is a budgetary plan for the long-term. Imagine you’re starting a cupcake company. How many cupcakes do you want to make a week? In your research you might determine that 2,000 would overextend your resources and leave you vulnerable. So maybe its 1,000 cupcakes you can afford at the outset. You can make a plan for doubling and quadrupling that output down the road. But start with good planning and you’ll sustain your business, and you’ll be around in the long-term to hit other milestones.
2) Hire a payroll company. It’s hands down the best money a small business owner can spend. Even if you only have one employee. Why? Because payroll companies do more than issue checks. They analyze your situation and help you make the best plan for your biggest investment: your employees. Also, they file the necessary quarterly forms with the IRS and they do it on time. Believe me, this reduces stress.
3) Understand your competition. People come through my office with business ideas all the time. I congratulation them for having the imagination, the enthusiasm, and drive to start their own business. But before they plunge precious time, energy, and resources into a particular market, I want to know if they’ve done their research.
For example, in the market for real estate brokers the attrition rate is notoriously high. To put it roughly, real estate has a boom and bust nature, and long-term success requires good planning. But all markets require planning, and I always say it helps to find someone to emulate. If there’s someone in your field who is doing something well, take note.
4) Invest your pretax earnings in a retirement account. It’s a great way to save on taxes in the short term and it allows you to invest for long-term security. There are many different options that apply, depending on the account you’ve set up, how many employees you have, and what kind of business you’re in. It might surprise you, for example, that a wealthy small business owner over the age of 50 can salt away more than $54k a year toward retirement, tax-free.
5) Seriously consider the legal structure of your business. Should you be a sole proprietor? Or should you form an LLC, or small business incorporation? And, if you choose the latter, in which state should you incorporate?
If you iron out these legal matters in the beginning, chances are you won’t have to think about them again. Get the legal advice you need and take the peace of mind that comes with that.
And, of course there is more. Feel free to contact me, Stu Steinberg, CPA, MBA, of Erock tax for help in small business strategy. I have owned a strategic tax practice on the North Shore for more than 23 years. Reach out and let Erock Tax take care of you.
Listen to Stu and Win Damon of Radio 1450 AM WNBP and wnbp.com review this topic below: