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New Business Startups

Be a Successful Startup Business

Unlike established businesses, startup businesses have no track record, no credit history, no inventory, and no accounting system in place.  With the introduction of Quicken in 1991, many startup businesses began purchasing this bookkeeping system as a mean of organizing their records while saving the cost of hiring a bookkeeper.  Shortly thereafter, Intuit introduced a more robust accounting system called Quickbooks.  Today, Quickbooks is used by thousands of small business owners in a variety of industries.

Unfortunately, purchasing an accounting software package does not assure the users that the information is correct and properly categorized.  In fact, in 2010 the IRS purchased thousands of licenses to assist in the audit of individual company's such as yours.  IRS regulations allow agents to request and receive files created by Quickbooks. 

One of the biggest challenges new startup business have is record keeping and how to classify transactions.  Additionally, here are some tips to help businesses at inception:

Establish a budget.
Budgeting and PlanningA budget is important for several reasons.  It provides a roadway for success.  Look ahead; Where do you expect this business to be in 3, 5, or 10 years?  Most business fail with the first 5 years.  Set goals.  But be realistic.  This is not the time to gamble.  Assess your market share.  What makes your business unique?  How will I establish a presence in my market?  Have I explored all important resources applicable to the product or service I intend to provide?  If you haven't answered these questions, you haven't done your homework. 

Develop a team
If you haven't overhauled an engine, don't take it apart.  Your team of experts should consist of an attorney, CPA, insurance agent, and banker.  By doing so, you lessen the risk of failure because you have taken important precautions before spending your life savings.  Remember; you get what you pay for.  Find the experts who have been in business for a long time and are able to give you an objective opinion.  Shy away from friends and neighbors who you might think are doing you a favor.  Inquire of various professional organizations such as the American Bar Association (ABA), the Minnesota Society of CPA's or the American Institute of CPA's.  These organizations have stringent ethics rules to protect the public.

Monitor your progress
Once you've established a budget and developed a plan, do a checkup, and possibly a tune-up every once in awhile.  Treat your financial success as you would your physical health.  Make sure your income and expenses are comparable to others in your industry.  It makes it much easier if you are in need of a bank loan and you expect the banker to understand your information. 

Establish a format that helps you operate your business.  And make sure your budget and actual numbers are compared on a routine basis.  Many small businesses analyze their business at a minimum of once every quarter.  This not only gives them an insite on how profitable their business has been over a short time span, but also allows owners the ability adjust any tax liability and minimize surprises at year end.

In all there years I have been in business, I have yet to see a sure fire way to eliminate these necessary steps for succeeding in business.  How you establish your business and who you involve in it's success will determine if your's is one of the 80% that fail or 20% that succeed.

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