How to Run a Business
Before you start running a business, you must have knowledge and skills in several important areas, including financial matters,business taxes, marketing and sales, insurance, distribution, employee relations and payroll, technology and computers, and more. Where do you start? What do you need to know? Where can you find help? While every detail of what you need to know to run a business can't be included in one article, you can find the major areas of business discussed here.
Where to Start - Create A Business Plan
Start by creating a business plan. Even if you don't need a bank loan or other financing, and even if you have a simple one-person business, creating a business plan helps you think through all the issues needed, like what legal type, what you want to sell, pricing, sales, and marketing, operations and technology, and financial projections.
Follow this simple business plan outline to get started on that business plan.
Sales, Marketing, and Distribution
Everything in your business is involved with sales and marketing. You need to figure out:
- Who your potential customers are
- How you will reach them to let them know about your business (through advertising and other marketing efforts)
- How much you will charge for your products or services
- And how to get your products or services distributed to or delivered to your customers.
Financial MattersA large part of what it takes to run a business is financial information. On a monthly, quarterly, and yearly basis you need to get financial information so you can see how your business is doing. You need to know:
- What your sales and expenses are, with an income statement
- The position of your company's assets, liabilities and owner's equity, on a balance sheet
- What customers aren't paying you (using an accounts receivable aging report)
You need to keep track of what bills you owe, including credit cards and bills to vendors.
And, of course, you'll need to review your business checking account and reconcile it monthly
When you start out running a business, you will need to determine what legal form your business will take - sole proprietorship, LLC, partnership, or corporation. This article discusses business types and which type might be best for your situation.
For running your business ongoing, you will need a good attorney or a firm which can handle the various legal matters that might come up, like real estate, employment, intellectual property, and general contract work. Even if you have an attorney on your board of directors, it's a good idea to have a relationship with an outside law firm. Selecting an attorney should be one of your first tasks as you start a business.
Employees, Payroll, and Payroll Taxes
If you plan to hire and pay employees, you have to know about
- The process of interviewing, selecting and hiring employees,
- New hire forms and other employee paperwork
- Running a payroll system (or hiring someone to do it) and paying payroll taxes
- Employee health insurance and other employee benefits
- And dealing with employee issues, with your attorney.
Every business needs insurance coverage. For example, you will need insurance:
- On any property your business owns
- On business assets like vehicles, equipment and machinery
- In case of business interruption
- For liability protection
- Disability insurance on yourself and other key employees
Businesses must pay many different kinds of taxes, and taxes must be paid to local, state, and federal agencies. You will need to know about all the taxes your business must pay to avoid issues with taxing authorities.
To run a business, you'll need to wear a lot of different hats, but with time you will get better at doing all the tasks required of a small business owner.
Where to Find Help Running a Business
- Other About.com guides have detailed information on many of the subjects discussed in this article. Go to About.com/Money to search on a specific subject.
- The IRS has information on starting and running a business, as it relates to taxes in particular. Go to the Small Business and Self-Employed Help Center to search for tax and financial subjects, or check out the IRS online learning resources. This article has more information on how the IRS can help you with run your business.
- SCORE is a non-profit resource helping individuals start and run small businesses, providing free mentoring; your local SCORE chapter can get you started or keep you going.
- The premier place for small business information is the Small Business Administration (SBA), where you can learn about starting a business, getting a loan, finding disaster assistance, and more. You can also contact your local SBA office for more personal assistance.