Small Business Management : Running a small business just starting out has its ups and downs. When I launched my company almost nine years ago, running my own small business was both rewarding and challenging. This has allowed me to establish greater balance in my life as I have reduced the administrative burden that corporate America places on each of its employees and replaced it with more time spent developing content for my clients.
Given the choice, running my own small business was the best choice for me at this stage of my life. I can work outside the home, see my kids regularly, focus my work efforts on content, rather than administration, and yes a bit of golf. Because of this, I’m constantly being asked by others, “What’s it like doing business for yourself?” as they contemplate the leap from corporations to sole proprietorships.
While not for everyone, here are some points to consider before starting your own small business:
One Stop Shop: One of the benefits of being a small business owner is the “call the right” autonomy. You are the boss and can obviously steer your company in your favor. Many think they like this arrangement, but the truth is, when it comes to being the self-motivator necessary to be successful – the “man” to aim for – many fail. Before you read any further, ask yourself if you’re cut out to be the “go to guy.” Otherwise, you can save a lot of time and frustration. It’s enough to live in the corporate world.
Develop a Business Plan: So why is business planning so important? In short, it provides “clarity”. Investing time to develop a plan provides proper clarification of the company’s vision. In addition, it provides a mechanism for measuring business results and provides a basis for future growth plans. In the long run, this increases corporate valuation through fiscal responsibility, which provides a story of opportunity for future investors or employees. Business planning is a one-part strategy and one-part tactic – but where the sausage is really made is in the execution. Execution comes in the hard work it takes to carry out your activity plans and accountability by tracking them.
Understanding the Tax Burden: Despite the political rhetoric surrounding the tax code and its impact on small businesses, the fact of the matter is that these entities are levied with a hefty amount of taxes. I am surprised at how many startups fail to understand the taxes that small businesses pay. My company has basically one of the easiest business operating models a small business can have.
I bill several clients per month; receive several checks a month; pay several bills a month; and have very little inventory and/or depreciation of capital assets. Nonetheless, my tax return was 84 pages last year. Filing as an S-Corp, my expenses on taxes are between 25% and 39% of federal taxes; North Carolina state income taxes range from 6.0% to 7.5%, social security and health care (twice actually for employers and employees) at 15.3%, so nearly 50% of all income goes to taxes and fees .
Replicate Yourself: Given the fact that you are a one-stop shop, small business owners need to replicate themselves wherever possible. Tools such as social media and the acceptance of telecommuting through online collaboration have allowed small business owners to be in many places at one time.
To be successful, small business owners need to take advantage of these tools to maximize their exposure to potential clients as well as reach customers outside of their direct trading area. Before this tool became available, my business was limited to the state of Illinois (where my company is from). Since I have used this tool to replicate myself, I have clients in thirteen different states.
Navigating Third Party Challenges: A small business owner wears many hats and relies on third party entities for key alliances. When Go Daddy had their website and email server in September, some 5.3 million small business websites and email were knocked out. Small business owners rely on these support companies and at times, are taken prisoner when problems arise. While my company doesn’t do much trading through my website, many small operators lose online revenue due to outages.
Scam Warning: Lastly, where there are small business owners, there are criminals waiting to prey on unsuspecting operators. In fact, last week, I received a letter from a group claiming to represent the State of Illinois. Having been in business for almost nine years, I am well aware of all the annual expenses my company pays.
As an Illinois company (operating in North Carolina), I received a letter stating that I needed to submit a $125 fee for my “Annual Minute Record Form”. I don’t remember ever doing this, and when I contacted my CPA, he shared the following press release with me:
In short, starting and running a small business may be the best decision you will ever make. Having the facts before a decision is critical to ensuring that you are positioned for success. Once you fully examine the decision making to start your small business, the results can be amazing…