Many people are probably familiar with the idea that they want to be their own boss and become entrepreneurs. Or put their skills to work alongside their main job and earn a little extra money while working as a small undertaking. Marko Kiisa, Head of SME Financing at LHV, gives advice on what one should keep in mind when starting a business.
In and of itself, starting a business in Estonia is a breeze. You should find a suitable form of business, choose a business name and area of activity, and then you can register the company electronically. It only takes about 15 minutes. However, in order for everything to go smoothly and effectively from there, and to avoid unpleasant surprises later, it is worth giving thorough consideration to some things.
Business plan
A strong business plan is the basis for every company’s success. On the one hand, it is a reflection and guide to all the details for oneself, on the other hand it acts as a basis for reliability if, at one point, it is necessary to obtain additional financing from the bank or to find partners for the company.
It is important to have a thorough knowledge of the relevant market. Think clearly about who your target audience is, who are the main competitors, what are their strengths and weaknesses, and what is your unique selling point, or the secret to success. Find out how the company makes money, i.e. where the income comes from and what the costs of doing business are, regardless of whether you are selling products or offering a service. It is common to start a small undertaking as a sideline to your main job, offering services with practically no costs involved.
The team
The backbone of every company is its team. Therefore, when starting a business, it is very important to find the right people to surround you and set up their roles. Key individuals should have the specific skills and strengths with which they create value for the company. Determine who is responsible for what and how they contribute to the development of the company. Too many people sharing similar characteristics don’t always make for a good mix – it’s helpful if you have people with analytical, strategic as well as sales-oriented skills on the team. The main thing is to make sure that everyone knows their role in order to avoid situations where some contribute significantly more than others.
Management of the company
When becoming an entrepreneur, it should be made clear that company registration and business activities also entail certain obligations such as accounting, timely payment and issuing of various invoices, preparation and submission of annual reports, etc.
The latter is particularly important in light of the recent mass deletion of companies. In particular, the state has begun to delete companies that fail to submit their annual report on time. However, the bank also has to terminate the contract with a deleted company, which in turn means that in the case of a lease or loan, the contract will be cancelled and the entrepreneur must immediately find the amount in order to repay the loan balance. Another problem is companies that have purchased some services or goods but have been deleted by the state within the period set for payment. There may even be money in a bank account, but if the company has been deleted, the money can’t be used. Therefore, it is worth keeping your company’s finances and paperwork in order.
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