As 2020 comes to a close, I was invited to reflect on my first two quarters in business. A friend who is interested in starting her own business asked me to share any challenges I have encountered and advice for other entrepreneurs who are interested in pursuing this path.
So, you want to start a business? Congratulations! It is a big decision and a huge commitment to determine that you would like to start an entrepreneurial venture.
Here are 5 tips to start your entrepreneurial venture:
1. Establish your legal entity ASAP.
I know there are many people who start immediately by tinkering and building in a garage or basement. It's important to establish your business entity first, whether you're an LLC, corporation, B-corp, or something else. Why is this so important?
Your business entity describes ownership, operating guidelines, and it influences future tax implications.
Especially if you are entering into a new venture with a business partner or other co-founders, you'll want to have your business entity established immediately. That way when it comes to an initial investment or equity, it will be really clear.
2. Apply for a business bank account.
Once you have your legal entity established, apply for a business bank account to keep 100% of your business expenses separate from your personal banking. Why is this important? Depending on the type of entity you establish, a certain amount of your business set up costs may be eligible for tax benefits, therefore you'll want to keep track of your business startup costs. I'm not a tax professional, so you'll have to consult one to receive up to date information.
3. Contract templates are your best friend.
Again, another important aspect of avoiding costly mistakes means investing upfront in activities that will protect your business. I recommend getting all the standard contracts that you need to operate. These will vary depending on the nature of your business. Some examples are:
Consulting services agreements
Non-disclosure agreements (NDAs)
Offer letter agreements
While there is an upfront expense to work with a lawyer to prepare and customize these agreements to your business needs, these are valuable templates that will be reused many times.
4. Focus on your secret sauce and revenue-generating activities.
Once you get started, you'll quickly realize you need to separate the duties in your business that are your secret sauce and are revenue-generating activities – those are the ones you should focus on. Everything else, delegate or outsource.
For example, I use Quickbooks Online for expense tracking, invoicing, reconciliation, and reporting. Within 2 months of establishing my business, I hired a virtual bookkeeper. I learned that accounting is not my strength, I'm inefficient at it, and there are other higher priority actions that I must focus on.
5. Invest in business systems.
Do not start your business using a free personal Gmail account. I repeat. DO NOT start your business using a free personal Gmail account. No matter how experienced you are, receiving an email from [insert business name]@gmail.com is unprofessional. To remedy this, I highly recommend purchasing Google Business Suite. At less than $6 per month per license, it's so affordable.
Another example is investing in a Zoom business account. I've heard this before while on a call, "We'll have to conclude our meeting before the 40-minute time limit on my Zoom account." For less that $16 per month, you can have a Zoom account with all the bells and whistles, so again, you can be cost-conscious and invest in the business systems too.
That concludes my roundup of the top 5 tips for entrepreneurs who are ready to start a business venture. Have any other tips to share? Let me know in the comments.