4 Things to Keep In Mind When Starting a New Business

New Business 2020-Negosentro

Negosentro|4 Things to Keep In Mind When Starting a New Business|Starting a new business is an exciting time. You are teeming with ideas for your product or service, eager to share it with the world. But, before you get started, it is wise to keep these four things in mind to help you stay on the right track.

Focus on Your Market

No matter how excited you are about what you have to offer, you have to step back and focus on who you are going to offer it to. This is your market, and their willingness to spend on your product will largely determine if your business succeeds or fails. 

Conduct thorough market research to find out its size, spending habits, and trends. The Small Business Association has information and resources that can help you get started for free. 

Decide on a Business Structure

How you structure a new business will depend on several factors. These are largely the type of business you are offering, how many people are involved or have an ownership interest, liability and risk, and how you plan to raise capital. Consider the most common business structures to see which one is right for you.

Sole proprietorships are the simplest form of business structure. They have one owner who operates under their own or an assumed name and who is responsible for all liabilities associated with owning and operating the business. Starting this type of business is relatively straightforward: you simply start conducting business. You will usually need to register any assumed names with the local government and apply for an Employee Identification Number with the IRS for opening business accounts. Taxes are filed on personal returns. 

A partnership is similar to a sole proprietorship except that it has more than one owner or partner. It must furnish an informational report to each partner every year that is then filed with the IRS. 

Many people choose to form a Limited Liability Company (LLC) for their business. As its name suggests, this limits personal liability for business activities. You can create an LLC with one or more individuals, businesses, or other LLCs in most states. Taxes can be submitted through members’ individual tax returns or the business can elect to be taxed as a corporation. 

Corporations are perhaps the most complicated form of business from a tax perspective, but they are incredibly popular. They limit personal liability for officers. You must file with your secretary of state to form a corporation. Income and expenses are reported on a separate corporate tax return to the IRS. 

No matter what business structure you decide on, try to keep all finances separate. That will help you compile reports, determine profitability, and file tax returns. 

Overestimate Costs

Even if you have been working in the field for years and have a pretty good handle on things, it is best to overestimate your costs when getting started. Many suppliers offer bulk discounts that a small business simply can’t take advantage of because of low volume. 

It can be a good idea to add an extra ten percent (or more) to the estimated cost of all goods, services, and fees to give yourself some breathing room. If you don’t need the extra money that has been budgeted, put it aside for expansion or slow times when you may need to boost cash flow. This can help your business handle unexpected expenses as they crop up. 

Ask for Help

Don’t underestimate the value of a great mentor who can guide you through this process. They have been where you stand now and have probably made a few mistakes along the way they want to steer you clear of. Reach out to experienced business owners or organizations to find a mentor that fits your style and needs. 

It is a hard fact that many new businesses fail. yet, they don’t necessarily fail because they are new, but rather because their creators went into the venture unprepared for all eventualities. While using these strategies can’t guarantee success, it can help you stay a step ahead of the game. 

 

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