Category Archives: Goals

The Personal Finance Guide to Starting a Business

Did you know that the United States is home to over 28 million startups and small businesses? By far, there are so many more small companies out there trying to get by than there are corporate giants. Even during times of financial, economic, and global insecurity, you can see the entrepreneurial spirit thrive–everywhere from small-town Main Street to the rapidly changing world of the internet. Some examples of the most popular types of small businesses include breweries, bakeries, pizza restaurants, cleaning services, online tutoring services, bike shops, fashion boutiques, landscaping services, personal trainers, and marketing shops.

While these companies nurture career growth and provide financial independence, they often require sheer determination to get off the ground. Every small business could probably benefit from higher-quality leads, more website traffic, and greater revenues. And accomplishing them is easier said done.

Simply stated, starting a business and making it a success involves a lot of planning. From market analysis to economic conditions, you need to consider a variety of factors. You can start by fine-tuning a business plan, evaluating your finances, researching startup growth, understanding business structures, and choosing the best tools. 

How to Start a Business

Considering creating your own business venture but don’t know where to start? We have got you covered. Here are essential steps you need to take to start a business.

Step1: Look Before You Leap (or: Research, Research, Research)

Once you’re sure where your business niche will be, the very first step is market research. Conducting detailed market research will enable you to assess your idea’s potential. Going through a validation process is essential to understanding the market and, let’s face it, figuring out if there’s an actual need for your service. Use surveys, focus groups, and online research to find the scope and need for services and products you want to offer; it will help you determine if your business or startup fits into your potential market. 

Step 2: Create a Business Plan

A business plan is your living document, mapping out the details of your company. At its core, it explores whether or not a business idea is valuable and worth pursuing. A business plan not only covers how your business will (hopefully) bring in money but also how much funding you will need, which permits apply, what you can handle in terms of rent, and which essential documents you’ll need before you can hang out your shingle.

Step 3: Assess Your Finances

Every small company, regardless of its size, requires some initial investment. No matter how low your operating expenses are going to be, you need to be able to cover them. A spreadsheet estimating the one-time startup costs, including equipment, permits, licenses, legal fees, inventory, branding, website domain name, property leases, market research, and trade marketing, can help you assess overall finances. And don’t forget to count utilities, supplies, travel expenses, and advertising in to keep your business running for one year at least. Once you have a rough estimation of your initial investment, figure out ways to fund the business. It may include;

Step 4: Determine the Right Legal Business Structure

Determining legal business structure is an extremely important step. Remember that your small business structure affects everything from filing taxes to personal liability. Here is a brief rundown of various business structures you can opt for:

  • Sole Proprietorship. Register as a sole proprietorship if you plan to own the company entirely by yourself and don’t mind being responsible for obligations and debts.  
  • Partnership. As the name implies, a partnership refers to two or more individuals liable as company or business owners. If you find a business partner whose skills complement your own, forming a partnership helps your business flourish.
  • Corporation. Consider making a type of corporation (C corporationS corporationB corporation) if you don’t want to separate liabilities. The legal structure typically makes the company a separate entity from the owners. Therefore, corporations can assume liability, own property, enter contracts, pay taxes, and sue other individuals. Note that each corporation type is subject to a set of different guild lines.
  • Limited Liability Company.  A Limited liability Company (LLC) is the standard type of business structure. It is a hybrid structure with the legal protections of a corporation while allowing businesses to gain the tax benefit of a partnership. 

Ultimately, the type of entity you choose depends on your specific needs and goals. But this is an important step; don’t overlook it! 

Step 5: Register Your Company & Get Permits 

Now you’ll want to make sure that the name you’ve chosen for your business is not in use currently or already trademarked (very important). This is an overly-obvious example, but if your name is John, you’re friends call you Papa, and you’re opening a pizza place, you won’t be able to call it Papa John’s. You would end up with a cease-and-desist letter before the paint dried on the signs.

If you’re a sole proprietor, you need to register your business with your county or state clerk. LLCs generally file paperwork with formation services, or you can do it yourself and contact the state. If this is a business structure that you would like, make sure you hire a registered agent.  

Depending on your business type, structure, entity, and location, you may need to get permits. Make sure you do your due diligence with all the permits and licenses apply to your company. 

Step 6: Establish an Accounting System

Now you’re going to need an efficient accounting system so you can manage budgets, set prices, file taxes, and pay anyone who needs to be paid–including yourself. Maybe the easiest way to handle the uncharted waters of business accounting is to hire an accountant. Many small businesses, whether they hire an accountant or not, use specialized software (like QuickBooks) to help manage everything. You can typically find tiered pricing plans for the software, depending on how robust of a toolset you need. 

 Step 7: Outline Management Roles

Who is going to do what? If you have partners or staff members, it’s better to figure that out in advance. Roles to consider include marketing and daily social media account management, human resources, day-to-day operations management, customer service, and so on. Outline these roles and decide how many employees you need, what responsibilities they will have, and how you will assign responsibilities and tasks to each person. If you plan for your business to outsource duties rather than hiring employees, it’s best to consult with an attorney to get an independent contractor agreement written. 

Step 8: Work on Your Sales Strategy 

Your sales strategy should cover how you plan to get people to use your products and services. However, before you can develop a sales strategy, you need to conduct a detailed market analysis. Figure out who you want your potential customers to be or which market segment you want to target. Once you know who you want to sell your products to, you need to find their interests and needs.

Here are four questions to answer while designing a sales and marketing strategy: 

  • How will you penetrate the mainstream market?
  • What tactics will you use to grow your company?
  • What sales channels you plan to focus on for distribution?
  • What mediums will you use to reach the masses and communicate with customers?

Step 9: Brand or Advertise Your Small Business

We include this as the final step, but hopefully, you’ve already been thinking about branding and marketing. Before you open your doors (be they brick-and-mortar or figurative), you need to build a brand image. Every small business should have a logo, even if it’s only something you paid a freelancer on Fiverr to do. You’ll also need to make sure you have an online presence by building a company website (and a company email account, while you’re at it), creating social media profiles, and establishing your Google My Business account. 

2014 Business and Personal Finance Goals Results

I changed my goals for 2014, going with 3 goals that keep us accountable both on a personal and business level. Now that the year it’s over, it’s time to review my performance and see how I did.

I’ve left out steps on the way to achieving my goals (like fully funding out Roth IRAs and contributing to 401(k)s) because they would have simply been checkboxes. I don’t believe in setting goals that are more of a given than anything else. It’s not impressive to make a long list of achievable goals and when you accomplish 18 out of 20, to claim that 90% were completed when those last 2 might have been the most important.

1. Grow My Blog Carnival Submission Service To Over $500/Month

I did not hit this goal, and for the past 6 months it’s been clear I was not going to be able to grow this business without putting a lot of time and effort into it. This has been stagnant, but that’s something I’m ok with. I don’t see a huge opportunity to grow the business, and the time that would be required to grow this to $500/month might outweigh the benefit. I definitely haven’t put in effort to recruit new users, for a few reasons: I have been lazy and haven’t made it a priority, and I don’t want to step on the toes of friends and other bloggers who have similar services. It does seem like a few carnivals have stopped in the past few months, and for some, it’s been harder to find hosts. If I see things go back to normal and bloggers are more willing to host, I will renew my search for new users.

2. Create At Least Two New Streams Of Income That Bring In $100 Per Month.

At the beginning of the year, I said I had an idea for one of these income streams, and in March, I achieved that mark. With a friend, we buy some items in bulk and resell them individually for more on eBay. It worked very well, but due to circumstances outside of our control, we had to shut the operation down. It was a great run while it lasted and netted me more than $1,200 (or $100/month for a whole year), so I’m going to consider that a success. It certainly wasn’t a failure, or if it was, I hope all my ventures “fail” as spectacularly as this one did. However, this isn’t something that we’ll be carrying over into 2015.

My perk farm is now earning over $150/month, which is awesome. It takes very little time to run, so this one is a huge success. Anyone can do this at home if you want to earn a few hundred dollars extra per month. Check out my post about perk if you’d like to earn that much, too!

3. Keep Discretionary Spending to 105% of 2013 Levels

I the 4th quarter, our discretionary spending was 47% higher than it was in the 4th quarter last year. WOW! However, this wasn’t really surprising considering that we took a 10 day international trip. We saved money by finding great deals on AirBnb, but we did eat out a lot, pay for entrance to museums, and much much more. We wouldn’t have missed it for the world, but it did cost us a lot of money.

For the year, we spend 31.5% more than we did last year. I guess we set our sights too high, and we lost it all on this one trip. Excluding the two international trips, we actually spent less than we did last year. That’s definitely encouraging, and while I didn’t hit my goal, I know that our spending is in check and this is likely the last large vacation we’ll take for the considerable future.

As a reminder, our new car is not included in this calculation (we decided to pay it off over 5 years instead of paying in cash). Our typical grocery bill, insurance, charity, tuition and student loan payments, rent, and utilities won’t count toward this goal, but everything else does. We want to see if we can keep our discretionary spending in check, because that’s all we can really control.

Rating Our Results

In terms of business goals, we did really well. I’m proud to have made $1,200+ in one venture and be making $150+/month in another. I thought that maybe this would be a stretch, so achieving this one is a point of pride for me. It definitely takes the sting out of spending a bit more this year. In terms of our personal spending, we really did keep it in check, and separately, we took a big, expensive trip and enjoyed it immensely. Overall grade? B

2014 Second Quarter Business and Personal Finance Goals Update

I changed my goals for 2014, going with 3 goals that keep us accountable both on a personal and business level. Now that we are halfway through the year, it’s time to reflect on our progress and project out the rest of the year.

As always, I am leaving out steps on the way to achieving my goals (like fully funding out Roth IRAs and contributing to 401(k)s) because they would have simply been checkboxes. I don’t believe in setting goals that are more of a given than anything else. It’s not impressive to make a long list of achievable goals and when you accomplish 18 out of 20, to claim that 90% were completed when those last 2 might have been the most important.

1. Grow My Blog Carnival Submission Service To Over $500/Month

This has been growing a little, with a few people dropping out and a few new people coming on. However, I definitely haven’t put in effort to recruit new users, for a few reasons: I have been lazy and haven’t made it a priority, and I don’t want to step on the toes of friends and other bloggers who have similar services. It does seem like a few carnivals have stopped in the past few months, and for some, it’s been harder to find hosts. If I see things go back to normal and bloggers are more willing to host, I will renew my search for new users.

2. Create At Least Two New Streams Of Income That Bring In $100 Per Month.

At the beginning of the year, I said I had an idea for one of these income streams, and in March, I achieved that mark. With a friend, we buy some items in bulk and resell them individually for more on eBay. It worked very well, but due to circumstances outside of our control, we had to shut the operation down (we still have some more product to sell, so maybe 1-2 more months of this and then it will be done). It was a great run while it lasted and netted me more than $1,200 (or $100/month for a whole year), so I’m going to consider that a success. It certainly wasn’t a failure, or if it was, I hope all my ventures “fail” as spectacularly as this one did.

I do have another idea that would max out at $150/month that I may detail in a future post. It involves very little work and has a low barrier to entry (and anyone can do), so once I do a little testing, I’ll be able to give a step-by-step guide for everyone.

3. Keep Discretionary Spending to 105% of 2013 Levels

In the 2nd quarter, our discretionary spending was 21% higher than the first quarter, and a whopping 55% increase over our second quarter of 2013. This was caused by a whopping $1,200 international round-trip flight I booked for a friend’s wedding in October. It’s a lot of money, but it will be a lot of fun and I wouldn’t miss it for the world. For the year, we’ve spent 22% more than last year at this time, which comes down to less than 10% when that one single transaction was excluded. Maybe 5% was a stretch, especially considering that Lauren and I would like to take a big vacation after she graduates from graduate school in the fall. That won’t be cheap either, and we won’t let this goal get in the way of having a great time.

As a reminder, our new car is not included in this calculation (we decided to pay it off over 5 years instead of paying in cash). Our typical grocery bill, insurance, charity, tuition and student loan payments, rent, and utilities won’t count toward this goal, but everything else does. We want to see if we can keep our discretionary spending in check, because that’s all we can really control.

I’m not terribly excited that we spent more this year than last, and I don’t think our spending is out of control. I expect the third quarter to be kind to us, hopefully we can bring that 22% into the teens by the next checkup.

Rating Our Progress So Far

I’m definitely encouraged this quarter by the business progress, having a few extra streams of income, even if they’re temporary, definitely takes the sting out of spending a bit more. We have some room for improvement, so our work is definitely not done. Good thing we have half a year left!

How are you doing on your goals so far? Where are you succeeding?

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