6 Tips to for Starting and Running a Successful Small Business
Today I have a guest post from Phillip Christenson, CFA. He is a local financial advisor that works blocks away from us here in Beautiful Plymouth Minnesota. He is writing on a topic near and dear to my heart, small businesses. In this article he shares his tips which entrepreneurs will find helpful no matter their chosen field. Phillip writes:
As a co-owner of a local Plymouth financial planning company, I have learned a thing or two about running a business. I’ll admit I am by no means an expert and have made my fair share of mistakes while starting up and running my business but have picked up a few tips along the way that others will find helpful in their own small business endeavors. Here are my 6 tips to help you with your own small business and avoid the pitfalls I and many other business owners have found themselves in.
Start with a Plan
Whether your write out a formal business plan or just an outline of your goals and objectives for going into business, this is where you start.This is also the biggest reason why most small businesses fail, improper planning. A good business plan starts with an executive summary and company description. This is the easiest part of the plan. Just describe, in your own words, your vision for the company and a general description of your products and services so anybody can gain a quick understanding of how you can help them. Then you should include some market and competitive analysis. This is just a summary of the market you are serving (e.g Minneapolis and the western suburbs) and a short analysis of the competitors that are already serving your market. Then create the company organizational chart (CEO, CFO, Sales Manager, etc.). Even if it’s only you and a couple employees list out the roles of each person and future roles. The idea is to create a vision of what your company will look like not necessarily how it is now. Finally, perform some financial analysis and projections. If you are just starting out plan on what you expect revenue and expenses to look like. If you have been in business for a little while make sure you keep your books up to date and understand what your balance sheet, income statement, and cash flow statement are telling you.
2. Structure your Business correctly from the start
Some of this analysis should be done when you are creating your plan but you might not know how you want your business structured. Should it be a sole proprietorship, an LLC, LLP, S-Corp, etc.? This is one of the most important steps in setting up a business because if done right ahead of time will save you headaches and money down the road. I am sure Pat Knight would be more than happy to help you set up your business entity right from the start. Just make sure you are able to explain your business objectives and vision for the company. You can take a look at his earlier post Five Important Elements of a Shareholder’s Agreement as a starting point if you are working with multiple shareholders.
3. Marketing
Include room in your budget for marketing expenses. You may be an expert at whatever product or service your business provides but if no one knows about it you’ll never keep your doors open. Or if you have been in business for a number of years now it may be time to re-look at your marketing strategy. Which leads me to my next tip…
4. Get Online and Get Social
It is free and easy to set yourself up with a Facebook page, Twitter account, and even your very own blog. Your customers want to hear from you! You need to be incorporating these practices into your business. Don’t tell me that your business isn’t conducive for being social. As a financial planner I deal with a lot of topics that many people find boring like insurance and saving for retirement. Or swimming pools for example, who would ever start a blog about swimming pools? This guy did which he claims saved his business during the ’08 recession. He has had well over 20,000 visitors to his site just from one article! Trust me there is an audience for your topic of choice. Don’t try to do it all at once. If you start a blog focus on that. If you want to try Facebook focus on that. Eventually you will find that all of this combines to create your complete online presence. Search Plymouth Financial Advisor on Google and let me know what you find.
5. Manage your cash flow and save some cash for a Rainy Day
As a financial advisor, I tell this to my clients but it is just as critical for a small business. Make conservative estimates about sales and costs. Keep 4-8 months of cash and liquid investments on hand, less if you are in a stable predictable business and more if you are in a more volatile or seasonal business. Make sure your personal finances are in order as well. As a small business owner you are tied to your business financially in a big way. If you need to invest more cash in your business will you be able to do so? Are your personal investments aligned with your business goals? These are good things to figure out before the next recession hits.
6. Networking
Networking is the fastest way to learn about other businesses that can help you and your clients. This guest blog post for example. Mr. Knight kindly agreed to allow me to use his blog as a platform to write this article which benefits his clientele, provides me exposure for my business, and provides useful content for his website. Win win all around! As well, you might be surprised to find out that I love networking with other financial advisors the most. Why? While they are technically direct competition sharing ideas and business frustrations has been a huge help to my business. For example there are hundreds (probably thousands) of softwares that are specifically designed for the financial planning community. By meeting with other advisors and discussing which ones they use and why they like or don’t like them can help me find the best fit for my company. This saves me time and money that would normally be spent figuring this out on my own.
Phillip Christenson is a Chartered Financial Analyst (CFA) and owner of Phillip James Financial, an Independent Fee-Only Financial Planning company in Minnesota. He also has a blog that focuses on Personal Finance and Investment issues. He can be reached at phil@phillipjamesfinancial.com or by calling 763-639-2175.