Financial planning: Steps to take when starting your business

Finances can be a daunting topic when starting up a new business. It can be hard to know where to start or where to focus first. We work with a lot of entrepreneurs and established business owners and encounter common start-up questions. 

Below are a few critical steps to take when creating your business entity and developing your financial strategy,

1. Start with a Business Plan

Having a business plan is the foundation of any entrepreneurial journey. A well thought-out business plan helps outline strengths and challenges in your venture, growth path, and financial roadmap. Having a developed business plan can also open new business owners up to opportunities for funding, like grants, which often require a business plan to be submitted when applying.

 Get familiar with what goes in a business plan. Do your research, identify your target market, and think through all potential expenses involved in starting and operating your business. It’s essential to be realistic about what you need, including startup costs like inventory, permits, and marketing. If you’re currently employed, don’t quit your day job just yet. Ensure that your new business can meet your financial needs before making a final decision.

 There are templates online to get started and you can work with our local Columbia County SBDC to develop one that’s market ready.

2. Choose the Right Business Entity

The structure of your business affects your taxes, legal liability, and operations. Choosing the right entity—whether it’s a sole proprietorship, partnership, LLC, or corporation—is a crucial decision. 

As Haley Starkey with Beyond the Forest shared in the June column, she wished she’d connected first with an accountant who works specifically in structuring businesses. “There were certain tax codes and benefits I didn’t know about when I structured my business myself,” Starkey said.

A good place to start if thinking about what’s best for you is to consult with a Certified Public Accountant (CPA) or tax attorney who can help you understand the tax implications of each entity type, allowing you to choose the best option for your financial goals.

3. Register Your Business Name and Apply for a Local Business License

If you’re not planning on using your first and last name as the business name, you’ll need to register your chosen business name with the state. This step ensures that your business is recognized legally and allows you to operate under that name. It’s an essential part of formalizing your business and establishing your brand. 

Visit the Oregon government site for details. Also make sure and register your business within your town even if it is a 1099-driven services business from your home.

4. Establish an Operating Agreement or Bylaws

One question that takes considerable consideration is how to structure your company. These can be hard questions to ask and work through especially if entering a partnership. If the latter, get well-versed on operating agreements or bylaws to clearly outline business responsibilities and decision-making structure. Addressing these topics up front will save a lot of headaches in the long run.  

5. Celebrate the Small Wins

Starting a business is like riding a roller coaster—there are ups, downs, and unexpected twists. You’ll likely encounter long hours, hurdles you didn’t anticipate, and exciting moments of progress. As an entrepreneur, it’s important to celebrate the small wins along the way, no matter how small they might be. Some days the win is just making it through another day of business. Whether it’s landing your first customer, hitting a financial milestone, or even just completing a challenging project, recognizing these moments helps maintain momentum and can be critical for maintaining morale. Celebrating those small victories can keep you motivated and remind you of the progress you’re making, even during the tough times.