4 Factors to Consider Before Starting a New Business

Starting a new business is exciting and fresh, especially if it’s something you’ve wanted to do for a long time.  You can’t let your excitement get the best of you though, because there are a lot of factors to think about before you get the ball rolling.  To maximize your success and minimize your risks, start thinking about profits, taxes and what it takes to get started.

Make Sure You Have the Start-Up Costs

Your ideas are solid and your business plan is sheer perfection.  Now it’s time to think about funding.  It’s tempting to think that when you’re starting up a new business, all you need is a foolproof idea, but that’s not even half the battle.  Your start-up costs are crucial, and they’re probably bigger than you first imagined.  You have to make sure you have enough money for a proper space, plus you have to consider your profit margins.

10/2.2011 – starting a business by julochka, on Flickr.  This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.

For instance, think about what you’re offering.  If you’re doing PR work for online businesses or helping other companies with SEO, you have to consider any programs you need to buy, as well as the time you’ll spend doing your work, then stack that up against what you plan to charge.  If you’re starting a bakery business, figure out what it costs to make your pastries, then figure out how much each one will cost the consumer.

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Figure Out Your Taxes

Taxes are always complicated.  They’re even more frustrating for your business.  Do you have any deductions?  How much can you expect to owe?  You’re going to have to figure in federal, state and property taxes, as well as social security and worker’s compensation for employees.

If this is your first business, you need help.  Small business tax planning is essential, so get a reputable accountant from the start.  He or she can help you keep up with what you’ve spent, what you’re earning, and what you can deduct, among many other things.  That way you’re fully prepared when the tax man comes.

What’s the Economy Look Like?

The state of the economy is always a huge concern for any business, new or old.  For new businesses especially, it can make or break you.  Feeling out the current economy is just as important as scoping any competition.  If people don’t have any money, they’re certainly not going to spend it, especially on a new business with which they’re unfamiliar.  It’s possible that you’ll have to delay your grand opening or rework your business plan, so make sure you’re completely honest with yourself.

Put Together a Hiring Plan

It’s tempting to go it alone in hopes of making more money.  Depending on the nature of your new business, that’s possible.  Perhaps you can rely on family and friends who will work for little or no money in the beginning.  As you become more successful, however, you’ll need help.  Start thinking about how many people you can hire and what you can safely afford to pay them.  You also have to think about a benefits package, insurance, social security, and paid time off, so never hire more people than you can afford to pay.

Don’t think about the negatives when you’re starting a new business, just stay realistic.  What about your business excites you the most?