The financial and legal steps involved in starting a small business

PHUKET: To pick up from where I left off last time, let’s discuss the financial and legal steps
involved in starting a small business.

Plan your financials: Whether you are putting in a couple of months’ salary, or your entire life savings, finances need to be properly laid out. Many of us make the mistake of putting in too much or too little at the start, and fail miserably in generating returns.

It is also vital to plan cash flows, that is, the daily running costs of your business. When starting out, costs of fixed assets, current assets and operations need to be calculated before and after expenses, so that you can foresee your requirements at least a year into the future.

I have seen several cases where people have put in all the hard work needed to succeed, but failed only because of poor planning.

Legal formalities: When registering your company, you will need to mention whether you want to work alone or in a partnership. When working alone, you won’t be answerable to anyone and you get to keep what you earn. However you will be responsible for every loss your business might incur.

A partnership can be good for those who want to be more careful with their money as well as their ideas. The ‘two heads are better than one’ theory is applied in this one.

Zohaib Sikander is the Business Editor at the Phuket Gazette. He has a degree in entrepreneurship and operations management. Drop him a line at zo@phuketgazette.net.