Starting a business can be exciting. You will need a lot of courage and enthusiasm, as well as commit a significant amount commitment of money and time. It’s not an easy road to take, but if you’re dedicated enough, you’re bound for success.
Unfortunately, between 20 and 70 percent of all startups fail, depending on their year in business. That is, 20% of new businesses fail during their first year and only 30% of them make it to their tenth year. There are a lot of reasons why that is the case and it isn’t usually because the company idea is awful.
If you’re thinking about starting a business, here are some ways to help you get started.
1. Prepare a Business Plan
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Having an idea for a business is good. However, if you want your startup to succeed, you need to make your idea a reality with a business plan. Having a good business strategy in place will help you stay on course, particularly when problems arise. Moreover, a good business plan is a key factor in a startup’s success.
A business plan is a written framework that serves as a road map for your startup. It ensures that your operations develop and change to fulfill the objectives outlined in your plan. Writing a business plan will help you understand what you need to do to achieve your goals. It also acts as a reminder of these objectives.
In addition to this, it is also a requirement if you want to apply for a small business loan. It’s your pitch to your lenders, in which you explain your startup’s goals and how you plan to run your business.
However, writing a business plan does not only constitute laying out what your company is all about and your goals. You need to know how to write one to include provide the necessary business plan information. Usually, business plans consist of the following information:
- An executive summary
- Your company’s description.
- Your products and services
- Market analysis, which includes market opportunities, sales, and your competitors
- Your management team
- A clear financial plan
- A detailed operational plan
2. Apply for Startup Loans
Following the creation of your company plan, the next step is to acquire the necessary funding to get things started. Usually, business owners use their savings to fuel up their startups. However, if you don’t have enough money, you can find companies willing to lend you a hand.
There are different types of loans for businesses. However, if your purpose for loaning is to fund your new business, a business startup loan is exactly what you need. As a new business owner, you can use these funds to purchase equipment, machinery, or inventory. Lending companies also allow you to use the fundsm to hire new employees.
However, before you apply for one, be sure that you understand the different sources of startup funding. While banks are considered traditional sources of funding, they’re not ideal for startups. First and foremost, they have strict requirements for applying for small business loans. Second, if you have a bad credit score, your application will be instantly rejected.
Fortunately, you can get small business loans from non-bank lenders, such as online lenders. These online loans are especially helpful if you’re not qualified to secure a standard bank loan. The alternative lending business is well-established. More importantly, the majority of its employees are well-known members of the financial services industry.
Applying for small business loans from these sources may even bring you more benefits, including:
- Faster and easier application process
- Get funded even with bad or no credit with bad credit loans
- More freedom in using the loan for whatichever purposes you see fit
- Get lower interest rates when you build a good relationship with your lender
3. Start a Business Line of Credit
A small business line of credit is more like a credit card than a loan for a small business.
An unsecured line of credit, like a small business loan, gives a company access to emergency funds. However, there is no initial lump-sum payment that must be followed up with a monthly payment.
Some credit lines have a definite time limit, while others are revolving. With revolving credit lines, you can borrow money up to a certain credit limit. This is different from term loans, which require you to repay what you got in equal installments until the debt is paid off.
Interest is only charged on the amount that is used with a revolving line of credit. As a result, you won’t have to pay interest while the credit line isn’t in use. This makes it cheaper than a non-revolving line. While some lenders charge a monthly fee to keep the account active, if you don’t use the line, there are usually no fees.
Most business lenders enable you to apply for money online, making it more accessible. To start a line of credit, you need to present a thorough picture of your company’s activities. Some of these include tax returns, business financial statements, approvals of credit, and annual earnings.
Some online lenders will also need a business plan with details about your experience in the sector. If your startup has little or no operational history, you should offer as much financial information as possible. Include any prior transaction records you have, such as invoices paid to suppliers or unpaid accounts/ receivables.
4. Hire the Right Team for Your Business
Your team does not have to be confined to your immediate coworkers. Everyone on the business journey with you should be considered a member of your team.
Your surroundings and the people you deal with have a constant impact on you. As a result, surround yourself with people who are motivated to succeed. Make sure you choose the right people on your team to help you take your business to the next level.
Your team members should be qualified experts determined to make a difference in the service business. More importantly, your mentality contributes to the success of the team as well.
Creativity is also an important factor in achieving success. The more creative people you have around you, the more likely you are to come up with helpful ideas. And the more innovative your startup is, the greater the chance it has of succeeding.
You can also seek advice from more experienced individuals. They will be able to provide you with useful information regarding the pitfalls you must avoid. Interacting with industry professionals also helps generate fresh ideas and gain a deeper understanding of consumer trends.
5. Create a Business Account
Every company needs a system to handle its finances. Business accounts help track cash balances, the money you owe to a lender, the money owed to you, and employee payrolls. The number of accounts required by a business varies, but all companies need business accounts.
Checking Account
A company’s backbone is its corporate checking account. You can use this account to deduct payroll, pay your bills, and deposit sales. It is also usually a company’s first bank relationship. Maintaining a checking account helps build a connection that will be useful for applying for small business loans.
Some lending companies offer applications to open bank accounts online. With a lot of things going on when starting a business, online processes help you significantly. as you don’t have to physically go to a branch to apply. Opting for online funding makes it much easier to check your accounts online instantly.
Accounts Payable
Accounts payable is a list of accounts owed to creditors by the company. Some examples include mortgages, car notes, and credit lines. Because these are long-term or revolving accounts, they differ from usual corporate spending. Payments on these accounts are made from the company’s bank account.
Receivable Account
Unlike accounts payable, receivable accounts indicate money owed to your company by other companies. If a company gives credit to its customers, for example, the amount oweding to the company is a receivable.
Payments on a receivable are put into the company’s checking account rather than being credited to it. Together with a payable account, this bank account serves as a source of information.
Payroll Account
When you start hiring employees, you need to set up a payroll account. Paying staff from different accounts makes it easier to keep track of the amounts for general accounting and tax purposes.
Not all businesses use a separate payroll account. Some choose to deduct the whole amount of payroll from their business account. However, using the payroll account simplifies bookkeeping.
It is also beneficial if the company uses a payment stub on their payroll to itemize the wages earned for the pay period and the year-to-date payroll information of each employee. You have the option of providing your employees with an electronic or paper pay stub. You might be able to give employees online access to their pay stubs if you use payroll software. Using paystub template forms in a pay stub generator software to create automated pay stubs lets your staff spend their efforts and time on other revenue-generating tasks.
Final Thoughts
It’s not easy to start a new business in a world full of corporate giants. There are so many things to keep in mind for a startup to succeed in its first year. However, you can take one step at a time and plan your way to success.
It’s not an easy process, but with enough determination (and funding), you can achieve your dream startup.
