Don't put off the basics when starting your biz
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(MoneyWatch) When speaking with or advising people starting new companies, or already running small ones, I've found that they often avoid, delay, or otherwise neglect to put some simple but critical business needs in place. Generally it's because they (like any responsible entrepreneur) want to save money, or because they think they "don't need these things yet." But there are structural and operational fundamentals that are best dealt with before you think you need them. Some of them involve a little out-of-pocket, but it's money better spent early in the game:
Legal structure: Many ventures start at home, as sidelines, or in otherwise small and modest fashion, with no legal structure. For some businesses -- like selling crafts in your spare time with no plans to turn it into much more than that -- this might be OK. But anyone hoping or planning to grow a full-time, sustainable business should choose and establish a legal structure early on, as it determines and affects many things, most importantly your tax and liability status. Get the advice and help of a qualified attorney (As I've said before, this is one of several things I don't recommend trying to handle on your own.)
Insurance: Whether your business is product- or service-oriented, if you deal with customers, employees, machinery, real estate, inventory -- or anything else that can be lost, stolen, damaged, injured, or in any other way represents significant risk -- don't leave yourself exposed. For many small businesses, a Business Owner's Policy is a comprehensive and affordable solution. But do your homework -- don't buy more insurance than you need; don't buy too little, either. Cover what you need to avoid disaster and sleep at night.
Proper email and phone: As I mentioned in an earlier column, with free-to-cheap phone, voicemail, Web domain, and email services, there is no excuse for having an unprofessional email address or using a home phone line for business. If you own a domain name -- even if your website isn't up and running yet -- make sure to use that domain for your email. For your phone, either have a separate, dedicated, quality line (in a quiet environment), or use a virtual attendant/mailbox service, voice-over-Internet, or other readily available small business call service. Key modes of contact are not places to shave pennies, especially when most of them cost little or nothing.
Employee manual/written policies: Once you start hiring, the sooner you put employee policies and other information in writing, the better. You don't need a 30-page, beautifully printed and bound employee manual. It can be a simple Word document outlining what you offer employees (benefits, time off, discounts, etc.); what you expect (working/break hours, confidentiality, dress code); and what the rules are (use of computers, leave of absence policies, harassment concerns, disciplinary process). Have new employees sign a sheet confirming they've read the document and understand your policies. Review it regularly and update as needed. The more you have in writing when you hire someone, the less potential for misunderstanding, ambiguity, or conflict when problems arise.
Proper bookkeeping: Whether it's with Quicken, its ever-popular business brother QuickBooks, or some other application, start off doing your accounting properly and thoroughly. If you don't, you may look back later and wish you had. Aside from the daily benefits of efficiency and accuracy, along with access to reporting tools and professional forms, when it comes to crucial matters like taxes, audits, or even the sale of your business, you'll be glad you didn't start with a receipt book, note pad, and calculator. With loads of accounting software options ranging from free to modestly priced, even the smallest startup can and should keep professional books from day one.
Forms and basic documents: In addition to the accounting forms (invoices, purchase orders, etc.) mentioned above, make sure you have other documents you need before you need them. Whether it's an account application, company credit reference sheet, price list, or quote/estimate form, your documents should be professional, consistent, and ready to go. Don't wait for your first customer to call to whip up a rushed (and probably sloppy) price list or credit app.
Of course there are other things that may need to be addressed early on, many of which depend on the nature of your business, but these are among the most common basics I see people put off or overlook.
No matter how small your company is (even if you're not yet up and running), make sure you're set up and ready to do business with the key bases covered. When things start hopping, you'll be glad you did.
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