Many entrepreneurs, such as Alex Mastin, CEO of Home Grounds, have highlighted how difficult it can be to find accurate resources relevant to small businesses:
“I quickly learned that the industry is swimming with misinformation and bogus claims. Finding the right specialists and fellow… connoisseurs took many months of research and cold calls. The right mix of experts in different departments was essential in taking the company off the ground and into people’s homes.”
The importance of small businesses to the United States economy has led to an oversaturated market of information for entrepreneurs that is confusing at best and misleading at worst. We have recently previewed findings of SuretyBonds.com’s 2021 Entrepreneurial Insights Survey in posts that examine resources crucial to entrepreneurial success as well as the importance of outsourcing to small businesses. In this post, we will work through the difficulties in seeking out reliable information and offer resources that can help answer the most pressing questions and concerns for many entrepreneurs and small businesses.
What is some of the bad advice surrounding entrepreneurs and small businesses?
Fortunately, information about the myths surrounding small businesses is almost as easy to find as the misinformation itself. In this post, Forbes tackles three misleading tips for entrepreneurs: Focus only on strengths, market yourself by telling your story, and set high goals. These kinds of narratives are misleading, partially because of their focus on the large and general at the expense of the clear and detailed. With these entrepreneurial myths in mind, this post will consider some of the more specific, nitty-gritty aspects of entrepreneurship that small businesses may struggle with.
How do I know what’s required to get licensed and bonded?
After you have taken the preliminary steps to starting a business, such as conducting market research and writing a business plan, you should research license, bond, and registration requirements. These requirements (and associated fees) will vary depending on where your business is located and whether your business activities are regulated by a federal agency, so you should devote plenty of time to your research. If you have the resources, some experts recommend hiring a business attorney to help make sure these requirements are met during the startup process.
Getting your small business registered
The U.S. Small Business Administration has helpful information on registering businesses. While some small businesses don’t need to be registered, this could mean missing out on legal and tax benefits, as well as personal liability protection.
Most small businesses should simply register their business name with state and local governments and file for a federal tax ID. Unless you want trademark protection or tax-exempt status, you will most likely not need to register with the federal government. If your business is an LLC, corporation, partnership, or nonprofit corporation, you will need to register with the Secretary of State’s office, business bureau, or business agency in the state where your business operates. You will likely also need to outsource to a registered agent service, which will receive documents and papers on your behalf, before you file. The remainder of the documents that you will need to submit will vary based on your location and your business structure.
You should additionally pay attention to registration requirements and whether or not you need to register with local agencies.
Getting your small business licensed
If your business activities are listed here, you will need to register with the federal government. Otherwise, your state will be the entity regulating your business’s activities. State licensing regulations vary, so you will need to research the requirements of the state, county, and city where your business operates. Be sure to pay attention to when your license expires, as not renewing on time could result in having to reapply.
Getting your small business bonded
Obtaining a surety bond is typically a required part of the licensing process. Even if it is not required, there are often benefits of being bonded for both customers and businesses. For example, this post outlines the financial benefits of being bonded for contractors.
A surety bond is a contract among three parties:
Principal (you): the individual or business required to obtain a bond
Obligee: the entity (usually a government agency) in charge of regulating or licensing an industry that requires the bond
Surety: the insurance company that writes and financially backs the surety bonds
Being bonded serves as a guarantee that you and your business will act in accordance to all relevant laws and terms of contracts. If you were starting a business as a contractor in Oregon, for example, you would need to submit an Oregon Construction Contractors Board surety bond and file your corporation, LLC, and/or assumed business name with the Oregon Secretary of State’s Corporation Division to gain licensure.
SuretyBonds.com offers bonds across many industries to meet a variety of requirements. To find the right bond, visit our website or call 1 (800) 308-4358 to talk to a surety expert or get a free, no-obligation quote.
How do I become an expert in a new field?
As Alex Mastin noted at the beginning of this post, resources are available and accessible in ways they have not been previously. This can lead to difficulties of navigating information in order to gain expertise. Here are some ways that new entrepreneurs and small business owners can add value to their businesses:
Despite how strenuous prioritizing education can be for entrepreneurs, the importance of lifelong learning is established and consistent across many different perspectives on entrepreneurial success. Taking advantage of the education required for licensure in certain industries can help you set good habits for continuing education later on. Services such as Contractor Training Center, which includes seminars and other educational resources for contractors, can not only help you to prepare for required license exams, but also continue to educate yourself with valuable materials and instruction. The Small Business Administration’s Office of Entrepreneurship Education (OEE) also provides entrepreneurial education tools, programs, and courses for entrepreneurs.
Find a mentor
Forbes, noting the value that mentorships can have on entrepreneurial expertise, writes that most greats were taught by other greats. Finding a mentor to help decrease the learning curve of your industry is easier said than done, however. You may need to look to external organizations to find experienced experts willing to help. These organizations/events include:
Small business groups or networks like Entrepreneurs’ Organization
Chambers of Commerce or local business partnerships such as REDI
Startup accelerators like Y Combinator and Techstars
The ways entrepreneurs can go about finding mentors go hand in hand with another strategy to gaining expertise: immersion. While online resources and readings are helpful, hands-on learning through discussions and exposure to other professionals can prove invaluable.
How do I keep track of my finances?
In a survey of small business financial health, the Federal Reserve Banks of Chicago and San Francisco linked efficient financial processes to the overall financial success of small businesses. Keeping track of your finances by using things like business accounts/cards and digital receipts will make sure you’re able to compare your business data to other businesses, identify areas to improve, and maximize cash on hand. Here are some other ways you can make sure your business’s finances are in order:
Use effective accounting processes
Being diligent in your accounting can help your small business stay organized, obtain funding, and identify new opportunities for improvement. FreshBooks lays out some advantages of careful accounting for startups, including giving owners quick glances at financial performance, easy data sharing with employees, and efficient communication with external organizations like banks, suppliers, creditors, and future investors.
NerdWallet recently compiled a list of helpful apps for small business processes such as accounting, point-of-sale, payroll, and more.
Manage bookkeeping to separate your personal and business finances
In the first post previewing the findings of SuretyBonds.com’s 2021 Entrepreneurial Insights Survey, Eden Cheng, co-founder of PeopleFinderFree, stressed the importance of balancing the growth of your business with your own mental health. It is similarly important to maintain a healthy separation of your business and personal financing. Bookkeeping–which differs from accounting in that it is a direct record of your financial transactions—can help make sure you are keeping your personal and business finances separate, ensure easy tax and loan application processes, and aid in organization.
SuretyBonds.com’s Small Business Startup Toolkit provides additional resources to help entrepreneurs grow their businesses.
Pay attention to your credit
According to a Consumer Reports investigation from 2021, more than one-third of Americans have an error on their credit report. One woman involved in the investigation found that her credit report showed a remaining balance of $1,200 on a credit card that she had paid off, which led to her not qualifying for the lowest possible interest rate when applying for a car loan. As errors in your personal or financial information are more common than you might think, double-checking your credit is an important step to making sure you’re qualifying for bonds, lines of credit, etc.
We want to hear what you have to say!
Do you agree with the responses from entrepreneurs who have already taken SuretyBonds.com’s 2021 Entrepreneurial Insights Survey? Take the survey yourself to share your experiences and help fellow small business owners learn from you!