This post is provided by Jason Dirkham

Entrepreneurs are people who like to “get things done.” 

But launching a business also requires a considerable amount of preparation. It doesn’t happen by itself. 

Critically, the founders need to complete certain tasks before their business begins trading. This way, they can avoid headaches later and maximize their overall chances of success. 

So what’s involved? What do you need to do before you launch a business? 

Do Your Research

Before you even think about selling products or services, you need to do your research. Wading into the market with a bunch of capital and hoping for the best is a fool’s errand. You need to have a working knowledge of what your audience wants before you begin providing it. 

Fundamentally, it doesn’t matter how brilliant your idea is or how little it costs. If there isn’t a market for it, your business will fail.

Thus, before you even set up a shop or spend any money, understand the nature of the industry you’re entering. And figure out whether people really want what you have to offer. They may not. 

Pick A Powerful Mission

A company is just a collection of people who’ve come together to achieve a particular goal or objective. Sometimes, the mission is something trivial – like supplying people with pencil sharpeners. But other times, it’s more profound, like solving the world’s stationery problems. 

Ideally, you want your mission to be something visionary that motivates you to succeed every day. The more compelling your mission, the more likely you and your colleagues are to pursue it, day in, day out, relentlessly. 

Remember, the mission you choose will affect the way you make your day-to-day decisions. It’ll also determine the type of people who choose to join your organization. Thus, picking the right vision statement is actually more important than you think.

Choose Your Structure

Okay, enough of the hand-waving stuff: now’s time for the nitty-gritty details. 

One of these is choosing your business structure. Your business structure fundamentally determines the relationship of your company to the authorities. It can influence the amount of tax you have to pay and the liabilities you face. 

When choosing a structure, you have several options: 

  • LLC: Limited liability companies limit the losses that you can personally incur if your business fails. Let’s say that you fail to generate revenue and borrow a lot of money from creditors. If you have an LLC, your creditors can only repossess your business assets. They can’t access your home or other private property – hence the term “limited.” That’s the plus side. The downside is that LLCs have to produce more detailed tax returns for the tax authorities. So your admin costs increase. 
  • Sole proprietor: Sole proprietors do not have limited liability protection. However, their filing requirements are less rigorous and expensive. 
  • Partnerships: Partnerships are similar to sole proprietors accept the liability is spread over all of the founding individuals in the partnership. 

The good news is that you can change your business structure during the course of your enterprise if you find that it’s no longer working for you. However, ideally, you want to decide this ahead of time so you don’t have to worry about it again in the future. 

Get The Insurance You Need

Small businesses face all kinds of risks that could leave them out of pocket. For instance, a customer could injure themselves on your premises, take you to court, sue you, and get you to pay compensation. 

Without small business insurance, you’d have to pay this out of pocket (and you might not have the savings to do so). But when you have cover, the insurer pays it instead. 

Other firms are at high risk of theft or property damage. Again, you can get insurance to mitigate these risks too. For instance, tradespeople might need insurance to cover tool theft. 

Map Out Your Finances

The biggest threat to businesses in the short term is not a lack of profitability, it’s lack of cash. 

That’s why it’s so important to map out your cash flow before you get started. You need to know how much money you’ll have on hand week to week to pay for the inputs you need to keep your company going. 

Mapping out your finances can be a challenge, but also very rewarding. It shows you when you’re likely to face a cash squeeze in the future so that you can start planning immediately. Sometimes, you’ll need to approach venture capital firms to ask them to supply you with the necessary capital. 

Know Your Tax Burden

You might think that you’re making a lot of money. But when you consider your tax bills, are you really? 

A lot of self-employed individuals and entrepreneurs who set up LLCs get into trouble when they don’t do tax planning. You’ll need to pay tax on any taxable income you generate. So if your business makes a profit, you’ll need to send a chunk of this to the IRS. 

You want to avoid a situation where you suddenly realize you have a massive tax bill you can’t pay in a month. 

Put Your Business Plan Together

Many entrepreneurs wonder about the purpose of a business plan. Isn’t it just better to get on with your business without spending ages putting pen to paper? 

Well, perhaps not. A business plan is like a founding document that describes how you’d like your company to progress. It’s essential for establishing the focus on your enterprise, telling you what you should be doing by each stage. It also contains your mission statement – something you need to remind you why you do what you do. 

Choose The Right Timing

In business, timing is everything. Ideally, you want your products and services to arrive on the market at the exact time consumers demand them. If you rush in too early, the market won’t be ready, and you’ll be playing a waiting game. If you arrive too late, other players will already dominate the market. Keep tabs on how things are progressing and then launch when you see your opportunity.