Your small business works in mysterious ways. After the first few months, when you’ve exhausted your network and the initial buzz of your launch is over, your revenue might sink a bit. It might sink so much that you question whether your business is sustainable or not, or if you have to go back to a “real job”. The down swing doesn’t make sense. Why isn’t the marketing working any more? Why aren’t you getting referrals? It’s…weird. It makes you wonder if your business is important enough to even be considered real.
Reality check: Running your business IS your “real job”. And your business is a real business, as long as you’ve made it official with the tax people and you’re actively earning revenue. Part of your job is to manage the ups and downs, and keep nurturing this strange entity that is your real, live, business.
When Your Business is Real (and When it isn’t)
I know a lot of people (especially freelancers) who don’t consider their own businesses “real” even though they work for themselves, so mindset is actually a big part of creating a “real business”. But it goes beyond that.
Once you’ve decided on a business name and registered that name with the government, you have to start reporting your business activities. Even though the process might make you feel numb, you just need to get on your boots and do it (if you think I’m wrong, just wait a couple of years until you get audited. Then you’ll see what I mean)
Does the definition of a real business have anything to do with income? Not really. Plenty of businesses aren’t even profitable, so it’s not about the bottom line either. Basically, if you’re trading something of value (whether a physical product or a service) for dollars, and your goal is to collect more dollars than you spend, you have a real business – whether your revenue is only $10,000, or $10 million.
There are also 3 things you have to do when you start a small business, that don’t take very long, but often get overlooked. These things make your business real in the eyes of the government and the internet (which eventually means your customers), and that’s just as important as your own opinion. Maybe more.
On the other hand…if you do freelance work for cash payments, you don’t have a real business. It’s not scalable and it’s technically not legal either. If you have a registered business name but you don’t offer any products or services, you don’t have a real business. If you own a domain name, it’s not the same as owning a business name – even if you make money from your web site.
Get the Boring S*** Done
If you get all your paperwork in order now – even though that’s kind of boring and you probably aren’t motivated to do it – your business will run more smoothly and you’ll enjoy it more. Don’t be left wondering in three years why you still haven’t found the business freedom you’re looking for – get yourself organized early so you can better enjoy the ride.
See, if you don’t believe you have a real business, then it’ll be hard to stay motivated to grow it and run it. But if you do believe it’s real, that’s still not enough. You have important stuff to take care of so that everyone else thinks it’s real, too.
P.S. I’m going to the U2 concert tonight…can you tell? 😉