Taking the leap of faith and starting your own business seems like a dream come true, but, you shouldn’t forget that this path is full of trials and tribulations. One of the hardest parts of being an entrepreneur and your own boss is decision-making.
When you work for somebody else you don’t have to think about things like hitting quota, increasing the bottom line, or legal issues. But, as a business owner, these and many more challenging tasks will be your responsibility.
To give you guidance, here are some of the most important decisions that you’ll face in the first year of your entrepreneurial journey.
1. What Kind Of Business Structure to Choose?
There are several options when it comes to picking the type of business entity for your new company. And opting for the right one means setting your course for the future, as each business structure comes with a number of benefits and drawbacks.
This decision will profoundly impact your taxes, personal liability, and your ability to find funding.
Let’s list and explain the most common forms of business structure to help you choose wisely:
- The sole proprietorship is a common business structure for those who want to run a company alone, and it is the simplest structure regarding taxes and bureaucracy. On the other hand, you’d be personally liable for any debts incurred by the business which means that your assets would be at risk.
- A partnership refers to a business owned and operated by several people. This is also a simple business structure to set up, much like a sole proprietorship in its ease and the inexpensive cost. The upsides are sharing both responsibilities and profits with your partner, as well as a favourable tax treatment. However, it is also worth noting that if one partner has incurred debt, all partners are responsible. This is known as a ‘joint or several’ liability.
- A limited liability company (LLC) is an entity you set up to effectively run your business and it is a good solution if you want to keep your personal assets protected. The business owner and the business itself are separate from each other in terms of law and the business is its own ‘legal person’. This means, you are not personally responsible for the losses and debt of the business. The limited company structure is the most popular among small to medium sized small businesses.
2. Should I Spend My Money on Marketing?
Many startups and small businesses operate on a shoestring budget, which is why this seems like a legit question.
The answer is: yes, absolutely!
Marketing is essential for the growth of your business, especially in its early days.
Some entrepreneurs make a mistake by believing that they can leverage their basic knowledge of social media and promote their business. The thing is that you need a proper digital marketing plan that will track the performance of your efforts and allow you to see what works and what doesn’t.
Here’s what you take into consideration when planning your marketing budget:
- Building a professional website. This step is crucial for maintaining a strong online presence. Your potential clients will look your company up on the internet, and if you don’t have a website at all, or if it’s of sub-par quality, your business will come off as unprofessional or untrustworthy.
- Producing superb content. Once your visitors land on your website, they will start looking for some educational content and solutions to their issues. If your content doesn’t provide value or address the pain points of your target audience, you can’t expect your visitors to stick around and explore further.
- Social media marketing. Engaging your potential customers is hardly possible if your company isn’t active on social media platforms. However, don’t spread yourself too thin. Instead of that, start small, and pick two channels that your target audience prefers. It’s also a good idea to invest in paid advertising on these platforms because you can have a great reach without spending much.
3. Do I Need a Lawyer?
Let’s not forget that every business is a legal entity, which means that it has to adhere to and be compliant with a number of laws and regulations.
Trying to handle these delicate matters yourself isn’t exactly the best idea unless you’re a lawyer yourself.
Just take into consideration partnership agreements, trademarking, employee contracts, intellectual property, not to mention potential legal issues.
A reliable, well-versed business lawyer can anticipate a potential problem before it escalates, thus helping you avoid different legal pitfalls. In a nutshell, in order to stay on the safe side when it comes to various tricky legal aspects of running a business, obtain legal guidance, and protect your business interests, you do need a lawyer.
4. How About Hiring an Accountant?
Being an entrepreneur means that you need to have at least some basic financial literacy. However, it doesn’t require having an accounting and finance degree.
To put this important decision into perspective, it’s worth mentioning that 82% of businesses fold because of poor cash flow management.
So, instead of trying to manage your business finances, it’s much better to hire a professional. This will both prevent you from making a bad financial decision or forgetting to file taxes on time and allow you to focus on actually running your business.
However, you don’t need an accountant to tell you that the first thing you should do is separate your personal and business bank accounts. That way you’ll be able to track your expenses and incomes.
Although you’ll face a number of difficult decisions during the first year of running a new business, these four are of tremendous importance as they will affect the future of your entrepreneurial effort.
Author: Michael Deane has been working in marketing for almost a decade and has worked with a huge range of clients, which has made him knowledgeable on many different subjects. He has recently rediscovered a passion for writing and hopes to make it a daily habit. You can read more of his work at Qeedle.