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Tips for a successful small business

charttwo30340387.JPGThere are certain characteristics that successful small businesses share. Often times small business owners give the same advice over and over again, on how they made their small businesses work. There is no denying the fact that starting a small business is hard, and keeping it up and running, is even harder. However, if you are worried about the long term survival of your business, the best thing to do is focus on doing it right, from the beginning. Here are some tips for a successful small business-

  • Have the money you need-Too often small business owners think that it's ok if they get their small business up and running, on debt financing alone. The problem with this is that the rate of failure for small businesses is quite high, and if your business goes under you will still be responsible, for paying back the loans you took out. The goal is to try and use as little debt financing as possible. If you can start your businesses, from your own resources, and perhaps with some help from family and friends, you are much position to succeed. Remember that in your planning you will also need some money set aside, for personal expenses, unless you are planning to continue to work a full-time job while you get your small business up and running. It can be very difficult to focus on your business, if you are constantly worried about how you are going to pay your bills.
  • Focus on being frugal-Your constant thought should be, "How can do I do this for less?"Wherever possible you should try and cut your expenses while your business is in the startup and early business phase. While it can be tempting to rent out a great location, fill it with designer furniture, and staff it with a full staff, you need to look at your business finances realistically. Starting your small business with used furniture or equipment, can help cut costs. You should be hiring employees until you are to busy to do everything yourself, and then you should make sure you have enough work, for one full-time employee. This is the time that if you can get by without something, you should.
  • Protect yourself-Most small businesses begin as a sole proprietorship. It is important to understand that this type of legal entity means that any debts that your business incurs, will become your personal liability. This means that if someone sues your small business, they are also suing you. If you do not take the appropriate legal steps, creditors can then attach your debts, not only to your business, but to your personal bank account, as well. While business liability will not protect your from debts, only from lawsuits. You should consider consulting with a tax attorney, to discuss the best legal entity to form your business under.
  • Understand how you will make money-The bottom line is that you are in business to make money. You will have to determine how not to just cover your costs, but how to make a profit. This is why it is so critical to be aware of every aspect of the finances of your business. You need to know exactly what your costs are and how much of your costs are covered, each time your make a sell. You need to have a written break even analysis of your costs, for every product you sell, and be able to quickly determine exactly how you are making money. Keep in mind that this break even analysis should be a part of your written business plan.
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