The pandemic isn't crushing the entrepreneurial spirit. It's fuelling it.
People normally tied to a desk or working double shifts used lockdown to launch side hustles, often out of necessity. And some have turned those side gigs into full-fledged businesses.
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For instance, in the US, the world’s largest economy, 427,842 new business applications were filed in August 2021 alone. That figure was 288,026 in August 2019. Similar growth was recorded across several key economies worldwide.
While a side gig can be spontaneous, growing a legit business requires research, planning and organisation. Otherwise, your fledgling enterprise could crash and burn in a couple of years.
These basic but essential steps can help you take things to the next level and give your new venture a shot at staying power.
1. Choose a business structure
There are six common types of business entities: sole proprietorship, general partnership, limited partnership and limited liability company (LLC). The option you choose determines how your business is answerable to governments, as well as who is financially responsible if your business is sued.
Global entrepreneurs often default to sole proprietorship because it's the easiest, but it's also the riskiest, explained Nellie Akalp, CEO and co-founder of US-based corpnet.com, a document filing service that helps streamline the business formation process for entrepreneurs.
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“There is no legal separation from the company, so the sole proprietor is personally responsible for any debts or liabilities.''
Registering as an LLC or corporation is more expensive and requires more paperwork, but it shields your personal assets from lawsuits.
2. Open a business bank account
Mixing business and personal finances can get messy, especially when it comes to securing a business loan. Open a business checking account to keep business income and expenses organised and easily accessible.
Look for a business account that has low or no monthly fees and fits your business needs in terms of transaction and deposit limits.
A business credit card can also help you track expenses and identify deductions. Plus, you can earn rewards, like cash back on fuel, office supplies and business consulting services.
3. Upgrade your bookkeeping
No more manual spreadsheets scale up to an accounting software that can do some of the heavy lifting for you, like tracking cash flow, managing invoices and generating reports.
Expect a learning curve with any new system, but know that it will help your operation run more smoothly. The right accounting software can also give you deeper insights into your business and help you identify weak points and opportunities to save money.
For medium-sized businesses in the UAE, experts view the popular ones to be: Intuit QuickBooks, SAP ERP, ERP Odoo, ZOHO, Sage ERP X3, Tally ERP 9, Xero, Microsoft Dynamics AX, Intacct, Epicor ERP & Epicor Cloud are commonly used, among numerous others.
“Accounting is the language of business, so invest time and money into understanding how to do your books,” said Danetha Doe, founder of a US-based financial education platform for independent contractors, freelancers and small-business owners.
“As a business owner, learning how to manage your company's finances, read profit and loss statements, and understanding cash flows will make you a better entrepreneur.”
4. Spell out your business plan
Your side hustle may have started organically, but turning it into a full-fledged business requires research and planning.
Sketch out short- and long-term goals for your business, along with a sales plan, financial projections and potential roadblocks. Be realistic, set specific targets and spell out how you plan to reach them.
Building a business plan gives you a road map for how to grow your business. It also shows lenders you've done your homework should you need to secure a business loan.
5. Invest in professional help
Entrepreneurs, by nature, wear many hats. But you don't need to wear all the hats.
Outsourcing some aspects of your business frees you up to focus on other things, like customer service or product development.
Not hip to social media? Consider hiring someone to build and manage your business's presence on social media.
Invest in a certified public accountant as well to keep your books audited. “CPAs may be more expensive than doing it all on your own, but it will be done right,'' said John Pham, founder of a US-based personal finance website. ``Plus, they will maximise your deductions in your accounts, which will most likely give you a higher return than the cost of a CPA.''