Take The Time To Set Your Business Up Properly
Many startup entrepreneurs and new businesses focus less on strategy and more on revenue generating tasks as they launch and grow their new business. Fair enough, a business needs cashflow. But the problem is that in the frenzy to get product (or services) out the door and money in the bank, they forego a few structural details that would set them up for success and help them avoid costly amateur pitfalls.
If the goal is to create a sustainable business, it is never too early to start looking at business structure as a company asset. Take a look at some of these assets and how they can help protect your business revenue.
Structure Is Key
As a new business owner, you are naturally working tirelessly developing or delivering your product, making sales and generating income. But keep in mind that while revenue and cash flow are of primary importance, these aren’t the only things that matter to the life of your business. In fact, while revenue fuels the engine, it is not the engine itself. To have a sustainable business, you must create structure, and the pieces that aren’t in place may come back to haunt the business (albeit you) if you don’t take care of them up front. Here are a few start up tips to make sure you have a solid structure to carry your business forward.
Build Your Professional Team
✅Before you launch, have a good attorney and accountant on your team. An accountant will help you create a set of books so that you can analyze the numbers and know where your cash is going, what cash is coming in and how that looks in terms of profit and loss. Additionally,
a small business attorney can help you with entity formation and creating an operating agreement. In the early stages, a sole proprietorship may be appropriate for your business, but it depends on your circumstances. Your accountant can also help you with that decision if you decide to forego the expense of an attorney in the beginning.
✅Begin a relationship with a highly referred insurance broker. Your broker will help you assess your risks and find appropriate coverage for you and your business, creating a plan for additional coverage as your business grows. Bundling coverage can generally save your company a lot in premiums, and a good broker will help you find a good balance of coverage, so that you are neither under nor over insured.
Plan For Strategic Growth
✅Create an organization chart documenting all of the positions in your company; one that is based on the strategic growth plan of the business. As the founder, you may be filling most positions at first, but having an organization chart as a roadmap will help you navigate as you grow. Create job descriptions for each position.
Create Clear and Detailed Written Personnel Policies
✅Have your human resources in order. Create an employee handbook that leads with a written mission statement and company values. The handbook is your company’s directive, outlining policy on all matters, documenting everything from hours of operation, attendance, punctuality, cell phone and internet use, work from home
policies, to items specific to your business such as compensation for company travel. Remember to include policies on vacation, sick time and all other benefits. Brainstorm and include every detail; for example, is there a 90 day waiting period before the start of benefits?
As a business owner, these policies are created by you; there is nothing set in stone so be realistic based on the size of your business and budget, and don’t over promise. You can always add benefits as you grow.
Document Team Onboarding, Training and Exit Procedures
Additionally, outline procedures for hiring and termination. Create an interview and onboarding process, including documented training procedures and a checklist to ensure all of the steps have been completed. There are many resources online that offer templates to create these assets, however if you have the funds and want to outsource this, hire a freelance HR professional. These policies will give your business a solid structure on which to rely saving you headaches down the road.
When I first started my apparel business, my partner and I did most of the work, minus some sporadic help here and there. Someone that I met randomly appeared on my doorstep several times requesting a job. I hadn’t planned for this and was taken by surprise. New to the concept of professional hiring, I didn’t have the clarity I needed to make a strategic decision and we needed help. So by default, I had a new employee.
With hiring policies in place, company values outlined (including personal values), and great interview questions that reflected those values, I would have had the confidence to make an informed choice based on a strategic plan. As the business developed and clear written policies and procedures were documented, I became more strategic and had many successful hires over the years. Save yourself some of the trial and error and really think this step through; it will save time and aggravation in the long run.
Without a business blueprint, there is no clarity as to the direction of your business, and your business is made vulnerable to the outcomes of aimless decisions based on immediate needs. From solopreneur to well funded startup, the steps are essentially the same. Do the work of planning and documenting upfront for each and every contingency. You will gain confidence from the momentum of being organized and prepared, and there is nothing that will create professionalism in your business, protect assets and increase profitability like a solid foundation.