4 things to do when starting your business

Starting a business can be both exhilarating and daunting. It's important to have a clear plan of what you need to do in the early stages to increase your chances of success.

Here are the first 4 things you should focus on when starting your business.

Step 1 - Register the business

In Trinidad & Tobago and most parts of the world for that matter, any commercial activity is considered a business and it needs to be registered with the relevant authorities.

Registration of the business is done with the Registrar General at Ministry of Legal Affairs and it can take 3 structures: 

• Sole trader
• Partnership
• Limited Liability Company

Sole trader

The name itself gives a very big hint to what this is. A “sole” person carrying on a “trade”. This is a singular person conducting a business for themselves.  

Partnership

A partnership is a business with 2 or more owners. A simple partnership can be 2 or more sole traders coming to work together because of common interests or synergies within their businesses. A more complex model can be a law or accounting firm that is in an incorporated partnership with legal status similar to that of a limited liability company. 

Limited Liability Company (LLC)

A business that is incorporated under the Companies Act. The business identifies itself with “LTD” at the end of its name. It is on the other end of the registration spectrum when compared to a sole trader in that it is a separate legal entity from the person/s who own it. 

All business types must be registered with the Companies Registry (Ministry of Legal Affairs) and the Board of Inland Revenue (Ministry of Finance).

If you are a sole trader, your personal BIR registration number is used for the business. If the business is a partnership or LLC, a separate registration is required. 

Step 2 - Open a business bank account

Under banking regulations personal bank accounts are not allowed to be used for commercial activity. This is called commingling and it is not allowed.  But apart from not being allowed, it is just generally not a good business practice. 

If business transactions are being tangled up with personal transactions, you will never get a true picture of how the business is performing. There won’t be clear information that you can use to make decisions on the business. 

Step 3 - Do a cash flow projection

It cannot be underscored how important this step is. Now it is related to step 2 since the projection is required to open the bank account but the projection is more than just a document to send to the bank. 

The projection details how the business is going to perform. As a new business, especially a small business, cash is your number 1 asset. Without credit terms from suppliers or a bank, your obligations will need cash to be settled. 

A cashflow projection will help you plan for when cash is needed to be spent and then match it to incoming cashflows from sales activities. The aim is to have more months with “surpluses” rather “deficits”.

Surpluses means that you received more cash than you paid out. Deficits means that you have paid out more cash than you received. In the months that there are deficits, it would mean that you would either have to reach into your personal pocket or use previous months’ surpluses.

By having this type of information at the start of your business, you are better equipped to plan your activities and you cannot run a business without a plan!

Which leads me to a bonus point. 

Step 4 - Do a business plan

A business plan is the formal approach that is taken to running the business. It outlines the strategies that will be taken in sales, marketing, finance and basically every other part of the business. 

It provides a level of focus towards your business activities in order to execute the plan. Activities with such a focus means that resources won’t be wasted. Especially in the first year of business when sales are hard and money might not always be flowing, wasted efforts and resources can mean losses for your business. 

Starting your own business can be an exciting and terrifying prospect all at the same time. There are a lot of things you need to do when starting a business, and it's easy to become overwhelmed. By following these tips, you'll be on your way to becoming a successful entrepreneur!

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