As someone who has had multiple failed startups, I feel uniquely qualified to share with you some tips that I’ve learned along the way. Now in my 4th startup, MediaThinkLabs, which provides digital marketing strategies and growth hacking for other startups, I’ve learned that building a startup from the ground up takes more than passion, skill and commitment. It requires a keen business sense, and fortunately that’s something you can learn and develop.
However, it’s best to hone these skills during the planning phases so you don’t get started down the wrong path. Building a business starts with a foundation, just like a house, and skimping on steps or doing them haphazardly can bring the whole empire crumbling down.
Learn from the mistakes of others and kickstart your new business the right way. Consider these nine tips for successful businesses and put them into practice immediately.
Startup Tip #1. Choose the right business entity
There are a variety of different business types including sole proprietorship, non-profit, LLC, PLLC, C-Corp, and S-Corp. Each has different pros and cons, and it also depends on how much liability protection you need or growth you expect. For many people, being a “freelancer” or sole proprietor is truly the best fit for life. For others, they may transition from this to a type of corporation. Get this right, so you don’t get hosed down the line.
Startup Tip #2. Choose your country and/or state wisely
You’ll be facing different taxes depending on where your business is founded. For example, there are zero state taxes for sole proprietors in Washington State, while California is notorious for having the highest. Within a state, you might also face different taxes depending on county. Some people like to create their business in Delaware or Nevada due to startup-friendly regulations. Do your homework. Choose the best route for the longevity of your business.
Startup Tip #3. Hire a reputable attorney and CPA
These two professionals can save you serious stress and cash, so don’t depend on H&R Block to take care of something as important as business taxes. Get word of mouth referrals, check out testimonials, and make sure these experts have experience in your type of business. Many business owners overpay or miss out on benefits because they don’t know better. Hiring Saul Goodman may not be the best approach.
Startup Tip #4. Consider your overhead
Do you really need that much office space—or any office space at all? In an increasingly mobile world, more startups are embracing virtual offices and telecommuting options. It’s kinder to the environment, you can save thousands in overhead, and appeals to more job seekers. Maybe you can explore coworking, work out of an incubator, or just work from one of the cofounder’s residences.
Startup Tip #5. Have a business plan first
Writing a business plan is nobody’s idea of a good time, and it’s tempting to just dive right in. Don’t. If you need help drafting a business plan, your local Small Business Association (SBA) office has free resources. The business plan doesn’t need to be perfect, but you need to get your thoughts organized.
Startup Tip #6. Set feasible goals
You should have goals for each quarter, year, and three-year increment. This should include sales, business growth and any expansion options. Also, to minimize time spent on time sucking activities. The Internet can be a double-edged sword when dealing with developing your own business and being distracted by the Internets.
Startup Tip #7. Hone your managerial skills
Even if you’re going to hire a manager to oversee your workers, as a CEO, founder or president, you’re going to need those managerial skills yourself. If you’re lacking (as almost everyone is), take some classes or ask a consultant for help. Try to remember to hire slow and to fire fast. Get rid of dead weight on your team as soon as you can.
Startup Tip #8. Know your supply and demand
It’s always great to follow your passion, but not when you’re the hundredth person opening a yoga studio in a yoga-saturated area. You might have to move or change up your business plan to offer a totally different type of yoga. Stay competitive.
Startup Tip #9. Love what you do
With number eight being said, there’s no substitution for loving what you do. If you’re passionate about something, that excitement is more easily passed on to employees and your customers.
Building a business is a long, arduous product of love. Plan well, plan for the worst, and approach each decision as if your life depended on it—because your livelihood just might. Do everything on this list right, and you still might fail. However, you will definitely have a better chance at success, if you follow these tips.