{"id":5540,"date":"2016-04-04T10:48:01","date_gmt":"2016-04-04T15:48:01","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/starting-a-business\/tips-for-a-successful-small-business.html"},"modified":"2024-05-22T01:45:27","modified_gmt":"2024-05-22T06:45:27","slug":"tips-for-a-successful-small-business","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/tips-for-a-successful-small-business.html","title":{"rendered":"Tips for a Successful Small Business"},"content":{"rendered":"\n<div class=\"fl-sectionWithSidebar fl-container fl-flex fl-flex-wrap fl-gap30  wp-container-core-columns-is-layout-9d6595d7 fl-sectionWithSidebar fl-container fl-flex fl-flex-wrap fl-gap30\">\n    \n    <div class=\"fl-section-main fl-page-articles fl-section-main fl-section-main-full-width\">\n        <h1 class=\"fl-no-margin-top\">Tips for a Successful Small Business<\/h1>\n<section class=\"fl-gutenberg-byline\">\n    <div class=\"fl-gutenberg-byline-content\">\n                    By <a href=\"https:\/\/www.findlaw.com\/company\/our-team.html\">FindLaw Staff<\/a> | Legally reviewed by <a\n                href=\"https:\/\/www.findlaw.com\/company\/our-team\/robert-rafii-esq\/\">Robert Rafii, Esq.<\/a>\n                | Last updated\n        <time>\n                            May 22, 2024\n                    <\/time>\n    <\/div>\n\n            <div class=\"fl-gutenberg-byline-editorial-note fl-text-sm\">\n            <p>Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n        <\/div>\n    \n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-legally-reviewed\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Legally Reviewed\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>This article has been written and reviewed for legal accuracy, clarity, and style by <a href=\"https:\/\/www.findlaw.com\/company\/our-team.html\">FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with <a href=\"https:\/\/www.findlaw.com\/company\/company-history\/editorial-policy.html\">our editorial standards<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n\n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-fast-checked\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Fact-Checked\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>The last updated date refers to the last time this article was reviewed by FindLaw or one of our <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/contributing-authors.html\">contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please <a href=\"https:\/\/lawyers.findlaw.com\/?fli=bylinelink\" target=\"_blank\" rel=\"noopener\">contact an attorney in your area<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n<\/section>\n<p>Everyone wants their small business to be successful, but you have to learn to walk before you can run. By carefully planning and executing even the smallest strategies to help your business, you can work to ensure that you&#8217;ll survive the inevitable hiccups associated with running a small business. The following tips will help you avoid pitfalls and stay on track as you grow your own business.<\/p>\r\n<p><b><i>Form your LLC with confidence.\u202f<a href=\"https:\/\/legalzoomcominc.pxf.io\/c\/4851649\/2115288\/26746?subId1=tips-for-a-successful-small-business-in-content\" rel=\"sponsored noopener\" data-cta=\"Biz LZ - LATL Callout\" data-cta-url=\"legalzoom.com\" target=\"_blank\">Our trusted partner LegalZoom has packages starting at $0 + filing fees.<\/a><\/i><\/b><\/p>\r\n<h2>Get Your Business Plan in Writing<\/h2>\r\n<p>Business plans are essential to running a business, regardless of the size of a business. A&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/business-plan-overview.html\">business plan<\/a>&nbsp;can vary in the number of details it contains but should contain things like the history of your business, details on your logo and advertising, and the purpose of the business. It should also contain:<\/p>\r\n<ul>\r\n<li>A&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/how-to-do-a-break-even-analysis-before-starting-your-business.html\">break-even analysis<\/a><\/li>\r\n<li>A profit-loss forecast and market research<\/li>\r\n<li>A cash-flow analysis and bookkeeping<\/li>\r\n<li>Business needs and target market (potential customers and customer base)<\/li>\r\n<li>Marketing plan and marketing strategy for business success<\/li>\r\n<li>Business goals for expansion (e.g. through social media or word of mouth)<\/li>\r\n<\/ul>\r\n<p>A business plan can also help by outlining communication types, future planning, and describing how management is structured for optimal customer experience. Having a strategy for your business gives you a framework for operating with know-how and flexibility for change.<\/p>\r\n<h2>Determine How to Make a Profit<\/h2>\r\n<p>Turning a profit is the ultimate goal of operating a successful small business. A simple way of calculating a profit is to add up business expenses like rent, materials for production, employee compensation, and the personal finances involved with getting the business off the ground. Then, determine the sales amount needed to cover the cost and generate a profit. This number will be your break-even analysis number. Remember that starting small helps you recover quickly without taking on a lot of debt and can help minimize liability.<\/p>\r\n<h2>Raise Funds and Save Money<\/h2>\r\n<p>Many small business owners&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/financing-basics.html\">cover their start-up costs<\/a>&nbsp;entirely through small business loans. From there, the expectation is that the business will start paying back the loans with business profits. The reality is that new businesses can take months or years to generate a profit, and loan payments can become burdensome if the business is not making money as quickly as anticipated. Indeed, entrepreneurship requires an acceptance and understanding of the risk that businesses fail.<\/p>\r\n<p>If you can save up for start-up capital and raise funds, it could help ensure that business loans won&#8217;t sink your new business. There&#8217;s also the chance that a lender could have issues with the loan if the business isn&#8217;t as successful as initially planned and payments are missed. Savings can be the &quot;saving grace&quot; in situations where it takes a few years for a business to take flight. In lieu of racking up credit card debt, consider contacting the&nbsp;<a href=\"https:\/\/www.sba.gov\/\" target=\"_blank\" rel=\"noopener\">Small Business Administration<\/a>&nbsp;(SBA) for other types of available financing.<\/p>\r\n<h2>Protect Yourself From Personal Liability<\/h2>\r\n<p>Most small businesses are sole proprietorships or partnerships. While these types of businesses are nice and easy to form, they also expose their owners to liability for business debts and judgments. Creditors and judgment holders can come after the owner&#8217;s personal assets, like savings accounts, property, homes, and more.<\/p>\r\n<p>While&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/liability-and-insurance\/small-business-insurance-plans.html\">insurance<\/a>&nbsp;can reduce this liability somewhat, it&#8217;s worth considering the formation of a&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/the-basics-of-small-business-incorporation.html\">corporation<\/a>&nbsp;(incorporation) or <a href=\"https:\/\/legalzoomcominc.pxf.io\/c\/4851649\/2115288\/26746?subId1=tips-for-a-successful-small-business&#038;auto-aff-llc\" class=\"diy-biz-affiliate\" rel=\"sponsored noopener\" data-cta=\"Biz Auto LZ - LATL Txt\" data-cta-url=\"legalzoom.com\" target=\"_blank\">limited liability company<\/a> (LLC). These business structures will shield owners from personal liability, even though there are more rules and requirements associated with them.<\/p>\r\n<h2>Get Everything in Writing to Protect Your Business Structure<\/h2>\r\n<p>While it&#8217;s nice to do business with a handshake, there&#8217;s no substitute for a&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-contracts-forms.html\">well-written business contract<\/a>. In fact, some states require that contracts are in written form in order to be executed. While contracts can, at times, be valid when orally made, they are much harder to prove and enforce. Make sure you get all agreements in writing \u2013 it will save you time, potential legal costs, damages to your business and reputation, and more.<\/p>\r\n<h2>Keep Your Competitive Edge By Protecting Business Ideas and Trade Secrets<\/h2>\r\n<p>There are many ways to gain a competitive edge over other businesses in your industry. Your product may be better, more efficient, or convenient. Maybe you&#8217;ve mastered a way to manufacture and distribute the product with minimal costs. Or, you could simply understand the marketplace better than other business owners.<\/p>\r\n<p>The best way to hold onto your competitive edge is to protect your&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/intellectual-property.html\">trade secrets<\/a>. A trade secret is information that isn&#8217;t known to others that gives you a competitive advantage in the market. There are many kinds of trade secrets, all of which receive legal protection as long as their owners take steps to keep them secret. Those steps could be anything from marking confidential documents to requiring partners and employees to sign nondisclosure agreements (NDAs).<\/p>\r\n<p>Another way to hold onto your competitive edge is to stay proactive. If you know that your business is going to face challenges or encroachment by a competitor, don&#8217;t wait to react. It&#8217;ll help your business if you plan ahead and stay ahead of the competition.<\/p>\r\n<h2>Hire the Right Talent With the Right Hiring Process<\/h2>\r\n<p>Don&#8217;t just hire the first person to come along with the basic qualifications you need. Take the time upfront to write effective job descriptions, conduct thorough screenings of applicants, and have one or multiple interviews so you can get to know someone. The&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/employment-law-and-human-resources\/the-hiring-process.html\">hiring process<\/a>&nbsp;shouldn&#8217;t be taken lightly. Finding the right person or people can create or destroy a positive, healthy work environment.<\/p>\r\n<h2>Create the Right Kind of Employee Relationships Based on Classification<\/h2>\r\n<p>Lots of businesses try to save money by hiring people as&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/employment-law-and-human-resources\/hiring-independent-contractors-vs-employees.html\">independent contractors<\/a>&nbsp;rather than full-time employees. This can be great for a business owner as long as you file the right taxes. The IRS will impose large penalties on businesses that do not withhold and pay taxes for workers that it considers full-time employees rather than independent contractors.<\/p>\r\n<p>Some factors the&nbsp;<a href=\"https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/independent-contractor-self-employed-or-employee\" target=\"_blank\" rel=\"noopener\">IRS will look at to determine<\/a>&nbsp;whether a worker is an independent contractor or a full-time employee is the degree to which:<\/p>\r\n<ul>\r\n<li>The worker performs tasks that are essential for your business<\/li>\r\n<li>The worker only works for your business<\/li>\r\n<li>The worker works 40 hours (or nearly 40 hours) a week<\/li>\r\n<li>The worker receives instructions and training from you, and you exercise control over how the worker does their job<\/li>\r\n<\/ul>\r\n<p>Though by default a working relationship is generally considered \u201cat will&quot; across the U.S., the explicit and implicit behaviors of the parties can affect how the relationship will be construed if there is a dispute. Creating a clear &quot;<a href=\"https:\/\/www.findlaw.com\/employment\/hiring-process\/at-will-employee-faq-s.html\">at-will<\/a>&quot; relationship with your employees is also important. This means that as an employer, you can terminate at-will employees for any reason if the situation is not working out.&nbsp;<\/p>\r\n<p>There are many ways to make it clear that the employment relationship is at-will, including in employee handbooks and through initial offer letters. Don&#8217;t make any promises to employees about the length or terms of their employment, as these could bind you to a certain term of employment with the employee.<\/p>\r\n<h2>Get Your Bills and Taxes Paid On Time<\/h2>\r\n<p>It should go without saying, but it&#8217;s important to pay what you owe from your business bank account, especially when dealing with the IRS and&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-taxes\/start-up-tax-issues.html\">small business tax issues<\/a>. The IRS can impose harsh penalties and come after a business owner&#8217;s personal assets if the owner doesn&#8217;t remit taxes on time.<\/p>\r\n<p>It&#8217;s also important to ensure that your&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-finances\/business-accounting.html\/\">small business accounting<\/a>&nbsp;is accurate, completed on time, and up-to-date. This will help you stay current on your debts. Paying debts as you incur them will help you avoid being overwhelmed by cash flow problems if several debts come due simultaneously.<\/p>\r\n<h2>Get Your Business Plan Off to a Strong Start: Talk to an Attorney<\/h2>\r\n<p>Entrepreneurs wear many hats, but acting as a legal advisor shouldn&#8217;t be one of them. While you will have to get acquainted with the laws and regulations that will impact your business, sometimes it&#8217;s important to leave the details to business lawyers who handle these matters each and every day. Give your business the best chance at success and contact a&nbsp;<a href=\"https:\/\/lawyers.findlaw.com\/business-commercial-law\/?fli=dcta\" target=\"_blank\" rel=\"noopener\">small business attorney<\/a>&nbsp;in your area for help, advice, and legal protection.<\/p>\r\n<p>Looking to start your own business? Use FindLaw&#8217;s <a href=\"https:\/\/www.findlaw.com\/forms\/business-formation.html\" class=\"diy-biz-txt\">DIY forms<\/a>&nbsp;to get a legal business entity set up in minutes.<\/p>\r\n<div class=\"was-this-helpful\">\n    <div\n            class=\"was-this-helpful__question-container\"\n            aria-labelledby=\"was-this-helpful__question\"\n            role=\"group\"\n    >\n        <span\n                id=\"was-this-helpful__question\"\n                class=\"was-this-helpful__question fl-text-lg-bold\"\n        >Was this helpful?<\/span>\n        <button\n                class=\"was-this-helpful__button fl-text-sm\"\n                aria-label=\"Yes\"\n                value=\"yes\"\n        >\n            <span class=\"was-this-helpful__button-text fl-text-bold\">Yes<\/span>\n            <i class=\"was-this-helpful__button-icon\">\n                <svg width=\"22\" height=\"22\" viewBox=\"0 0 22 22\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\">\n              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