Starting your own business can be an effective way to build long-term wealth—or it can really set you back financially. If you’re thinking about taking the leap into entrepreneurship, you can increase your chances of success by following these five tips:
Understand your why
Entrepreneurship sounds amazing—you get to be your own boss and set your own schedule, but it’s hard work and at the end of the day, the responsibility for your business rests on your shoulders. That stress will pile up and during those times, you need a strong “why” to sustain you. Who are you trying to help with your business? Are you passionate about it? What sacrifices are you (and are you not) willing to make for it?
Build a strong foundation
Develop a marketing plan
You can offer the greatest product or service on earth but if no one knows about it, your business is going to struggle. To get the word out, you need a marketing plan. Your marketing plan will evolve over time, but to start, you might focus on building referrals through word of mouth, social media, building an email list, or online digital marketing.
Prepare for taxes
Paying taxes is one of the biggest headaches for new entrepreneurs. As a business owner, you’ll need to pay taxes quarterly. To ensure you have the money set aside to pay Uncle Sam, you should work with an accountant to estimate your quarterly tax payments, or at the very least, save 25%-30% of your income after accounting for deductible business expenses. Set up a savings account specifically for this purpose and automate it if you can.
Watch your expenses
Most businesses fail because they run out of cash. You need to know how much your expenses are and make sure that they don’t exceed your income. Your business income should be enough to cover not just your business expenses and tax savings, but also your personal expenses, savings, and goals. If not, you’ll find yourself or your business racking up debt to keep the lights on and you want your business to support your life, not the other way around.
