Starting out in business for yourself? Congratulations.
Small business, and businesses that were once small, form the tapestry of our economy.
I’ve run my own small business for coming 40 years and my favorite clients in my business are other small business people.
But, in the euphoria and exhaustion of starting up, don’t put off doing the dull basics of bigger businesses. Those basics are basic for a reason.
Form habits and routines from the very beginning that will serve your business well as it grows.
Four utterly non-sexy imperatives form the foundation of a small business.
Document the deal
Whether you are partnering up with another entrepreneur or engaging someone to create stuff for your business, put your deal in writing.
In the best of all possible worlds, you get a lawyer’ s help. A lawyer can see if the agreement is complete, that it covers all the important issues, and is without ambiguity.
More on whether your contract is legal
But even if you are doing it yourself, the act of writing down what the two of you agree on improves the odds that there is a true meeting-of-the-minds and that you really do share the assumptions about how the business deal goes forward.
Make it legal
Find out about the laws that cover what you’re doing.
- Do you need a license?
- Can your legally run a business from your home?
- Are permits required?
- Do you need additional insurance?
- Are your staff employees, independent contractors or volunteers?
You want to avoid a false start, a violation that requires you to start over because you weren’t in compliance.
That’s a diversion you don’t need when you’re trying to get a business off the ground.
Most of us didn’t grow up aspiring to be bookkeepers. Yet the importance of book keeping continues to impress me.
You will need to file tax returns. You may have a partner to share profits with. Even solo, you need to know what it costs you to be in business.
Your books at the beginning don’t have to be sophisticated or elaborate. A spreadsheet will do.
But you’ll want to know how much you contributed to the business, whether that contribution forms the tax basis of your investment or your loan to your business.
I can’t tell you how often clients tell me they “invested” in a friend or relative’s business, but can’t tell me whether they contributed capital, or made a loan to the business. It makes a difference, whether the business is a success or a failure.
If you rely on memory or on waiting for that lull in business when book keeping will look like fun, you’re kidding yourself.
Take care of yourself
It takes an enormous amount of time and energy to start a small business. You are the business’s key employee, probably its most valuable asset.
Treat yourself like a valuable asset.
If you run yourself into the ground, there will be no business.
- Get some rest.
- Stay connected to the people around you.
- Be engaged in the broader world.
And treating yourself well does not mean fancy new wheels, consistent with the business you hope yours will become.
Working for a bankruptcy trustee early in my legal career, I saw an incredible run of failed businesses where the first thing the new business folk had done was buy a status automobile, or even two.
I suspect the shiny cars and the subsequent business failures were not unconnected.
As time goes on, be a good chief of HR: institute a retirement plan that allows you to put cash away for old age.
In the Great Recession, I saw too many floundering businesses where 50 and 60 year old business people told me “the business was my retirement”. They were sitting in a bankruptcy lawyer’s office because the business was now defunct and they had nothing.
You don’t want to be in their shoes. Diversify your retirement resources: hold both business assets and standard retirement accounts.
Power of habits
New York Times business writer Charles Duhigg occupied the best seller list for more weeks than I can count with The Power of Habit.
Duhigg talks about how habits can be changed; you can short circuit the “change” bit if you start out right and build these good business habits.
I never recognized Aristotle as a business writer. But it was he who said Well begun is half done.
Image courtesy of Pixabay.