Thinking about starting a business? Here are 5 things to consider
More people are choosing to become entrepreneurs and chart a path of their own in the pandemic. In fact, one million more new business applications were filed in 2021 than in 2020 -the highest total on record- according to the U.S Census Bureau.
If you are ready to dive into small business ownership, having a plan, understanding your credit health, and building a strong foundation can set you up for success — and help you sustain and grow what you are working to build today.
“The early days of building a business are exciting and also come with many questions. I enjoy helping people figure out the roadmap and take some of the guesswork out of the first few steps,” said Chase Senior Business Consultant Kristina Sicard.
To help you start, here are some tips for those initial steps:
- Put it on paper. Every new business should start with a business plan. Even if your start with the basics, this document is a blueprint for how to build and maintain your company, which is helpful to have on hand once you begin to get into the nitty-gritty of getting your operation off the ground. This 5-steps checklist can help you take important actions before you open.
- Build and protect your credit. Knowing your credit score and how it works is a building block for your overall financial goals.
“As you start your business, it’s important to realize your personal credit score will be the key to help obtain initial capital, such as a small business credit card. Keeping it strong can help you maintain your personal AND your business’ financial health,” said Chase Senior Business Consultant Darla Harris. “As your business grows, the financial health of your business is what will allow you to access other capital and funding, yet both your personal and business credit information could be considered as part of the mix when creditors evaluate your needs.”
One tip: To build credit in your business’ name, set up a small business credit card account, pay vendors and suppliers on time, and be mindful of cashflow and liquidity, among other things.
- Separate personal and business accounts. Many business owners start their companies with their own money, but it is very important to practice the habit of keeping personal and business finances separate. Starting a small business checking account or opening a business credit card can you help you keep track of spending and will also help establish the credit profile for your business and simplify your accounting and help you when it’s time to file taxes.
- Think about expenses. Start-up costs can vary and it’s easy to get lost in the numbers. Getting a clear picture of how much startup money you will need is essential to help avoid cash-flow problems until your business starts turning a profit. You may need to hire staff, purchase equipment or get an office or warehouse space to run your company. There are many ways you can finance your start-up or small business, including a business loan, credit card, line of credit, equipment financing, and small business grants. Determining the best financing option depends on your credit score, how quickly you need the money, and the long-term effects it may have on your business. Speak with a banker first. They are there to help guide you.
- Ask for help. When you’re ready to get started or grow your business, consider having conversations with your local SBA small business development center (SBDC) which delivers free tools, counseling and training to entrepreneurs. Seek out licensed experts in banking, legal and tax who can help build your company’s infrastructure as you launch. Chase offers free workshops -virtual and in-person.
- Bonus tip: The U.S. Small Business Administration (SBA) offers information on the process of registering your business name with state and local governments. There are liability protections, contract opportunities, as well as legal and tax benefits you can miss out on by not registering your business. For example, as your business expands, you can apply to become a supplier to larger businesses.
If you are ready to start a money talk, schedule a meeting with a Business Banker or Chase Senior Business Consultant. During your initial conversation, discuss your business plan, ask for advice on ways to manage expenses and access capital, and don’t forget to ask about available resources and support.
For more tips and insight on how to make the most of every business and financial opportunity, visit a Chase branch near you.