Tips for Small Business Success

We live in an entrepreneurial culture. For better and worse, being one's own boss is the new American Dream, and the pandemic provided the push that many of us needed to branch out and do our own thing; to slow down, step back, and reevaluate the way that we prioritize our time. YOLO, baby! So why not make the most of it and finally start that business you've been dreaming of? But starting a business and running a business are two very different things. You might love to grow flowers, but if you don't have an understanding of, or an interest in, budgeting and cost control, calculating profit margin, insurance requirements, tax regulations, and HR (to name a few), you probably shouldn't be starting a flower farm.

According to the US Bureau of Labor Statistics, around 50% of small businesses fail within five years. But by following these four tips, you're much more likely to remain in the other 50%. 

*Please note that I am not an attorney or financial advisor, but a fellow business owner who has made some frustrating, avoidable mistakes over the years, and has learned a lot along the way.* 

1. Hire An Accountant 

The single best thing that you can do as a new business owner is hire an accountant before you start your business. Don't wait until you think you need one, because you need one now. A skilled accountant (or the right bookkeeper) can ensure that you have all the necessary tools in your toolbox from the get-go by assisting in business formation, establishing business financial processes, and organizing tax preparation and management. 

Right after starting our first business we received a small grant to hire an accountant to help set up our Chart of Accounts in QuickBooks. A few minutes into our initial meeting he pointed out that I had registered our business incorrectly. In short, it was advantageous for us to dissolve our brand new Multi-Member LLC and register instead as two separate Single-Member LLCs, due to the nature of our business. This is also when he explained to me the distinction between tax evasion and tax avoidance. One is quite illegal while the other is essential, and it's an accountant's job to know the difference and help you improve your financial literacy as a business owner.

Having your business's Chart of Accounts set up accurately from the very beginning is important because it ensures that you're prepared to file taxes correctly in the first year. It will streamline annual tax prep and enable you to generate accurate and organized  financial reports (Profit & Loss Statement and Balance Sheet) which are necessary for applying for grants, business loans, and updating your business plan. Furthermore, several big decisions are made in a business's first tax year which have lasting effects, such as establishing your fiscal year, deciding whether to account on an accrual- or cash-basis and whether to take the standard mileage deduction for the business use of a vehicle or to calculate actual expenses. The peace of mind that comes with working with an accountant from the very beginning of your business is absolutely worth the investment.

The best way to find your person is through word of mouth. Recognize others in your industry who really seem to have their act together, and ask them for the name of their accountant and/or bookkeeper. And if that individual isn't taking on any new clients, they'll likely be able to connect you with another who is.

I suggest you check out this article by Kate Strathmann at Wanderwell for more information on accountants and bookkeepers, what they do, and why you need them.

You know that important business related task that you've been avoiding? Just do it. Do the thing. You won't regret it. 

It is easy to get intimidated by big administrative and financial hurdles. The unknown can be daunting, and the fear of doing something incorrectly can keep us from tackling those crucial items on our to-do lists. But these easy-to-avoid tasks are often the most important, and their delay might mean that your business is not compliant with state and federal regulations. For example:

• You pay your employees cash under the table, maybe because you're a small operation or just don't want to deal with the hassle and expense of figuring out how to put them on the books. Not only is this illegal (you're technically committing tax fraud), but you're doing a disservice to yourself and your employees. Your employees are not contributing to their social security, and their income is not recorded anywhere, meaning that they don't have a proof of income to show when looking for housing or applying for a loan. As the employer, you are unable to claim the business expense/loss of those off-the-books wages, plus your business is not protected by a worker's comp insurance policy. No workers comp insurance in place means you are one accident away from losing it all.
• The solution: ask your accountant to assist you in finding a payroll processor, such as Gusto, Onpay, Paychex, or Quickbooks. It's so easy to get started! Then, work with your insurer to obtain a worker's comp policy and register as an employer with your state's Department of Labor, and you'll be following the rules and issuing paychecks in no time! 

• 
  You host events on your farm, or open up now and again for U-Pick Flowers
  without the necessary liability insurance. Perhaps it started out quite small and has grown or it just feels super low-risk? Well, it’s very risky indeed, and definitely not worth it. 
• The solution: contact your insurance provider and get it done. Be honest with your agent about the types of events that you're hosting and all of the associated risks, and they'll be able to determine exactly what you need. Yes, you'll be adding to your monthly insurance premium. But when you have a customer slip and fall on your property, or a toddler gets bitten by a pig, it'll all be worth it.

• You sell potted plants without a nursery license or seeds without a retail seed dealer license. Why? Maybe you're a small operation and don't think it's all that necessary (and if your sales are low enough, it might not be), or you just don't know where to start with the whole process. But this is an instance in which it is better to ask for permission than forgiveness. You want the folks at your state's Agency of Agriculture to like you, so stay in their good graces by following their rules. 
• The solution: this is an easy one, simply a matter of filling out a form and mailing in a check. The forms can likely be downloaded from your state's Agency of Agriculture website and the fee will be nominal, depending on your state, then they'll mail you a certificate and you're good to go! Don't forget to renew as needed (though, they're very good at reminding you when it's time to renew).

• You're in your first couple years of farming, but still a small operation. You hope to grow it into a profitable enterprise that can support you and your family, but you have not yet taken the steps to register your business and make things "legit" because you don't think you're big enough to justify the hassle. 
• The solution: go legit! If the plan is for your business to become anything other than a little side gig or pet-project, you should consult with your accountant or business advisor about which business structure is right for you (most likely a single-member LLC) and register with your Secretary of State's office. There are a few steps to this (complete your Articles of Incorporation, designate a registered agent, etc.) but it's all very straightforward and you're more than capable of figuring it out. I promise. You'll also need to obtain an EIN; this is your Employer Identification Number, which acts as your business's social security number, and is essential for conducting all sorts of business dealings such as paying taxes, hiring employees, opening business bank accounts, and creating accounts with wholesalers (such as Farmer Bailey).

This might all sound quite scary and intimidating, but fear not! Remember that you are not alone, and lots of folks are in the same boat trying to figure all of this out. And most importantly, know that there are people and resources in place to help you through every step of the process. 

You're ready to move forward on some of the big action items on your business owner to-do list. But where to start? Ask for help! This might seem simplistic, but it's easy to feel overwhelmed by ignorance, weighed down by all that you don’t know as a new business owner. It’s a steep learning curve, but it’s really just a matter of tackling one thing at a time. Don’t be afraid to ask seemingly dumb questions. It is cliche but true that the only dumb question is the one you don’t ask. Whatever question you have right now, at this moment, it can be answered by someone sitting by a phone (or computer) whose job it is to answer that question for you. So make the call!

It’s critical to ask for help from the right person, and that person typically isn’t a stranger in a Facebook group, particularly when you’re looking for business, legal, or tax advice. I really can't stress this enough: it’s always best to go directly to the source rather than take anecdotal advice from friends and strangers. What worked for one person will not necessarily work for you; this could be because they live in a different state, have a different business structure, or because the rules have changed since they figured it out. There is also a good chance that they just don't know what they're talking about. For example: I was recently doing some work in a cafe, and next to me there was a college aged woman interviewing a local small business owner for some sort of project. The interviewer has a small business of her own, and at one point the interviewee said "Yeah, you should probably get your LLC someday, but I think it's something like $500 per year to maintain, so you might want to hold off for now. It was cheaper back when I got mine 20 years ago, but I heard it's pretty expensive now...". Then the young woman nodded, said "oh wow. Yeah, ok" and the conversation moved on. It is my hope that she went home and visited the VT Secretary of State website, where she would have learned that it costs $135 to register an LLC, then only $35 a year to maintain it from there. 

Seek out resources for more sustained hands-on help as well, such as the ASCFG Mentor Program, which pairs seasoned flower farmers with rookies for two years of mentorship and regular communication. 

In our early days of farming we connected with the Intervale Center in Burlington VT and enrolled in their Beginning Farmer Program, which offers information, assistance, and encouragement to beginning and aspiring farmers in the state of Vermont through one-on-one coaching and business planning, all for free! We asked them to help us develop a better understanding of farm financials, and were able to work closely with a farm business advisor to write our first real business plan. It wasn't easy to find the time to drive two hours each way for our regular meetings, or to complete our homework assignments, but the tools that we acquired through this process completely changed the trajectory of our farming careers. It was also through this program that we received the grant used to hire our accountant, who has since become a trusted business advisor, tax preparer, and is now the staff accountant for Farmer Bailey.

Now I’m not just talking about asking for business help. Running a new business can be demanding work, and it’s all too easy to spread yourself too thin. We tend to glamorize the 16 hour workday, thinking that if you’re not working yourself to the bone everyday you must not want it bad enough. But if you’re running on fumes, how can you possibly have anything left to give to your family, your business, and yourself? No, take time for your physical and mental health, and ask for help whenever and wherever you need it. 

Back when we were vending at three large farmers markets per week while also doing wedding work and running a bakery, it was impossible to keep up with housework, especially with a team of employees (and their dogs) coming in and out of the house all day. It was a tremendous source of stress, so we hired a housekeeper to come in every other week to help us stay on top of tidying. She charged $120 per visit and it was one of the best investments we could have made.

You can do this! But you can’t do it alone.

You've hired an accountant and jumped through all of the necessary hoops to register your business and get legit. You have a system in place for staying on top of your bookkeeping, and you've consulted with industry leaders to answer all of your questions and provide some clarity and insight on your path forward. Excellent! Now it's time to make money, and it is your responsibility as a business owner to stay abreast of your business's financial health by tracking your expenses, keeping accurate sales records, and taking the time to calculate your profit margin.

In order for your business to succeed it must of course make money, otherwise it would just be a hobby. You became a flower farmer because you love to grow flowers, and you'll remain a flower farmer by thinking strategically and maintaining a business mindset.

While attending an ASCFG conference a few years ago, Bailey got to chatting with a farmer who absolutely loves to grow the more specialty cut flowers like ranunculus and lisianthus, and she can grow them very well. However, her market only wants things like sunflowers and zinnias; she can sell thousands of sunflowers per week but can't sell a stem of lisianthus to save her life. But this isn't a passion project for her, it's a business. She has embraced her role of Sunflower Queen, prioritizing the profitable crops out in the field while reserving her true loves for her pleasure garden up by the house. Don't forget about your hobbies and other interests outside of work. Not every passion needs to be monetized.

Similarly, as part of our business planning and deep dive into farm finances with our consultant at the Intervale Center many years ago, we created an enterprise budget for our pastured pork operation here at Ardelia Farm & Co. When we broke down the numbers and determined just how much we were actually spending on grain to maintain our breeding stock, then balanced that against the average litter size and sale price of a piglet plus our revenue from meat sales (not to mention our labor, which we didn't even consider back then), our minds were blown. We were charging market price for everything and felt like it was a pretty profitable venture, but we were actually losing money. We love raising pigs, and we do it well. But we decided right then and there that we were no longer in the pastured pork business, and we shifted our focus to the things that were actually profitable. It just didn't make sense, and we couldn't make the numbers work. But that doesn't mean that we never raised pigs again, we simply didn't do it at a commercial scale. Instead, we'd raise a few each year for the farmstead. 

Not every idea is a good one, and not every business venture you pursue is going to be profitable. And that's OK! Part of achieving success is knowing how to recognize when something isn't working. Don't let yourself get stuck, and be willing to pivot.

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Above all, don't lose sight of why you started your business in the first place. You have a passion and want to share it with the world! And by hiring an accountant, staying compliant, asking for help when you need it, and keeping an eye on your numbers, you're well on your way to achieving your business goals.