You might be getting ready to start a new company, or you might have been in business for a while. Either way, it’s a good idea to step back and evaluate the big picture to make sure you’re on the right track.
Establishing and running a business is a major undertaking. But making sure you have the right tools in place and a proper organizational structure from the beginning can make tasks much more manageable. With so much to keep track of, it’s easy to overlook some key business components. Keeping the following strategies in mind will pay off significantly in the long run.
1. Have a Business Plan
You shouldn’t endlessly obsess over your business plan. However, it’s important to have a clear idea of where you are and where you’re headed. Make a concise outline of your structure and goals. Doing so provides a framework you can to refer to as you progress. An outline also allows you to easily track your progress.
A proper business plan is important if you want to recruit investors or apply for a business loan. Anyone considering giving you money will want to know you’re going to put it to good use.
2. Register Your Business
For many reasons, it’s important to make sure your business is registered appropriately in any states in which you operate. The Small Business Administration website is an excellent resource to consult regarding this type of information. It contains up-to-date information on each state’s specific regulations relating to registering different types of businesses.
Having your business registered appropriately is important for tax reasons. It’s also important for insurance purposes because different types of businesses are required to have different coverages. Proper registration will ensure that you pay the appropriate premiums, as well as receive accurate compensation.
3. Understand Your Tax Liability
Keeping track of which taxes your business needs to pay and when to file them can be overwhelming. For this reason, you need to be prepared ahead of time. Maintaining good records is essential to ensuring you don’t miss a deadline and that you make accurate payments. Having good accounting software in place will go a long way in that regard.
You’ll also need to acquire an Employee Identification Number (EIN) from the IRS. You can apply for one either online or through the mail. Even if you’re a sole proprietorship or LLC, it’s important to have an EIN. Having one enables you to open a business bank account and potentially hire employees.
Perhaps you haven’t decided how you want to structure your business yet. It’s still worth considering the different tax realities of LLCs, S-Corps, corporations, and so on. Structuring your business properly from the beginning can save you some headaches, as well as money, later.
4. Acquire Comprehensive Insurance
Making sure your business has proper insurance coverage in place is essential. Insurance protects you financially in a range of situations.
Most businesses will start with a Business Owner’s Policy (BOP). A BOP is a bundle of coverages that includes many elements most companies need. The exact contents of the bundle can vary somewhat depending on the nature of your business. And purchasing policies in this way will often save you some money.Almost every state requires workers’ compensation. And the state often regulates it, both in terms of the rates you pay and where you can purchase that information.
Almost every state requires workers’ compensation. And the state often regulates it, both in terms of the rates you pay and where you can purchase that information.
There are some types of business insurance people commonly overlook. These include Employee Practices Liability Insurance (EPLI) and Directors and Officers Liability Insurance, commonly referred to as D&O. EPLI protects you from suits brought by your employees over claims involving discrimination, harassment in the workplace, wrongful termination, and other similar situations. These are not covered by workers’ compensation insurance, so you will want to have EPLI in place to protect you.
D&O policies cover instances of alleged wrongful acts committed by directors or officers of your company when serving in their professional capacities. These policies typically don’t cover intentional illegal acts, but the policy can pay for defense up front for the individuals named in the suit. It can also cover monetary damages, although bodily injury and property damage payments are excluded.
5. Develop a Marketing Strategy
Having a solid marketing strategy in place is essential to staying competitive and growing your business at a healthy rate.
That’s not to say that you must spend a ton on marketing, but you do need a reasonable amount set aside for it in your budget. You should have a plan in place so you know how to use your marketing budget to maximum effect. Just like your business plan, your marketing plan doesn’t need to be a hugely detailed document. But it does need to include a clear outline of your marketing goals and the steps you plan to take to achieve them.
Of course, the main things you want to think about when starting or running a business are the products or services you provide. But having the proper structure and protections in place ensures you can comfortably focus on running your business with confidence that your assets and forward progress are secure.