Starting a business can be both thrilling and scary. Entrepreneurs often begin with a lot of passion and energy, trying to turn what they love into a full-time venture. However, many small business owners stumble when it comes to the practical side of things. They might find it difficult to handle the financial aspects, protect their business assets, and take on additional responsibilities. Statistics show that about 20% of businesses fail in their first year, and by year five, that number goes up to 50%. Unpredictable challenges, like a pandemic or global issues affecting supply chains, can be hard to anticipate, so there’s no surefire way to ensure success. But, here are some tips to help new business owners tackle the basics that often trip up startups.
First, consider getting a D-U-N-S Number from Dun & Bradstreet, which is a unique nine-digit identifier for your business. This number is useful because other companies, lenders, and the government might want to look at your business’s credit file before offering trade credit or loans. You can apply for this number online for free.
Next, think about setting up your business as a separate legal entity. Many newbies start as sole proprietors and mix their personal and business finances, which can be a costly mistake. Doing so makes you personally liable for any business debts. By incorporating or forming a limited liability company (LLC), you create a legal separation between you and your business, which can protect you from some financial risks.
Opening a business checking account is another smart move. Keeping your business finances separate from your personal accounts not only protects you from creditors pursuing you for business debts but also helps you build a credit file for your business.
Running your own business means being prepared to be the boss. While that sounds great, it also means more work and responsibility. You’ll need to put in long hours, manage the financials, handle hiring, oversee employees, pay rent, and do marketing. Even if you can delegate some tasks, ultimately, the success of your business rests on your shoulders.
Building business credit is crucial for your business’s growth. Lenders, suppliers, and clients often check a business’s Dun & Bradstreet credit file before engaging with it. To build your business credit, make sure to pay your bills on time and ask vendors to report these payments to Dun & Bradstreet.
It’s also important to protect your business with insurance. Running a business requires both time and financial investments, and unexpected events, such as natural disasters or lawsuits due to injuries, can be costly. Look into different insurance options like commercial property, product liability, and professional liability insurance. Consulting with an insurance expert can help you choose the right policies to safeguard your business from financial stress.
Lastly, don’t hesitate to seek help. Starting a business is challenging, especially for first-time entrepreneurs, who have a lot to learn and many opportunities to make mistakes. Fortunately, others have gone through the same journey, and some may be willing to share their experiences with you. Consider reaching out to other local business owners for advice or exploring resources like Dun & Bradstreet that can offer guidance.
Ultimately, while there’s no guaranteed formula for success, a careful and informed approach can help mitigate risks. Taking time to understand these steps and seeking professional advice can help you avoid common pitfalls and enhance your chances for success. Remember, this information is meant for guidance only, and it’s wise to consult legal or tax professionals for specific advice.
