Starting a new business can be exciting, fun, a little scary, and expensive. An expensive mistake if you make too many missteps – especially when you’re working with a good business idea, and not much else. Whether your vision is a profitable website, retail outlet, restaurant, or professional office, following some common sense “rules of engagement” will help save you time, money, and more than a few headaches.

1. Finance from savings if you can

It can take months, and even years, for any business to become reliably profitable. Lenders may be reluctant to finance start-ups because there’s no history of success. Save up as much as you can while developing your business model,  writing your business plan, looking for the right space, and taking those first tentative steps toward business ownership. The more you can save, the better your chances of surviving the first difficult months (or years) to reach business profitability.

Some entrepreneurs obtain a second mortgage, or max out their credit cards and personal credit lines. It’s a personal choice, of course, but using personal assets to finance a business puts your home and credit-worthiness at risk – something to keep in mind as you move ahead.

2. Think small

Working from home instead of renting space can save on office rental costs, commuting costs, office insurance premiums, and other associated expenses. If you don’t need to hire staff, don’t. If you do need help, use outsources and temps on an “as needed” basis until you’re certain you have enough work, and enough business revenue, to warrant hiring staff. Grow slowly, but steadily, to help protect the assets your business has accumulated to date.

3. Create a corporate structure

A corporation, LLC or some other corporate entity may help separate your personal assets from company assets in the event your business faces financial or legal challenges. It’s also a good idea to obtain business liability insurance to help protect your company, and be sure to update coverage as your business grows.

4. Crunch the numbers every which way

Work the numbers: best and worst case scenarios. How much will you need to open the doors, or launch an online business? Be realistic. How much will you need to finance marketing, business insurance, health care coverage, office furniture, shipping, and other expenses?

Develop the worst case scenario. If the numbers still seem workable, move ahead. If it’s close, think smaller. If it looks like you won’t have the capital you need to build, operate, and market your new enterprise, wait and save more money before moving forward. Under-capitalization is often the reason a new business fails.

5. Create a business plan

Many business plan templates are available on the Internet, including on the SBA website. Create a business plan based on the reality of your market segment, demographic, start-up funding, and business operational costs, and determine when you can reasonably expect to start seeing positive cash flow.

Again, it can take months, or years, to turn a profit. A business plan – your road map to success – can help shorten the time to achieve this all-important goal.

6. Start filling in the blanks

When starting a business – real world or online – filling in the blanks requires research. Who will supply raw materials or finished goods? Who will answer the phone? Who will pack up orders and take them to the post office each day? Where will people sit? And work?

Develop a schedule for a hypothetical, “on-paper, 30-day trial run.” What equipment will you need? What services? Payment gateways? The more blanks you fill in for the short term, the greater the likelihood of long-term business success.

7. Get it in writing

A start-up generally produces a lot of paperwork. Contracts with consultants, customer invoices, vendors’ terms, loan agreements, leases on space and equipment, tax filings, registrations with local and state agencies – get it all down in black and white, and make sure everything is filed properly so you can find it when you need it.

8. Hire a lawyer and an accountant to manage compliance, taxes, and other essential start-up activity

Starting a business often requires legal counsel to ensure compliance with oversight and taxing agencies at the local, state and federal level. Talk to an attorney experienced in working with start-ups, and creating and filing business paperwork.

Establish a relationship with an accountant who understands tax law, the rules and regulations employers must follow, and other business matters that can spell the difference between success and failure.

9. Hire people who think like you

If you do need staff, hire people who have a business philosophy and work ethic like yours. Hiring “cold” can lead to problems down the line – problems that can slow business growth and reduce profitability.

Also note that staff will cost more than just salaries. Consider benefits, i.e., health care coverage, sick days, vacation days, long-term savings plans for employees, and other expenses that can add 29.7% to the salary an employee receives, according to the federal Bureau of Labor Statistics.

10. Develop your initial marketing and promotion strategy and cost it out

You may have the best business idea since sliced bread, but if no one knows you’re out there, you won’t generate the revenues to maintain adequate cash flow. Marketing costs vary. A single, full-page, four-color advertisement in the local paper can cost hundreds, even thousands, of dollars a week. On the other hand, Google® AdWords can cost as little as a nickel per click-through based on the keywords you select.

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