After the pandemic of 2020, millions of working adults chose to go into business for themselves. Many of them started family firms, sometimes called mom and pop businesses. While only a minority of new commercial entities are family owned, there are distinct advantages to this form of enterprise. The first step for entrepreneurs, who are usually married couples, is to select the industry and niche that is most suited to their preferences, talents, educational background, and experience. How can this unique form of entity make the most of the upcoming year?
The second step is to make sure that all funding needs are met before launching the new company. Never skimp on financing, especially in the early months of operations. To ease the burden of financing, you may wish to keep your startup costs low. Choosing to hire equipment, such as using a laptop rental service rather than buying right away, will help to minimize your initial outlay. Additionally, it's imperative to obtain reliable legal advice before forming a family-owned company. There are some features of mom-and-pop enterprises that call for special attention, especially for owners who intend to employ younger children as part-time workers. However, there are advantages, namely being able to use the family-owned terminology in advertising literature. Don't forget to establish a solid business credit rating by paying all bills on time. Here are details about some of the most effective ways to make your family business a success.
Choose the Right Niche
Keep in mind that some niches lend themselves to the mom-and-pop model, and some don't. For instance, online e-commerce stores are an ideal choice for parents who want to work together and bring their young children into the organization on a limited basis. Also, lawn service and landscaping firms are easy ways for couples to earn a living together. However, unless both partners have similar educational backgrounds, it's difficult to operate consulting or highly technical companies as family-run enterprises.
Get a Small Business Loan
The pre-launch phase is not the time to get overly frugal. Instead, if you don't have enough cash on hand in savings accounts to finance the startup, apply for a loan to cover the entirety of your fiscal needs. Ironically, far too many entrepreneurs in every industry either procrastinate about applying for loans or prefer to take the frugal approach, which tends to end badly. A number of startups turn to Accion Opportunity Fund small business loans to acquire the financial wherewithal to cover all those unexpected expenses that pop up before, during, and immediately after opening the doors to a new firm. To get the funding that can make your entrepreneurial dreams come to life, apply for a small business loan before going forward with any other plans.
Get Reliable Legal Advice
The family-based entity has a few unique legal characteristics, which is the main reason you'll want to get competent legal advice. This is particularly true for couples who intend to let their children work for pay in the enterprise. Be sure to do all the paperwork that goes along with establishing the entity according to state laws. Don't be overly concerned about legal expenses because most lawyers who specialize in commercial law can get a new organization up and running in a short period of time. Most lawyers if they offer fixed rates for mom-and-pop setup, which includes all the relevant paperwork and state filings.
Use the Family Advantage in Marketing
Don't forget to use the term family-owned in your marketing and promotional materials. Some consumers prefer to buy from such companies under the assumption that they'll receive better service and higher-quality goods and services. Whether that is true or not is up for debate, but the fact is that a large percentage of your customers will seek you out because you run a family company.
Establish Solid Commercial Credit
Make an effort to build up your commercial credit score. There are several ways to do that. First, make deals with vendors who are willing to extend a small line of credit. Then, pay every bill early. Apply for a secured business credit card that offers a modest balance and reasonable fees. Make sure the secured card company reports to all three major bureaus. Remember to clean up your personal finances first. Some lenders want to see that you have decent credit as an individual before extending credit to you for large projects. Finally, set up two bank accounts, checking and savings, in the company's name.
