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Lifecycle of a Small Business: Day-to-day

Lifecycle of a Small Business: Day-to-day

Congratulations, you’ve made it this far! You’ve got a name, an EIN and an operating space. You’ve even picked out some insurance. You’re pretty close to being open for business! But what do you need to do next? We’ve compiled a list of some of the more common day-to-day goings on that a small business owner/operator may encounter. Read on below to see how to tackle these tasks and continue plunging ahead full steam toward your grand opening! 

How many employees do I want or need?  

First, ask yourself this: “Do I want employees?” If you’re not someone who works well with others or who thinks a job will only be done right if you do it yourself, then employees may not be for you. You’ll also need to consider that while hiring an employee may free you up to do the tasks you’re best suited for, hiring and training someone takes a lot of time. Additionally, hiring even one person onto your team now means that the success of your business not only solely affects you and your family, but that person and his/her family as well. You’ll also need to consider if you can financially afford to take on even one employee right now. You’ll need to decide on what a fair wage or salary is and determine if the income your business generates can sustain that wage/salary. Make a list of pros and cons to help you see if hiring people at this fragile stage of your new business is the right thing to do. The type of business you’re starting up very well could dictate whether or not you have employees. For example, if you’re opening up a restaurant, it’s illogical to think that you can cook, serve, clean and ring out customers all by yourself.  

If you’re sold on the idea of having a solid team of dedicated workers, then let’s charge on.  

It’s important to note that the number of employees you’ll need/want varies depending on the type of business you’re looking to start up. A restaurant may need 30 people, while a small fitness studio may only need a dozen or so. A good approach, no matter your type of business, may be to consider starting small. Hire a small handful of employees at the very beginning stages and gradually add more into the fold as things progress, if there is a demand for more time or increased productivity.  

Do I need an employee manual? What should I include in it? 

Yes, absolutely! Having a well written employee manual can help communicate the expectations of both employee and employer as they relate to the business. When drafting your employee manual, keep in mind state and federal laws, develop policies and procedures that reflect the company’s philosophy and size, and keep your employees needs in mind! Stay tuned for a blog on this topic a little later!  

What is a Progressive Discipline Policy? 

Progressive discipline is a policy in which the severity of the punishment increases each time an employee commits an infraction. Typically, a progressive discipline policy begins with an oral reprimand, followed by written warnings, suspensions, and, finally, termination. If a progressive discipline policy is something you’d like to enact in your workplace, be sure to outline it in your employee manual and go over it with each employee during their training or on-boarding. Be consistent with your disciplinary plan; be careful not to make any exceptions for any employee.  

Debt Collections  

It will undoubtedly happen: a customer will forget to pay their bill or not pay it in full, and you’ll be faced with the task of collecting an outstanding debt. Don’t fret; it’s not all bad. Consider these tips when you’re dealing with debt collection:  

  1. Utilize a reminder service for your clients, to help them remember when a bill is due; 
  2. Use multiple communication channels to get in touch with your client: email, phone, snail mail; 
  3. Consider bringing in a debt collection agency if the bill is long overdue. Make sure the debt collection agency you hire adheres to the guidelines set by the Fair Debt Collections and Practices Act. 

Handling debt collection often falls to the bottom of a small business owner’s to-do list. In actuality, outstanding receivables and collections can be a hindrance to the growth of your business. Be sure to have a plan in place for how to handle debt collections from the very beginning. Consider tasking a specific employee to handle all debt collections, to better ensure that you’re getting paid for the services you provide.  

Contract Management  

Efficiently and effectively managing your business’ contracts will help ensure that everything from start to finish runs smoothly and as proficiently as possible. This may be a manageable task when you’re first starting off, but as your business grows, you may find contract management to be a convoluted process. You don’t want to drop the ball on your clients, so be proactive here. Consider hiring someone or a team of someones to manage your contracts. Look into software programs that can help you streamline the process and keep everything in one highly-organized and safe space.  

If you are starting up a home improvement or other contracting business: be mindful that there are specific clauses you’ll need to include in your contracts to protect both you and your consumer. Consider reading up on a previous blog of ours on this topic. If you have any questions, consider consulting an attorney 

Consumer Protection Laws 

Brush up on the Maryland Consumer Protection Act (CPA) to familiarize yourself with the practices and policies in place designed to protect Maryland consumers from shoddy or fraudulent businesses. Not to say you are, but it would still be a good idea to make sure you’re not accidentally doing something that a consumer could file a claim against you for. The CPA focuses on a wide variety of businesses which encompass the “sale, lease, rental or loan…of any consumer goods…or services.” The Division of Consumer Protection in the Office of the Attorney General is empowered by the CPA to investigate any and all complaints made to them by consumers of the state.  

What if I want to change my entity type? 

As your business grows, your plans or views for the business may change. With all that growth and change, you may find that you need to update your entity type. From liability to tax considerations, to the number of employees you hire, there are a number of reasons why a business may need to change entity types. Regardless of your reasoning, it may be wise to consult the help of an attorney to make sure you’re not overlooking any tax or legal implications of your change.  

Maryland’s Business Express makes it easy to make changes to your business once it’s up and running. You can download all the necessary forms you’ll need to change your entity type right from the website. You may also need to update or request a new EIN, which you can also do from the Maryland Business Express website.  

What does it mean to be “Not in Good Standing” and how do I get out of it? 

“Not in Good Standing” means your business is not in compliance with one or more Maryland laws that apply to businesses and their responsibility in the state. Only active businesses can have a “good standing” status; even businesses that have been voluntarily terminated will show “not in good standing” because they are no longer active.  

To get in “good standing”, simply address your issue of non-compliance. Some common reasons that a business may not be in good standing are:  

  • An issue with the Maryland Office of the Comptroller; 
  • An issue with the Maryland Department of Labor, Licensing and Regulation;  
  • A check or other form of payment that was not honored. 

How do I handle doing business across state or country lines? 

If a significant portion of your business is handled outside of Maryland, you may need to qualify as a Foreign LLC or corporation. If you regularly meet with clients or hold other important business meetings across state lines or if a significant portion of your business revenue is earned through transactions from another state, you will need to register as a foreign LLC or corporation with that state. Each state has guidelines that a business must meet in order to qualify as foreign, so you may want to consult the help of an attorney or financial advisor to be sure you’re not skimping out on important things like taxes and tariffs.