If the Great Resignation taught us anything, it’s that people want a chance to own a business. They want that opportunity to do something they enjoy, make extra money, and see what the business world offers them. Here I am sharing 5 tips to follow when starting a new business.
The solution for many is to start their own business on the side. It’s work, but you can succeed if you are passionate about the idea. Consider some tips that will make starting a business quicker and easier.
Why Start a Side Business?
It might not be practical to walk away from full-time employment. Starting the business on the side means you have the time to find a path to success while still paying the bills. Or, you can just increase your income without giving up your career.
Some people choose to start a side business for extra income or to grow passive income that can help with retirement. For others, the new company is more like a calling. It might be an opportunity to explore something they are passionate about, like writing or art.
It could be a way to give back to the community, too. For instance, you may want to design t-shirts and have the proceeds support a program that helps others. Let’s go ahead and see what are those 5 tips to follow when starting a new business.
What Kinds of Businesses Work Well on the Side?
The list is exhaustive, but some businesses people start on the side include:
- Testing or building apps
- Creating websites for affiliate marketing
- Real estate
- Flipping houses
- Art designs and licensing
- Writing books
- Creating handmade goods
- Virtual bookkeeping
- Virtual travel agent
- Pet care or dog walking
- Career Coaching
- Event planning
- Personal training
Many people take something they feel passionate about, such as fitness or coding, and turn that into a side business. For instance, if you are an artist, you might get into pattern designing. On the other hand, if you work in construction, flipping houses makes sense for you.
Tips to Follow When Starting a New Business
Starting a new business isn’t as complicated as it sounds. First of all, you need to come up with an idea for a business and the key is to plan something you can start small and build. That will put you in the right mindset. So, here are the 5 tips to follow when starting a new business.
1. Find a Need and Fill It
Many new businesses try to fill a need that doesn’t exist, and they fail. The best approach is to find something you enjoy doing that solves a problem. Great companies grow out of challenges because they offer solutions. If you can find a way to fill a need, your new business will start strong.
Sit down and write out some things you love to do or that you do well. Also, make a note of the things you hate doing. For example, if you don’t like driving for long periods, a business as a delivery driver will probably not be sustainable.
Once you have a few business concepts in mind, you can start to determine if there is a need you can fill with one. The more ideas you have, the more likely it is you’ll come up with something that has potential.
2. Research the Market
Just because you have an idea for a product doesn’t mean there is a market for it or someone would use your service. Do some research. First, see if anyone else is offering something similar. If so, how are they doing with it?
Also, bounce the idea around to see if there is interest. Don’t just talk to family and friends who want to be encouraging. Go to potential customers and see what they think. For example, if you are considering a delivery service, ask around your neighborhood to see if people would hire you first. How many other companies are doing deliveries there? Is there another area that might work better for you?
3. Consider the Operational Needs
What do you need to make the business work? Can you run it from home, or do you need a workspace? Do you have the technology necessary for the business? What about the skill sets?
If you can’t fill the operational needs right now, you have something to work towards. Or, it might mean you need to make another choice. For example, if you want to make deliveries but have a small car, this might not be the right choice for you unless you can buy something bigger.
You need to have everything in place to run the business before it starts. Otherwise, the company will get off on the wrong foot.
4. Map Out a Business Plan
Create a road map for your business. It will allow you to set goals and understand the direction you want to go. It will also tell you when it is time to let it go. Not all businesses work. You need to be able to walk away from one that isn’t bringing in income for you. If one doesn’t work, it just means you need to try something else.
5. Figure Out Your Taxes With a Professional
It is important that you understand how the new business affects your tax liability. For example, do you need to charge sales tax? If so, how much and how do you go about paying it? Also, what expenses qualify as deductions? Finally, do you need to prepay your personal taxes?
If the taxes confuse you, then get professional help. Without a tax plan in place, you might sink your new business in the first year. Get a consultation with a tax accountant or bookkeeper. If you expect the company to show a profit early, hire someone to manage the books.
Hiring someone to help you with the taxes right away may pay off for you. You can learn the tax benefits of becoming an LLC, for instance. It will also allow you to avoid any IRS penalties because you didn’t know how to handle your business taxes. It is much easier and less expensive to create a tax plan at the beginning than to fix IRS problems later.
6. Consider Funding Options
Since this is a small side business, chances are it is self-funded. However, you should still establish a budget and know how much you can afford to spend. If you are partnering with someone else, have a clear understanding in writing how much each partner will contribute to the business. Don’t leave the funding up to chance; set a limit for yourself so you don’t run through your savings.
Also, create a backup funding plan in case the business is doing well but not bringing in much revenue yet. You may need to consider financing as a last resort. If so, lenders may require you to use your credit history or provide collateral. You don’t want to have to close the doors on a business that has potential because you didn’t think ahead about finances.
Starting a new business is an exciting opportunity. But it can also be disappointing if you don’t go about it correctly. First, find something that interests you, ensure it fills a need, and then take the steps necessary to ensure its success.
These tips to follow when starting a new business will work with almost every business prospect, whether you plan to build houses, mow lawns or sell art. The better you plan, the smoother your new business will run and the more money you can make from it.