Small-business owners say they have no regrets about starting their companies, but they wish they’d done many things differently at the outset, according to a recent online survey of more than 500 small-business owners.
Even though the overwhelming majority of those in the Harris poll said they would start a small business again, about eight in 10 small-business owners said they felt unprepared at the beginning.
All of those surveyed own a business with two or more non-owner, full-time employees, less than $10 million in annual revenue and have been operating for at least five years in an ownership role.
The poll, conducted in May on behalf of the Bank of the West, found about 40% of respondents said they weren’t ready to deal with the slow times; others cited taxes and healthcare benefits among the challenges they felt unprepared for.
If you have a great idea for a small business and are toying with the idea of starting one, you don’t want to be caught off guard. Learn from small-business owners how to start off on the right foot.
Manage your cash
When it comes to small-business financing, 31% of business owners surveyed said it was crucial to separate business finances from personal finances. The majority said they funded their businesses through personal assets or other household income rather than through small-business loans. Only one in five took out a business loan from a bank.
When asked what advice they would give to those just starting out, about 22% of the small-business owners emphasized the need to manage cash flow. Most said they ensure steady cash flow by immediately billing clients for completed work or sending reminder notices to clients once an invoice has passed the due date.
Because it’s not always easy to receive payments on time, about 27% of successful small-business owners also advise new owners to maintain a healthy cash reserve. Nearly one in five said creating and sticking to a budget is also critical.
Invest in the right resources from the start
When you start a business, you want to build a firm foundation for success, starting with resources including technology, marketing and the right employees. About 15% of the small-business owners surveyed said they didn’t invest enough in technology when they began their businesses. Over one-third of respondents said they didn’t do enough marketing and promotion from the start.
Hiring the right person for the job is also critical, even if that person costs more to employ than those closest to you. About a quarter of respondents said they wished they had hired outside of their network of family and friends.
Ask for help when you need it
Three in four owners said they should have consulted an expert early on. The areas of consultation small-business owners particularly needed help with were tax and legal support, as well as marketing and promotion. Nearly one in five respondents said they lacked the tax and legal expertise they needed to effectively run their businesses. About 37% of respondents said although they were planning a marketing strategy, they wished they had consulted a marketing expert.
Advice from experts is especially critical when finances are tight, according to the respondents. Most small-business owners found the advice of accountants to be very important. For those who aspire to own their own business, 38% of respondents suggested consulting business strategists for advice, and about half said the best guidance came from a certified public accountant or attorney. Another 39% recommended seeking out financial advisors when making money-related decisions.
As successful entrepreneurs know, it’s better to ask questions early and often. Find answers to your small-business questions by connecting to an advisor here.
Use NerdWallet’s Small Business Guide to find more advice and insight for getting your own business started.
Small-business owner photo via Shutterstock.