Setting Up a Business Without Sabotaging Yourself in 7 Clear Steps
Setting up a business without sabotaging yourself— these 7 steps will help you avoid common pitfalls if you are thinking about starting a business. It is an exciting thing to start your own business, however, there are so many details and things to think about and ways you can get in your own way.
While there are many individual steps, also, there is a simple structure that all businesses need to engage with before becoming a viable entity.
The following article gives 7 steps to setting up a business without sabotaging yourself.
1. Create a Clear Mission Statement
A mission statement clearly states what your company is doing and why. One of the ways companies and owners sabotage themselves creating their mission statement is that they formulate elaborate mission statements that encompass all sorts of company values. As a result, it gets so idealistic and cumbersome that no one can remember it or articulate it well.
A mission statement needs to be so simple that it can be remembered by every member of the company. Similarly, it needs to be so easy to understand that the customer immediately gets why you do what you do.
Often, a company will have an internal mission statement, with some quantifiable metrics. For example, “We will get a walker into the hands of every elderly and disabled person in the United States by the year 2025.”
The Outward and Inward Mission Statements
Usually, there is also an outward facing mission statement that explains the “why” of the business. For instance: Our mission is to get a walker into the hands of every elderly and disabled person because everyone deserves to have mobility and quality of life.
The internal mission statement clarifies “what,” to “whom,” by “when” (a date on the calendar). Similarly, it helps keep your team motivated and it is exceedingly clear what they are supposed to be working on and toward. The external mission statement helps your customers know how you can serve them. In other words, it tells them WHY you want to bring them this service.
Importantly, it follows then that creating a clear mission statement is an essential step toward setting up your business. Emphasis on “clear.” In other words, don’t sabotage yourself by getting too broad and not focusing on the correct activities to help you succeed. With a clear mission statement, your team and your customers know exactly where to put their focus.
If you would like help creating a mission statement, consider hiring a Business Made Simple Coach.
2. Define a product offering
In this paragraph, I want to talk about how to not sabotage yourself with your product offerings. Many companies struggle to narrow their focus to a specific and clear product offering. For example, they have a vague sense of what they offer, or they offer too many things. Moreover, then the marketing and messaging gets a bit mushy.
I heard one billionaire entrepreneur say the other day: Create your marketing materials first and then create the product. I believe he knows that until you can describe it succinctly to others, you will struggle to create the item with the focus that it needs.
Above all, get very clear about as many of the variables about your product as possible. Firstly, Is this a physical product? A digital one? Or maybe even both! It can be a service or a thing. Secondly, as you become more defined in your product offering, everything else also falls into place like your marketing, your budgets for production, your hiring needs, etc.
Clarity is always your friend and lack of said clarity is one of the common ways owners, CEOs and marketing departments sabotage the over-all effort.
3. Define your pricing and payment terms, and other variables related to your customer.
Remember what I said about clarity and the product offering? This holds true for the other variables related to your customer as well. Check out my article regarding improving your customer’s journey for a more in-depth look at this topic. However, in this paragraph, I want to help you avoid sabotaging your customer service efforts specifically.
How clear are your payment methods? What will you charge? How will you get paid? Will there be any exceptions? What will your guarantee be? Do you know what your refund policy will be? What will your direct customer service look like? All of these things are part of the pricing and payment umbrella and they each deserve their own section.
The latter questions will be discussed in a later article—the bare bones of this is that you have to decide what your pricing is and how you will collect money. Here’s an interesting question: will you accept cryptocurrency? This isn’t a big deal quite yet, but I believe it is going to be on in the near future!
It goes without saying that this can get tricky if your product is expensive—will you allow people to make installments? What happens if they pay for part, but not all of the purchase price? If this is a subscription, and they ask for money to be refunded months after the fact, because they didn’t use the service—all of these contingencies eventually need to be hammered out. This is a vital step to setting up your business without sabotaging yourself, and failure to have clarity here (i.e. making exceptions for everyone and deciding on the fly) is one of the ways businesses sabotage their schedule and energy.
4. Define the forms and templates you want to use and then create them.
Hooray for some nice concrete parts of the business that many people enjoy, because it feels like they are DOING something!
However, depending on the kind of business you create, you may want a proposal template. First, you will want an invoice and second, a receipt template. Third, depending on the product, you may need a contract template.
There are many free resources on the internet, so I suggest you look at several before you decide on the forms you need to utilize. Above all, this section gets you to think of these things ahead of time and create them before you need them, so that you aren’t scrambling as the need arrises. Similarly, the template is to keep you from having to reinvent the wheel each time.
This is a fun activity where you get to put your name and your logo on these documents and it feels like, wow! You are getting somewhere with this business. This is one of the fun steps to setting up your business!
My one caution here is to avoid investing too much time and resources into this, because the likelihood of it iterating quite a bit at the front end is high. I wish I had back all the money invested in URLs for my fictitious companies. Give yourself permission to work out some of the kinks before you invest heavily in design and logos.
In 5. Get your legal forms filled out and submitted.
In this paragraph, let’s discuss legal forms. Some people would say that this is the first step to setting up your business, but I’m going to disagree.
A lot of iteration that happens in business. In addition, when you set up your company with the government, there are many choices you have to make at that juncture. Name, website url, etc. Part of the reason the government has a DBA (doing business as) category is that it is a PAIN to change all these forms and names and tax IDs—but often, people realize later, down the road, that they need to change their name. In addition, they don’t want to create (and pay the fees) for a whole new business entity.
So, my recommendation is to spend some time really honing in on your mission and your product, before you make it legal and official. (However DO make it legal and official before you start selling products!).
Business Cards and the Like
I know business owners who have spent a small fortune on business cards, letter head, website development, all to change it and go through the whole process again, because they have shifted their focus or changed their name. The business cards and physical items are very fun, because it makes it feel like the business is up and running and viable, but really, until you sell something, this is a bit of an illusion. Get very clear, then register your business, then order the logged apparel.
Here is a place where people sabotage themselves at the front end: They try to DIY everything. Talk to your tax guy about the forms that are necessary for your type of business and your location. If anything involves large sums of money, pay the $300 / hour for short session with an attorney who specializes in business. The DOES make a difference in the long run and it will save you time and money down the road.
6. Determining the banking tools you need is a critical step in setting up your business without sabotaging yourself.
Want to know a large sabotag-y no-no? Mingling, co-mingling, mixing business and personal finances. Yes, I know you know. And I also know you do it, as do many people, especially at the front end of a business.
In this paragraph, I’m going to hound you to keep your business finances separate from your personal ones. The point of business (besides altruistically providing a service for other humans) is to make money! And nothing gets messier than having co-mingled accounts. As your business grows it gets so difficult to see accurately what is happening when there is no clear separation between personal and business finances.
Of course, a business bank account separate from your own checking / savings account is a must! However, many new entrepreneurs let everything co-mingle in the early stages of their business. I would say, once you have the business as a registered entity, give it a separate bank account. In addition to making things easier for you, your tax person will thank you! (And if you are your tax person, you will thank yourself too!) Lastly, this removes so many headaches down the road.
Next, you need to establish an account with a method of taking payments (like square, etc.)
Finally, I would suggest reading a book like Profit First or looking into something like Business Made Simple—they have a simple accounting method that helps you make sense of the money coming in and going out of your business venture. Also, keeping finances separate allows you to more accurately monitor your cash flow.
Check out my article on Cash Flow for a more in-depth look at this topic.
7. Determine where you will conduct your business, aka “do I need an office.”
You need to determine where you will run your business. Do you need to rent an office? Perhaps. However, if you don’t need to rent one immediately, this is a great expense to save for later. For instance, since the 2020 pandemic, many business that formerly thought they needed a physical location have since discovered that they actually don’t. Consequently, they have saved thousands of dollars by not renewing their lease.
One of the ways I see young businesses sabotage themselves is by spending more money than their business can support. It is easy to think that you will begin earning revenue quickly (and perhaps you will). However, I have seen companies raise large amounts of seed money (i.e. in the millions) and still run out of runway before their product is finished or launched. If you don’t have to rent an office, don’t. Cut costs by renting a less expensive office, if you can. Or see if you can get a shorter lease in the event cash flow becomes an issue. Hope for the best, but plan for the worst. Jim Collins (in Good to Great, called this productive paranoia).
In conclusion, with the early stages of a business, you need to keep your overhead low, so that you don’t find yourself running low on cash. In other words, this is one of the early killers of new business and one that creates a tremendous amount of stress for the owner.
Summary: here are 7 Steps to Setting up a Business Without Sabotaging Yourself:
- Create a clear mission statement.
- Define a product offering
- Create your pricing and payment terms, along with other variables related to your customer.
- Define the forms and templates you want to use and then create them.
- Get your legal forms filled out and submitted.
- Determine the banking tools you want to use is a critical step as you set up your business.
- Determine where you will conduct your business.
If you begin with these 7 steps to setting up a business, you will be well on your way.
If you would like help with any of these, consider hiring a coach! At Leavebetter.com we believe that everyone should be able to win in business and in life!
If you find this helpful in the functioning and success of your business, consider hiring LeaveBetter for some additional coaching.
There are many other topics like these in key realms of business development that are strategic to the ongoing development of your business and life.
Reach out to me and we can get started working on that, or on your personalized Life Plan. As a certified coach and therapist, this is what I do best: helping people like you achieve the skills you need to reach your next level in your business and life.