Running your own small business is an amazing way to find freedom, but it comes with some challenges – such as economic fluctuations affecting its financial health and affecting growth.
To qualify as a small business, an entity must satisfy size standards set forth by the Small Business Administration (SBA). These vary depending on its industry and include factors like number of employees and annual revenues.
Defining a small business
Small businesses are independently-owned for-profit enterprises with less than 500 employees that operate independently. Small businesses play an essential role in our economy and provide numerous employee benefits. Their flexibility enables them to adapt quickly to changing economic conditions; and act as innovative labs where new ideas that could disrupt entire industries may emerge. But in order to be considered a small business by government regulations and standards set for each industry.
Small businesses vary depending on the industry they operate in; most tend to be privately-held businesses that operate for profit with fewer employees than larger organizations. Their legal form – be it corporation, partnership, or sole proprietorship – also affects their size. Small businesses may qualify for certain tax credits such as the Small Business Health Care Tax Credit.
Getting started
If you’re contemplating starting your own small business, there are numerous viable options open to you. Some require minimal startup costs while leveraging existing skills – for instance a consulting agency would allow you to leverage your experience while meeting the needs of other small companies that don’t afford full-time marketing or PR specialists.
Other options to consider for starting a business could include personal care, community service and food preparation. When selecting the ideal business idea for you, take into consideration your schedule, passions and target market sustainability. If unsure, discuss it with friends and family until an idea fits this profile.
Once you’ve decided on a small business idea, create an Employer Identification Number (EIN) and open a bank account specifically for it. This will allow you to keep the finances separate from personal expenses while making tax filing simpler. Furthermore, local and state authorities may require registration of your business.
Financing your business
Debt financing is often the go-to way of funding a small business. This could involve taking out loans, lines of credit or using credit cards; less formal methods of funding a startup include crowdfunding or grants.
Regardless of how you finance your business, when taking out loans it’s essential that you carefully read over and review all terms and fees associated with them in order to understand exactly how much owe to lenders.
Bank loans offer competitive interest rates and flexible terms, but qualifying can often be challenging due to strict requirements and lengthy application processes. An alternative form of debt financing for small businesses includes small business lines of credit which operate similar to business credit cards with lower limits; alternatively merchant cash advances might be considered good solutions when expenses occur regularly.
Managing your business
Small business managers must keep an eye on a multitude of details related to running their organization, from inventory and customer relations, finances and more. While this task can be tedious, there are ways to simplify the process.
Start off right by consulting experienced executives. The Service Corps of Retired Executives (SCORE) helps over one million small businesspeople annually with free advice to avoid making costly errors in business practices.
One key component of successfully running a small business is maintaining long-term goals. While day-to-day tasks may keep us occupied, setting quantifiable goals allows you to measure whether your company is growing in an appropriate direction.
Finally, productivity apps and tools can help ensure that you use your time wisely and meet the demands of your business – while giving each task the attention it requires.