You’re undoubtedly excited about forming a LLC and getting your business started. New opportunities, new adventures, and new challenges all await you once those doors, virtual or real, open for business. Although exciting, many businesses will fail but that can be avoided with two key actions: planning and patience.
Forming a LLC is very easy with the help of a business registration service. A little bit of paperwork and a small fee results in your business being licensed with the state where you reside. It’s quite simple and very inexpensive and it will surely not break your budget. (This begs the question, why do so many people fail to officially form a LLC with their state when it’s so simple?)
Business registration fees aren’t the hidden costs to consider. You might be different than other future business owners. Many are loaded with excitement but lacking on plans and patience. Patience gives you the ability to know the right time to open your doors and the planning gives you objective data to help make that decision. Let’s look at your budget. (You did make one, right?)
Did you consider these items?
Taxes– When you came up with how much money you’re going to net in a month or a year, did you remember to subtract your business taxes? You should budget conservatively so plan on 35% of your gross income that will have to be paid in business taxes.
Sluggish Growth– You’ll open your doors and in will poor the customers. Surely you know that a new business takes a while to get moving but how long? If you believed that it would take a year, what if it takes 2 years? What if an unforeseen economic event puts the breaks on your business? Is that built in to your budget?
Getting the Word out– Sure, you worked in advertising costs like flyers, mailings, and coupons but how about attending a trade conference? You’re going to have to fly there, register for the conference, and stay in a hotel room. How about taking a potential client out to dinner? Going to a ball game? A spa date?
The Unknown– Did you factor in the expenses that you haven’t thought of? There will be many because you haven’t started this business before. You can’t account for all the costs that will accompany this business so you have to work in some money for that. In fact, a pretty large amount. 20% to get started.
What’s the downfall of many new business owners that makes their business ultimately close their doors? Their budget is as hopeful as they are and that’s a recipe for failure. You should believe in yourself but your budget should not. It needs to be set up for the worse case scenario and that’s going to take a lot more money than you originally thought. That’s where patience comes in. If you don’t have the money saved to meet the needs of that pessimistic budget, wait a little longer to open your doors.