Before opening the doors, some planning in certain areas will help you run a smooth operation. There’ll be many unforeseen events that will make you change your systems and processes as you go along but considering the basics beforehand will help save you from even more work later on. Here we’ll address a few of the areas to consider.
The most common way of delegating responsibilities is by hiring subcontractors or employees.
Whether you use subcontractors or hire employees, set up a system to screen them. Referrals from people you trust are helpful. Interview everyone you’re considering hiring and be sure to check their references. Using an employment service is a good way of having specialists help you screen the applicant and come up with a remuneration offer.
If you hire employees, you’ll most probably have to go through some red tape. In the US, you’ll have to, among other things, get an Employer Identification Number (EIN), fill out an Employee Eligibility Form and get Workers’ Compensation Insurance.
Bookkeeping & Accounting
When running a business, you’ll need to keep accurate records of your financial transactions. Not only will you use this information for your corporate taxes, employee payroll and sales tax reporting, but this information is vital as a gauge of your organization’s performance.
There are a lot of software packages out there that will allow you to do your own bookkeeping, or you may choose to hire a bookkeeper contractually or as an employee. At the risk of shamelessly pluggin this website, it’s worth taking a look at the accounting system we have available.
Corporate income taxes tend to be trickier to handle than personal income taxes. You’ll almost certainly better off hiring an accountant to take care of your corporate taxes than trying to take care of it yourself. Good accountants often offer advice on how you can reduce your tax burdern.
If you have employees you’ll have to deduct taxes and other amounts from their pay and remit them to the appropriate governmental organization. Income taxes often change from year to year, and sometimes they change more than once a year. You can choose to pay someone for this work to save you time, or you can have it do it yourself to save some money. If you choose to do it yourself, there are tools available to help you with this. This website has free payroll calculators designed to calculate the required deductions for Canadian and U.S. payroll.
Your customers are vital to your success and therefore it’s essential that you treat them like gold. Part of doing that, is ensuring you have a customer service system in place that maximizes your customers’ satisfaction. Try to delight your customers rather than just meet their expectations. If a client has a problem with your product or service, make sure it’s handled promptly. You can very often turn an unsatisfied customer into a loyal one by handling their complaint(s) promptly and professionally.
If we use an example of an online retail store, good customer service would mean:
- Responding to emails quickly (preferably the same day and definitely within 24 hours)
- Sending email feedback when an order is placed, and another when the order is charged and shipped
- Having a phone number where customers can reach a real person if necessary
- A live customer service chatroom is a good idea if possible
- Polite and courteous interaction with all clients, including the angry ones
Carrying physical inventory is a balancing act. Too little inventory, and you risk running out of stock resulting in lost sales and upset customers. With too much inventory you have your money tied up in stock for a long time rather than putting your money to good use.
In the quest to minimize or eliminate inventory, the science of inventory control has become complex. Strategies have been developed (such as “just-in-time” business) to improve performance and some manufacturers will “drop-ship” products directly to your customers. What’s best for you will depend on your situation. Experience will help you figure out ideal stock levels and if you’re just starting off, expect mistakes to be made. Nevertheless, some planning and market testing, if possible, is far better than nothing at all.
Whether you’re selling a physical good or something downloadable online, you should have controls in place to minimize theft or piracy. For physical goods, a simple check to see if you may have a problem would be to count your inventory levels regularly and compare the results with the quantities you’ve sold. This is the minimum you should do. If your product for sale is downloadable, there is a balance to be made between annoying your customers with numerous verification steps, and having your product easily pirated or illegally shared. Generally, the more niche and inexpensive your product is, the less likely you’ll face rampant piracy. In this case you can probably relax your verification procedures a little.
A Side Note to the “Do-It-Yourselfers” Out There
When starting a business with minimal resources, many owners will try to tackle as many tasks as they can themselves to save money. While this is often unavoidable in the beginning, the tasks that don’t relate to growing the business should be delegated to others to free up time for the owner. For example, as an owner, you’re better off spending your time devising new strategies to broaden your customer base, than filling out bookkeeping entries.