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Secrets to keeping your small business going

books30364900.jpgStarting your own small business is no easy task. Keeping it going is even harder. If you are worried about the future of your business, the best place to start is at the beginning. From the point that you start thinking about starting your own businesses and throughout the life of the business there are certain strategies that you can use to ensure that your business can withstand the test of time.

1. Start-up funding

It takes money to start and run a business no matter what industry you are in. Prepare early to be able to sustain your business on as few loans as possible. It is always better to save up enough money to start your business yourself than it is to depend on the loans of others. Additionally, your profits are yours to enjoy instead of spending the first few years trying to pay back what you borrowed, plus interest. Make sure that you also set aside some extra for your personal expenses. It is a lot harder to start your own business if you are worried about feeding your family.

2. Be frugal

Do with less whenever possible. If you can work out of your home from now and avoid renting out a location, do it. You should not even think about hiring employees until you consistently have enough work to keep every single one of them busy. Start out with used materials. If you can get by without something for now, do it.

3. Make sure that you are taken care of

Most small business owners start under the corporate entity of a sole proprietorship. This means that you are personally liable for all debts of your business. If someone sues your business, they sue you. If you do not protect yourself a creditor can go after your business and your personal bank accounts. Business liability insurance can protect you from lawsuits but not from debts. You may want to form a corporation or limited liability business entity.

4. Know how you will make a profit

Your business needs to make money in order to stay in business. It is not enough to cover all of your costs; you need to know how you will make a substantial and sustainable profit. Know what your costs are and how many of those costs are covered when you make a sale. Know how much you need to sell each month. Create what is called a break-even analysis and be able to explain in a few sentences the details of your money-making plans. This should be a vital part of your business plan.

5. Gain a competitive advantage

Instead of continually trying to play catch-up with your competition, focus on what makes your business unique. Some call this your trade secrets. Make sure that those you share your secrets with are contractually obligated to keep certain things confidential. Be able to react quickly if something negative happens. Have a method of research and development in place (if not its own department) so that you can continue developing new products and better ways to operate.

6. Put it in writing

Many companies struggle to obtain the money that they have coming to them because the buyers are not contractually obligated to pay. Make sure that you have a way to prove what is owed to you. Even if you are not required by law to make a contract doing so for large sums, long term agreements or the transfer of copyrights or real estate is a good idea.

7. Hire good people

There are lots of sayings that will tell you that "you are only as good as the employees that you hire." Anyway you put, the bottom line is the same. Hire good people and treat them well.

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