Updated: May 3
Starting a Business - Part 7
We know starting a business can be so rewarding, but you won’t hear anyone say it’s easy. Do you know what the common denominator for success is?
It’s being willing to do & DOING the things other people aren’t willing to do.
Success is literally failing and course correcting. Bob Proctor explains it like a rocket going to the moon. It is slightly off track more than 90% of the time, and it’s course-correcting the entire way. But guess what? It makes it to its destination - the moon. It doesn’t just quit.
Intro to Business Structure
You’ll need to decide how you want to structure your business, but don’t let this stop you. Most small businesses fall into one of the following business structures.
Sole proprietorship: According to the Small Business Administration, “You're automatically considered to be a sole proprietorship if you do business activities but don't register as any other kind of business. Sole proprietorships can be a good choice for low-risk businesses and owners who want to test their business idea before forming a more formal business.”
Limited liability company: “LLC's protect you from personal liability. In most instances, your personal assets — your vehicle, house, and savings accounts won't be at risk if your LLC faces bankruptcy or lawsuits.”
C Corp or S Corp: “Corporations offer the strongest protection to their owners from personal liability, but the cost to form a corporation is higher than other structures. S Corp is a special type of corporation that's designed to avoid the double taxation drawback of regular C corps.”
Don’t let business stuff stop you. According to Legal Zoom: “You don't need an LLC to start a business, but, for many businesses, the benefits of an LLC far outweigh the cost and hassle of setting one up.” You can set up an LLC yourself, but it’s best to do a little legwork or seek professional advice if you are unsure. Just don’t get frozen in your tracks. Keep working your business alongside any other business-related tasks. You can find additional business guides within the small business administration at http://sba.gov.
Try to Prevent These Pitfalls
Don’t promise equity from the beginning. Partnerships can be very powerful, but that doesn’t mean you should plan to give half the equity away from the start, regardless of whether the efforts over time are equal. It’s best to establish powerful partnerships that are based on performance. Establishing a deal based on profit or revenue ensures you are rewarding based on results and not structure. You can always choose to be more generous for stellar performance.
Avoid not getting started. You eat an elephant one bite at a time. You don’t need to know every step of the way before you even start. Set your intention, have a plan for your routine activities, list & prioritize 6 actions each night for the next day, and TAKE ACTION.
Don’t think too small. Any time we commit to doing something we’ve never done before, it will be uncomfortable. That’s ok. You don’t have to dip a toe in for the first few years before you really go for it. Fix your sights on what you would really love!
Don’t put off testing and measuring. I know this one isn’t sexy, but you really want to avoid pouring your blood, sweat, and tears into activities that aren’t producing.
Don’t lose sight of putting relationships first. We touched on this before. It’s not just about a single sale. Focus on building lasting relationships with your clients.
When starting a business, there are 4 phases you will go through. Most people want to skip around or jump to the end. This might work for some, but it leaves most confused, overwhelmed, and disappointed.
The 4 phases of building a business
Which phase should you be putting most of your focus on right now? Commit to getting solid on each phase before you start splitting your efforts on the next.
Manage your Business Activities
You can’t really manage time, only what you do with it. Think about the activities you have been regularly doing in your business. Are they giving you the results you are looking for?
Always thinking from the end goal, what are some activities you need to regularly do to get you there? Make a 90 day or quarterly plan for your business and map out the activities you need to take. Once the plan is in place, focus on DOING the activity.
The recommended approach is to spend a minimum of 60% of your time and resources on sales marketing, and then split the remaining resources between production & operations. This approach helps you increase revenue, optimize cash flow, and maximize profits. At the same time, make sure you are being proactive and decrease expenses whenever possible.
You can’t course-correct if you aren’t regularly monitoring what's working and what isn't. Review your outcomes at least quarterly, but monthly check-ins are recommended. Then you can adjust your plan to put more focus on where you are getting a better ROI.
Track your conversion rate so you know how many reach outs, signature talks, networking events, appointments, and other activities relative to your business you need to hit your revenue goals at your current conversion rate. Also, map where your new clients are coming from.
Ask yourself during each review:
What didn’t work?
What can I do better?
Who can give a testimonial?
After a couple of quarters, you should get a pretty solid idea of your conversion rate.
Stay Focused on Business Efforts
Even when new business ideas pop up, it’s best to stay focused on one business. Dividing your efforts between multiple ventures can be a recipe for disaster. If you split your attention, you will get subpar results in everything you are working on.
By focusing on one business, you can create a company that eventually works without you. This systemization is a repeatable process that produces a profit over and over again. Once the systems are in place, it gives you the option to branch out into other business efforts.
So right now, commit to doing the things other people won’t, so you can have, do, and be what other people won’t. Make a decision whether now is the time to choose a business structure. Decide which business phase you need to focus on and start planning your activities. Plan upfront how you will track the performance of these activities at the end of the month or quarter, and until then focus on the DOING.
Check out Starting a Business - A Guide for the Online Entrepreneur for a summary of this blog series and what you can expect to learn each week.
Do you need help aligning all aspects of your business so your message is clear, concise, creative, and speaks to your ideal customer? If you answered YES, book an introductory consultation to learn how we can help you! We will speak with you to learn all about your business goals and needs during this free call. Should you choose to work with us, we promise to save you time and any frustration that can come along with having a business.
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