You’ve got a great idea for a small business doing something you love, and your diligent market research has shown that it’s totally viable. You’ve already started mapping out your target audience and thinking about the more exciting aspects you need to consider, such as your company logo and brand colors. But what are some more mundane but important questions you need to think about before you launch?
Here is a quick checklist of 7 key areas to consider.
1. Company structure
What legal structure will you choose for your business? Will you operate as a sole proprietorship, set up a limited company, form a partnership with someone else, or incorporate?
A lot will depend on your company’s mission and business goals. For example, are you looking to scale your business and employ more staff, or work as a solopreneur? Where do you see the business taking you? While you may not know the opportunities that will present themselves now, having an idea of where you’re going will help you set effective business goals. After all, as the Stoic philosopher Seneca was quoted as saying, “If a man knows not to which port he sails, no wind is favorable.”
How you set yourself up is an important consideration as it will determine how you operate, your liability (if any), the taxes you pay and even how you invoice and are paid. It’s worth seeking professional help and guidance to get your business set up correctly, although that’s not to say you can’t change it in the future as your circumstances evolve.
2. Company name
Will you have a company name, a trading name, or use your personal name for your small business? Will the name be linked to what you do or something more abstract and creative?
There are pros and cons to each option, and the one you choose will depend on your circumstances and, to some extent, your company structure.
For example, personal branding is great and can help you stand out, but it might be more challenging to sell the business down the line if this is something you aim to do.
In any event, make sure to conduct a thorough internet search to ensure the name (and domain) has not already been taken and to check for any trademark issues. There will also likely be business registration requirements.
3. Finance
How will you finance your business? Will you bootstrap it from your own funds and savings, take out a personal loan, or secure funding from family or friends? Are there any business loans or grants available for which you can apply? Alternatively, what about investment from other sources, such as angel or seed investors?
All the above are viable options, and it might be that you end up using a combination of them. While it’s true that for some businesses you might not need much more than internet access and a laptop (think freelance writer or an online consultant), you’ll still need to invest in online tools and subscriptions. Plus, you’ll likely not see the fruits of your labors straight away, so you will need money to tide you over.
4. Workplace
Where will you work? Does your business need premises, or can you work remotely? If so, do you have an adequate workspace at home or a co-working space in your local area? Will you need to travel to the client’s premises or commute to your workplace? If so, you’ll need to factor the cost of this into your overall business plan and income goals. Also, will your workplace require any special equipment for you to perform your work, or is it location-dependent, for example, a local store? Where and how you perform your work will impact your business finances.
5. Business tools
What business tools will you need to do your job? This includes both physical tools and online tools that enable your business to function effectively, such as invoicing software. You may also need to hire professionals, such as an accountant, and you’ll need a robust bookkeeping system in place.
You’ll also need tools to market your business, so you might require a website, a scheduling tool for meetings, or need to set up social media accounts for your company. You may even want to build an email list to market your business; again, while many tools are free to begin with, they often require subscriptions to access more advanced features.
6. Taxes, licenses, and permits
Depending on your jurisdiction and the nature of your work, there may be professional licenses, insurance and permits you need to apply for before you can trade. If you work from home, there may be specific regulations governing this in your area.
Additionally, there may be special tax implications to consider, so check what, if any, employer and tax IDs are required. A professional can help guide you through what’s needed to avoid any unhappy surprises down the line.
7. Getting paid
In addition to having a business bank account (to separate your personal and business finances), you’ll also need to consider how you will be paid.
Getting your invoices paid quickly and on time ensures you have a healthy cash flow. That’s where top-notch invoicing software comes into its own. Invoice Ninja is a leading free invoicing software for freelancers and small businesses. It offers multiple payment gateways, so your clients can pay you online with just 1-click. It also comes with professionally designed and customizable invoice templates, as well as numerous helpful, small business-friendly features. Check out all our features here. Try Invoice Ninja for free here.
Plus, if you operate in the EU, you need to be aware of the e-invoicing requirements. You can find out more about e-invoicing and PEPPOL, the EU standard for exchanging electronic documents, here.
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Of course, there are many other areas to consider when starting a new small business, such as sourcing quality suppliers, marketing to customers and clients, and the big one – pricing, so it makes sense to seek professional advice on starting a small business. However, hopefully, this at-a-glance list will act as a good starting point.
