Small business owners usually have to juggle a ton of difficult and totally unrelated responsibilities. Finding the time to research every single thing that could help your business might be impossible when you’re totally slammed. Nevertheless, there are several important elements of running a company that will definitely require a fair amount of due diligence. Exercising good due diligence will help you make well-informed decisions on your business’ behalf.
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Organizing Your Business
The way that you establish your business can have profound implications on your rights and responsibilities as a principal. You’ll need to consider whether a corporation, LLC, or partnership is the right way to register your company in the state where you operate. You don’t necessarily need a lawyer to form a business entity, but you’ll have to evaluate your options very carefully.
Your choice of entity is particularly important if you share ownership interests in your business with multiple principals. You’ll also have to draft your organizational documents with an eye for detail to ensure that they’re consistent with your jurisdiction’s statutory law. Partnership agreements or articles of incorporation lay out each principals’ obligations to one another. Rather than using a boilerplate form and assuming everything on it is consistent with your management structure, you have to affirm that every provision in your governing documents reflects your actual intent and practices.
Creating a Sales Plan
To give your new enterprise the best shot at success as you begin your operations, you have to be methodical about your sales process. Use sales research and assess consumer demand in your specific industry in order to identify the most effective ways to engage customers. In particular, you want to know which customers you should target and what you can tell them about your company’s products or services that will really resonate with them.
Ideally you’d like your sales plan to include a customized sales process. Part of the utility of creating a formal sales process is that it equips you with a template for executing each phase of a sale from generating a lead through finalizing a transaction.
In your plan, be sure to cover the resources that you’ll use to organize your outreach efforts and be consistent about customer follow-up. In addition, you should outline your sales goals. Set your projections judiciously, and use substantive research to support them.
Having a formal sales plan could prove to be advantageous when you’re seeking out funding opportunities. It shows prospective lenders and stakeholders that you know your industry and your customer. It speaks to your managerial competency and conveys that you’ve done adequate due diligence about what you’ll need to do to be profitable.
Building Credit
You know that you need to pay your bills on time in order to establish positive credit for your company, but there’s more to it than that. Monitoring your credit is fundamental to building up creditworthiness. By checking your score regularly, you’ll get a firsthand look at exactly how your spending practices and credit utilization are raising or lowering your score. Use a monitoring tool that sends you real-time alerts when your score changes or a creditor makes a hard inquiry on your score.
Learn more about strategies to raise your score, and find potential avenues to rebuild your credit if you’ve had setbacks in the past that you have to overcome. Improving your financial literacy about credit as a business owner is going to make you more savvy about expense management and practical ways to get working capital.
There are a lot of different areas that you might not be comfortable handling all research on your own and probably shouldn’t. In some instances, you may need to be prepared to seek out guidance from a managerial consultant, lawyer, or financial advisor. Ultimately, getting professional input will give you confidence that you’re taking all of the right steps to safeguard your company and stay on track for sustainable growth.