Some people just have an entrepreneurial spirit. The idea of owning their own business burns within them. And even after they start it, the fire just burns hotter and hotter. If that sounds like you, it is probably just a matter of time before you join the ranks of the self-employed.
Of course, that means you’ll have an extensive checklist of things to do before you start. Many things on that checklist depend on the type of business you open, but there are some common denominators every aspiring entrepreneur should have on it.
Determine personal income needs before you start a business
This is paramount. You must be able to meet your personal financial obligations and basic needs. But you must know the cost of those needs, which means having a personal budget. Having a budget will allow you to know how much to draw from your business and still allow it to thrive.
It ensures you won’t take too much or too little. It can even help you structure your business to ensure it generates enough income.
Separate business accounts and personal accounts.
One of the biggest mistakes new business owners make is not having separate accounts for their business and personal funds.
Whether the new business is a side hustle or a full-time effort, not mixing its income with personal funds will save you plenty of headaches later.
Aside from being unable to determine how your business is faring, mixing money can create chaos at tax time and even generate an IRS audit.
Set income goals and timelines
Setting realistic income goals and timelines for your business is a necessity. Do plenty of research on your business and determine time frames to keep going, sell, or cut your losses.
This may sound a little fatalistic, but it keeps you from quitting too soon, as some businesses can take years to get off the ground. It also helps you determine if selling is a profitable idea.
Finally, if the business does not succeed (and that’s okay because many don’t), it keeps you from throwing good money after bad. The trick is to think critically enough to make a sound decision when the time comes.
Do a SWOT analysis of your business
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, four common themes that exist for every business no matter its size or age.
They can be used anytime but are especially helpful when starting a new venture. Whole volumes have been written on them, but this article is a good primer if you are unfamiliar with them or have never created one.
It will serve as a springboard for developing strategies to exploit opportunities and avoid potential pitfalls.
There is still plenty to do and learn about in your entrepreneurial journey. Take time to consult with trusted mentors as you get started. But be sure to take the first steps outlined in this post.
They will help you feel more confident and give you a solid footing to meet your business goals.