<aside> đź’ˇ The love of money may be the root of all evil, but the lack of money is the root of nearly all failure for small businesses in Michigan. SBDC reports that up to 82% of all small businesses that fail do so because of money problems.
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Table Of Contents:
Words
Modules:
6. Business Entities in Michigan
Money is a sharp tool that cuts both ways. Money pays to keep the lights on, funds your team, and supplies the tools you use to carry out every day business. However, money also demands you think about taxes, budgets, and investors.
Fair warning: this module might make your head spin. Remember, there are a lot of people who want to see you succeed, and are willing to work with you for free. Take the time to read this carefully; if you need help, you can learn more here.
00:30 - Why you need an Legal Entity
01:40 - What is a Legal Entity
02:10 - You Options
02:50 - How to Choose
03:40 - Your Next Steps
Starting a business isn’t free. Most small businesses don’t turn a profit for the first three years. In fact, even running a business can cost you money. Having a clear idea of how much money you need for the first several phases of your business is crucial to achieving success.
These initial costs are called “startup costs”. You should consider making a list of all of the costs necessary to launch your business to ensure you have the appropriate funds to start out strong.
Creating a list of all these startup costs can be a little tricky at first, but is key to starting a business. If you want to learn more about startup costs, check out these articles by QuickBooks and Investopedia.
During our business planning module, we talked about creating an operational budget and linked you to several tools.
If you skipped that section, head back and create the operational budget.
Many businesses in Michigan receive outside funding to help them get started. Before you go hunting for money, remember these few things.
There is almost never free money without strings attached. Before accepting money, fully understand all the responsibilities and conditions it comes with.
If you are looking for a loan, you are expected to demonstrate your willingness to risk your own financial resources for the business before someone else will risk their money. In general, you should have a minimum of 20% down before you go for a business loan.
For almost every business there is a minimally viable version that you can run before spending big bucks investing into the business. This might force to think creatively, but it can be done 95% of the time and it is unlikely you are an exception.
Ensure you have fully validated your business before you start risking money.