Creating a startup from your spare bedroom or garage is all very cool but when it’s taken out into the harsh business environment, that’s another matter entirely. For first-time entrepreneurs, it’s all a little daunting, which can make them hesitant to do what’s required.
If that’s you (even if you don’t want to admit it), this article is here to help. Here are four steps to take that will assist your business in surviving.
1.Get a CPA Right from the Start
To approach the business properly, you need a steady hand. Usually, that’ll come from an older, more experienced Chief Public Accountant (CPA) who can ensure that you choose the most appropriate corporate structure and procedures are put in place to manage the financial side of the business.
When hiring a CPA, take time to find a good one. Don’t choose a CPA that’s barely been in business themselves for a few months. You need business and tax knowledge, but also a well-rounded person too. They may end up making suggestions or pointing out things to avoid, which saves your bacon (or fruit smoothie, if you’re a vegan) down the road.
2.Use Business Planning
Don’t wing it! While the startup stories of lore are fanciful and encouraging, they’re also highly imaginative too.
Create a business plan that runs through what you plan to do in the business. This step-by-step approach ensures that you’ll need to do proper research to figure out how you’ll get each part achieved and what it’ll cost. Then your plan to invest your savings into the company can be examined to see if that’ll be enough or you’ll need a business loan too.
Without planning the business out on paper first, it’s impossible to know if it has a strong chance of working. Be aware that all plans get thrown out once you get started because the business reality will be different. But, at least, you’ll have a general idea what you’re aiming for and can adapt as you go.
Whilst business books talk about the minimum viable product and pivoting enthusiastically (and quickly) to the next greatest idea, be careful with that advice.
Successful startups have usually done their homework first. The market research is already in. The gap in the market has been found. And now the company is going after that target market.
The quickest way to burn through available capital is to hop from poorly conceived idea to poorly conceived idea. In love with the dream of owning a startup, but no idea how to turn it into a real business is no way to proceed.
4.Restrain the Expenditures
One of the other misadventures with a startup is going large with expenditures in the early months. This too will waste precious financial resources causing a faster cash burn rate than is necessary.
Financial stress will mount when spending too quickly with little if any sales revenues. Avoid the drama by operating on a minimal budget until the business concept is proven out through paying customers.
Getting through the first year or two is a wild ride for many startups. Yet at the end of it, it’s possible to have developed a viable business that can grow a strong foundation.