You have spent hours honing your craft. You have risen to a level where you realize people are willing to pay you for what you do. Now, you may know all there is to know about how to make what it is you make, but you don’t know diddly about building a business. Stepping into the business world is a frightening transition full of legal mumbo jumbo and tax mystery. What are some specific things to know to get you started and keep you out of trouble?
Make something to sell something
You can’t have a business without something to sell. An idea, a product, a service, you have to have something that someone else wants. It doesn’t have to be perfect; it just has to be worth paying for. So some mystery about what you are doing exactly is ok, the sooner you are turning product the better. Give your early customers options for upgrading or some benefit for being early adopters.
Develop a business plan
If you are going to be going to a bank for a start-up loan, then a full business plan may be necessary. If you have a couple of credit cards and people on deck, willing to pay you money, you can be a little looser in your plan. Small startups can get by with a bare-bones outline of a business plan. The loose organization will allow you to test and refine your viability in the market before you are all in.
Your business plan should outline your vision, mission, and process. Marketing and potential cost and return data will help you to get a grip on the cash flow you may require. Again, keep it loose and flexible. It will also help you stay under some form of control, so unbridled growth and spending don’t drag you into failure and bankruptcy.
How are you going to get paid
You will hand someone something you made in return for some form of payment. How are you going to be getting paid? If cash, how will you be accounting for the cash flow in your business so you can avoid tax disasters and have a record of cost and sales? If you are going to be taking personal checks, how will you be handling returns for insufficient funds? What method will you be using for accepting credit card payments? Many banks and quite a few businesses exist for you to use that provide payment acceptance, money transfer, and even website development and payment tie-ins.
If you are in a resale market, will you be giving credit to customers and how will you be determining your customer’s viability and ability to repay you? Will you be able to absorb the loss if your client defaults on what they owe you?
How will you be paying
You don’t have to have a lot of money to start. Some very brave individuals have lived for a little while on that line of going broke. Buying materials on credit, knowing you have a sale on board to make up the difference. Dangerous, but done regularly. Having cash up front and not owing is best. As you become more viable, it will be normal to have accounts with different suppliers, instead of paying cash for each purchase. Regularly paying off your debt and building a war chest will be your safest route. Work at developing three to six months of operating expenses to provide for hard times and loss.
How will you be handling your accounting
Having a record of each and every transaction is the most important part of your financial management. This is how you prepare for your eventual discourse with the tax man. Having a system in place for invoicing, transactions, and expenditures will allow you to have tight control on how and where your money is going. If you have any idea that you are weak in this area, surround yourself with people who are good here, even hiring this out if need be.