The 7 Items Every Checklist for Small Business Needs
Every small business has to start somewhere. At first, one may only be focused on what the product or service is, and how to provide it. However, there are dozens of other elements involved in a building a foundation for a successful business. You have to think of everything from managing the daily operations to developing a marketing strategy. Sure, the whole thing can be pretty exciting. But at the same time, it is often overwhelming and confusing. For anyone who is trying to fill the many roles of a business owner, it can be hard to know where to start. However, this checklist for small business owners will give you some idea of the seven things every small business needs to get started.
1. Have a Plan For Expanding Your Business
The first part of the plan typically comes naturally. Someone is lucky enough to find something they love doing and hopes to profit from it. If you’re lucky, the product or service you offer is in high demand. But no matter how lucky you are, a small business cannot be successful unless there is a plan. That is why having a business checklist is so important. Consider this a template for the future.
In the beginning, this to-do list will help you cultivate the outline or your business, so the first draft may not have all the finer details. Just make sure it covers a few essential points. Most successful small businesses will create each of the following:
Break-even analysis
Essentially, this is just what it sounds like. It’s an analysis to determine what it will take to break even. That is to say, how much revenue will it take to cover the total cost to run the business.
Profit-loss forecast
This is a rough projection of how much money you will bring in by selling products or services, and how much profit you will make from these sales. It is about comparing the costs to operate to the net and gross profit of your business.
Cash Flow analysis
This is particularly important. Many say it is one of the most important financial statements for a small business. A cash flow analysis is a listing of the flows of cash into and out of the business or project. It keeps track of your spend and your income and helps you make sure you can maintain a balance.
Having a plan allows you to plot a course for your journey before you even take off. That way, you know what you can produce, what you can afford, and how you can maintain.
2. Manage Start-Up Money
A crucial element of starting a small business is how you will fund it. A lot of small business owners utilize loans to cover their start-up costs. The idea is to be able to pay these loans back quickly through the profits from their new business. We’ve all heard the saying “you have to spend money to make money” and the idea is to spend less of your own money by betting on yourself.
However, it is important to remember that it can take months or even years for a new business to actually generate a profit they can use. Conversely, the payments for those loans can really put a choke-hold on those profits. Is the mission is to make money, but you spend most of it paying off old debt, it can be frustrating in the beginning.
Not everyone has the money to start-up independently. However, if you can save a substantial amount of capital yourself, it helps to lessen the burden later. A business might start making good money, but too many loans can sink the enterprise before it gets off the ground. However, if this is not an option, make sure to watch your budget. Managing money is critical when you’re starting a small business. It’s also a necessary ingredient its long-term survival.
Then, when you are finally ready to start expanding your business, you will have an opportunity to take advantage of the money you don’t have to pay back.
3. Safeguard Yourself
Most small business owners have either a sole proprietorship or are in a partnership. These types of businesses are especially attractive for new owners because they’re easy to form. In contrast, these types of businesses expose owners to liabilities. Typically, these liabilities arise from business debts or legal issues.
Unless you have additional protections, creditors and judgment holders can actually come after your personal assets as a business owner. This includes your own savings account or even your home.
This is why limited liability corporations (LLC) are so popular with smaller businesses. Essentially, members of the company are not personally liable for debts when they form an LLC. It’s the LLC itself that incurs any judgments, not the individuals involved. Conversely, there are more rules and requirements associated with an LLC than a sole proprietorship.
4. Keep Records
Documentation is such an important part of maintaining a business. Keeping some kind of paper trail is always a safe way to ensure that each deal, transaction or new partnership is honored and enforceable. Written contracts may have gone mostly digital in today’s corporate world, but they are still the law of the land.
Furthermore, contracts are hard to enforce unless they are in written form. True, oral contracts can be acknowledged as binding, but they are much harder to prove and enforce. As much as you would like to believe that everyone running a company believes in best practices, the truth is that not everyone who owns a business or makes the deals likes to play by the rules.
This can also play into making sure your accounting is taken care of and managing your payroll when you start to bring on more workers.
This is the same as keeping your receipts for big purchases. When you get all your business agreements in writing, you are giving yourself the means to hold others accountable. At the same time, it helps you ensure that your business is keeping your side of the deal.
5. Build a strong team
This should be on every checklist for small businesses. Once you are expanding your business and setting new goals, you will need to gradually build up a strong team of people to take on more of that work. As a business grows, it usually means the number of people it takes to match the growing demand increases as well. Specifically, you want to make sure you are not just putting people in positions to fill up space.
Some small business owners just want to take the first applicant with the basic qualifications, without bothering to know whether the individual is a good fit for their team. But for small businesses, getting people who have the motivation, creativity and the right kind of personality can take your company to the next level. You don’t want to just fill the void. It is important for everyone on your payroll to make a valuable contribution.
Beyond that, support that team and make sure you are engaged in their success. When people struggle, train them and build them up. When they’re excelling, show gratitude and give them the opportunity to learn more and keep growing.
6. Create a Culture
Once you have a plan for the business, the means to protect your business and the right people to make it all possible, you want to create a culture that supports all that. After all, what is the point of putting in all that work to get your business off the ground if you don’t maintain a positive attitude?
Having a strong corporate culture is incredibly empowering. In fact, the benefits of cultivating a great culture in your business are even supported by social science. According to James L. Heskett, a positive culture can increase a company’s performance by up to 30% when compared to the average one. For small businesses owners, that means establishing:
Vision– The mission for the company that guides each employee and department toward a common purpose.
Values– At the core of a business’s culture are the behaviors and mindsets necessary to help make the company’s vision a reality. How do you treat each other, and how do you treat your customers?
Practices– How does the company take action? Any corporation or small business can have a revolutionary vision, or preach righteous values, but without setting a standard for putting all of it into practice and making it visible, the culture is all talk and no follow-through.
Part of your businesses brand is your culture, so make sure that you not only teach that mindset and mission to your employees but live it with your customers.
7. Pay your bills
In the end, part of the reason you started a business in the first place was to pay the bills. We make money so that we can afford to do the things we love and believe in. So, even as a business owner, you have to make sure the bills get paid on time.
This is especially true when dealing with the IRS. Making a huge mistake– like not remitting payroll taxes in a timely manner– can result in harsh penalties. They can even come after a business your personal assets. Likewise, a business owner should always make sure to pay their regular debts. This way, you can stay in front of your cash flow, and keep better track of the profits.
Remember, even a business can build a bad reputation for slacking on their payments. Ultimately, this will only make it more difficult to develop new business relationships. You work hard for your money, but the price of doing business is to keep paying your dues.