Top Ten Tips for Successful Business Startup

As I said before, in the future I believe everyone should start a business.  Not only for tax purposes, but for self-satisfaction, independence, and fun.  We Baby Boomers will all need to start businesses because we most likely won’t have Social Security and retirement funds to support us.

Starting a business is a pretty scary proposition; believe me, I know.  I have done it myself, several times.  I have taught small business classes for many years, and I have distilled the wisdom of myself and many others down to the “Murray Top Ten Tips”  for succesful startup.  This week, I would like to share them with you, in reverse “David Letterman” order.  Feel free to comment, share experiences, disagree.

#10 Put It In Writing.  If it isn’t in writing, it doesn’t exist.  This one has been proved over and over.  If you don’t put it in writing, you’ll end up having to put it in writing.  I had a young business person in my office a few weeks ago. He was negotiating to buy into a health care practice and the selling doctor was telling him, “I will sell you the practice, but I’d like you to work here for a year first.”  That might be a reasonable expectation, but what happens to that promise if it isn’t in writing?  I have seen people come in an steal businesses out from under the person who expected to buy it.  I told him to put the promise in writing, and get a right of first refusal for the practice.

#9 Overestimate Expenses/Underestimate Income.  Double your estimated expenses and cut your estimated income in half and  you might be half right. Bankers have told me that most prospective business owners do the opposite, overestimating income and underestimating expenses.   This doesn’t help get a bank loan, because the bank is rightly skeptical that the estimates can be achieved. If the new owner is asking for working capital to keep the business afloat until it gets enough customers, estimating wrong can spell financial disaster, and quickly.  Put together realistic estimates of everything you will need and realistic estimates of your income, then cut the income and increase the expenses.  It’s better to do better than you expected than worse.

#8 Start with an Employee.  Cutting corners by not hiring someone to help you will cause your business to grow more slowly, and look less professional. It willl keep you from giving excellent customer service.  I know you’re thinking, “I don’t have the money to hire someone,” but there are several alternatives.  If you are working from home, hire an independent contractor to do some of the tasks you don’t want to do, like bookkeeping or marketing.  If you have an online business, hire a virtual assistant to help promote your business, keep you on track, and handle appointments, travel scheduling, and other details.  You can’t afford NOT to hire someone.

More “Murray Top Ten Tips for Successful Business Startup” tomorrow….