By Hanniz Lam
When I began my first business in 2008, I had no idea how much I needed to start a business. I’m going to be writing about my business journey so if you’re in a hurry, just scroll down all the way till you see Blue.
I knew I had about 6 months of savings and I knew an event planning company didn’t require high overheads if I only provided services rather than rentals.
I didn’t need an office. I just needed a business license, laptop, internet, website and someone to do my taxes.
I registered my Sole Proprietorship business with SSM for RM60 per year, got a reasonable laptop for about RM1,500, internet was about RM100 a month and I paid about RM400 a year for a Wix website.
How did I get my first customers? Websites were a pretty new thing at that time so with the right keywords and regular blog updates, people stumbled upon my website.
Facebook was new too and I got some traffic from there. Online directories were quite popular then so I listed my business anywhere I could for free.
I paid my dad to do some calling to a list of companies. He has a good American accent though he’s pure Chinese so people didn’t immediately put down the phone down on him hahah!
LinkedIn wasn’t too popular yet and was viewed more like a platform to get jobs so I joined BNI, a group that meets up once a week at 6.30am till 8.30am to refer business to each other.
That cost me about RM3,000 a year if I’m not wrong. I got a few good business deals and a support system. Entrepreneurship can be a lonely journey so I found this group helpful the two years I was there.
Over the years my business grew comfortably enough to sustain my lifestyle. Taxes didn’t kill me. I then decided to invest in paying an agency to help with my SEO for two years. This helped me get more corporate clients.
Then I wanted the company to grow without my being actively involved. I know this would take me about 5 years and so I found a partner and with advice from a friend, we ventured into producing our own trade shows.
We expanded into a Sdn Bhd business so our business would have credibility and it would protect us as owners. This cost us about RM2,000 a year for a company secretary and about RM300 for the paperwork to open new bank accounts.
We also paid for more corporate gmail accounts which came to about RM200 a month. (We have now switched to Outlook which has saved us a ton of money. Hit me up if you need this service)
We didn’t make much the first year but managed to breakeven the second year. We got cheated by a client so we lost quite a bit there too. We could have hired one more manpower with that money.
However, we also got a client to sustain our business through the first year of Covid when lots of businesses shut down. Our taxes came to quite a bit that year, a shocker to us small business owners. The accounting and auditing fee stumped us too but we managed to pay with our stomachs turning.
You need to know that the taxes, accounting and auditing fees are paid the following business year when we had no actual business so it was painful.
So yes, the checklist. It may seem daunting at first, but getting on top of your company’s money matters is an essential first step of your leadership road ahead.
You’ll need to be responsible for the management, organization and registration, taxes, business license, potential lease for office space, computer hardware/software, furniture, sales and marketing, and eventually, possibly inventory and labor.
GET REAL ABOUT YOUR MONTHLY EXPENSES
This may seem like a simple at-home budget exercise, but without one, how can you know how much money is going in and coming out, and how much money you’re realistically able to put towards your company, before you have much revenue coming in?
For your initial budget, include all the big-ticket recurring items — rent, utilities, monthly subscriptions such as website, emails, internet, accounting and anti-virus software.
SET ASIDE PERSONAL AND BUSINESS EMERGENCY FUNDS
Though no one wants to give energy to those anxious worst-case scenario thoughts that pop up from time to time, you’ll need to have a plan B at all times as an entrepreneur. Part of feeling at ease about your future is having an emergency fund set aside to prepare for the mishaps that often happen in the early stages of a business.
You should have three to five months — or more if you can swing it – to cover both business and personal expenses.
Making a profit in a business can take time. When starting your business, it can take you anywhere from months to possibly a year to see a positive cash flow, so it is important to continue the course.
MONITOR YOUR SPENDING FROM DAY ONE
Since you now have your parameters, it’s vital to track every purchase.
You need to know how much it costs you to start your business, keep it running, and how much you’ll need to earn to make a profit.
You don’t want to get nine months in and realize you didn’t budget for taxes — or that if you lose that one big client, you can’t pay the bills.
A lot of businesses fail due to not monitoring their spending. Knowing how much you need to get started and how much you need to make to grow are important numbers.
You might be envious about companies who get funded and live lavish lifestyles.
It’s no use living lavish lifestyles when you need to shut your company down because instead of focusing on making money and profit for the company, you chose to show off about how successful you were in getting funded.
IDENTIFY YOUR RISK TOLERANCE
To go out on a limb and start your own venture takes courage, guts and a leap of faith. Whether you realize it or not, you have an appetite for risk as an aspiring entrepreneur, but the key is to understand your comfort level.
Many times throughout my entrepreneurial journey when my event business was slow, I ventured into other things to make side income. These are usually short term projects which add to my experience and pocket money. Learning is an ongoing journey for me. Meeting people outside my industry proved useful in building my network.
There will be times when you wonder what the heck you were thinking starting a business. Every successful entrepreneur has been there.
Take the risk, plan, plan, and plan some more, and don’t get discouraged when you stumble along the way. You’ll be surprised at how many punches you can take when you’re working towards something you’re passionate about.
One of the most impactful ways to prepare yourself for owning a business is to seek the counsel of experts who specialize in your weaker areas. Unless you come from a wealthy family or rich connections who can invest in you, you can budget for this once you start making a steady revenue and profit.
Maybe you’re an excellent writer — but numbers cross your eyes. Or, perhaps you’re great at marketing, but you draw a blank when it comes to HR or accounting and tax matters.
It’s worthwhile to hire professionals. They’ll be able to tell you what regulations you need to adhere to, give you finance and tax advice on how much you’ll need to spend, and how much you’ll need to make to run your business.
STRUCTURE YOUR BUSINESS CORRECTLY, AND BE SURE TO KEEP PERSONAL FINANCES SEPARATE FROM BUSINESS FINANCES
When you decide to incorporate and create a sole proprietorship or partnership business or Sdn Bhd, open a business banking account, too.
As much as you can, separating your personal and professional expenses (along with income streams) is a smart financial tactic.
The separation in financials makes matters a lot easier and cleaner when it is time to prepare your business taxes and properly calculate deductions
Invest in accounting software that is easy to manage for a beginner. If this is too daunting of a task, be prepared to hire an accountant that can help keep you organized, compliant and help you understand your financials’ dynamics. You are responsible for knowing your business.
SET AND TRACK YOUR GOALS
If you are quitting a job to focus on your business fully, make sure you have SMART goals: specific, measurable, attainable, relevant, time-bound. By ensuring all of your aspirations meet these requirements, you give yourself the ability to analyze along the way, regroup, make a change, and most importantly: keep going!