UNDERSTAND THE COSTS BEFORE LAUNCHING YOUR BUSINESS OR STARTUP TO THRIVE.

Launching a business is a complex and capital-intensive process. In order to thrive, I've found it's best to understand your expenses beforehand, including calculating your total first-year budget estimate and adding an extra 20 percent as miscellaneous.

A common mistake leaders make is failing to consider all the costs of starting and running a business. I'll help you prevent that by discussing some of the hidden costs and sharing my tips for launching a business. 

The Hidden Costs of Starting a Business 

Here are six of the less obvious, but highly important, costs to factor in when launching your enterprise:

1. Taxes

As a business owner, you'll be responsible for paying various federal, state and local taxes. The intricacy of your taxes depends on your locality. California, for example, requires a 7.25 percent sales tax, while Texas requires a 6.25 percent sales tax. 

2. Permits, Licenses and Fees 

These expenses are needed to start your business or perform certain activities. Some licenses and permits are a one-time expense you'll need to pay at the commencement of your business, while others require renewals. 

Permits, licenses and fees vary with your business niche, country and locality. Thus, it's wise to consult a local business consultant or a founder with the same type of enterprise for advice. 

3. Employees and Benefits 

Employees and benefits significantly impact the cost of running a business--and can be unpredictable. Costs here include medical and personal leave, training costs and health insurance. These expenses are necessary to provide motivation for employees and retain top talents with rare skill sets. 

4. Administrative Expenses 

These are overhead purchases that your organization incurs that are usually not tied to its core production activities. That is, expenses required to procure items to support your organization's daily supervisory activities and paper works. This can include rent, utilities, office equipment and fixtures, office supplies, etc. 

5. Business Insurance 

Business insurance fees are premiums paid to protect your enterprise against loss incurred during a theft, disaster, litigation or any other unforeseen circumstance. Many states in the U.S. require businesses to have workers' compensation insurance, while some niches require a series of comprehensive coverages. For example, you may need third-party vehicle insurance. 

6. Professional Consultants 

Professional consultants can proffer solutions to your relevant pain points. The consultants you'll hire depends on your business function. Some examples include marketing consultants, IT consultants, finance consultants, etc.

A 2018 study of 100 major companies found three-quarters of private sector organizations spent between 2 percent and 5 percent of their total budget on consulting support. 

Tips on Starting a Business

Starting a business and making it thrive is a very difficult endeavor. The Harvard Business Review notes that most startups fail. To better avoid being among them, I suggest adhering to the following tips:

Define Your Business Concept

Your business concept is the idea you build your enterprise around--the core purpose of your business, how you plan to generate revenue and your ultimate strategy for being profitable. 

Your concept may be to create a new and never-before-seen solution, modify an existing model or replicate an already existing one. Once you know what the idea is, work with your team on fine-tuning all pain points. 

Develop a Scalable Business Model

A scalable business model supports quick growth. Focus on making the core business model of your enterprise flexible enough for horizontal scalability (ability to add more products) and vertical scalability (ability to increase current product output). 

Get Your Finances in Order

I suggest keeping your core business processes and finances separate. For starters, open a business bank account for transactions such as invoicing customers and paying suppliers. Often banks require a separate account to issue credit and overdrafts. Additionally, consider hiring an accountant or using accounting software to manage your ledger and generate financial statements.

Lastly, before funding your enterprise, it's best to get an idea of your startup costs. Make a list of your total expenses--both the easily observable ones and the hidden costs. Some experts recommend having cash to cover your operating expenses for a few months post-launch.

For your business or startup to thrive, it's important to understand your costs before launch. In addition, sharpen your business concept, make it scalable and get your finances in order. 

INNOVATIVE WAYS TO BUILD BRAND LOYALTY

Building brand loyalty is one of the most critical contributors to the success of any business in today's highly competitive market. A loyal customer base not only brings in consistent revenue but also serves as an advocate for the brand. For startups, this brand loyalty is even more important, given their need to grow quickly, reduce costs, and establish themselves.

Unfortunately, building brand loyalty is not one of those things most entrepreneurs are advised on early in their careers, resulting in a missed opportunity. Consequently, many startups struggle to gain traction and achieve long-term success. By prioritizing brand loyalty and seamless experiences early on, startups can establish a strong foundation for growth and sustainability. You can use a few of the following methods to do just that.

1. Offer Exclusive Benefits and Rewards

This might be the most well-known strategy to build brand loyalty, but unfortunately, it seems it is often not implemented -- or not implemented well. I know I've signed up for multiple rewards programs and then just didn't hear from the company after my initial purchase. In the long run, that's not benefiting either party. 

Offering truly exclusive benefits to loyal customers recognizes their value and gives them a reason to keep coming back. Rewards can be anything from early access to tiered loyalty programs, but they have to incentivize continuous interaction. Some startups have started to implement this strategy to build brand loyalty, but the companies leveraging technologies like web3 are especially noteworthy. Web3 brands are able to build consumer loyalty by using technology and a connected product experience.

For example, Cult & Rain -- a web3 fashion company that's only a year old -- is doing this by combining an AR NFT (augmented reality non-fungible token) and an NFC (near-field communication) chipped hoodie. Combining these elements, they improve authentication. However, it also benefits resale opportunities, community engagement, and marketing efforts, impressively building brand authority in a new way. Consumers can access exclusive content, and they have a one-of-a-kind experience.

No matter which industry your startup or business is part of, implementing this strategy is possible and often effective.

2. Trust Your Community to Make Decisions

One of the best ways to help your users feel appreciated is to make them feel trusted. This can be done in many ways, but the most common is being receptive to their feedback. This could be something as simple as asking customers for their input on new product designs or as complex as involving them in the development of a new service offering. With the introduction of technologies like blockchain, founders have become even more daring when it comes to integrating their customers into the decision-making process. 

One example of this would be Decentralized Autonomous Organizations (DAOs) like Lifestyle DAO. Founded back in 2021, the organization operates by allowing members (token holders) to suggest changes to the rules that govern the organization. Once a change is suggested by a member of the original team, members can cast votes to approve or deny such a change. This means that the team and the community work together, proposing changes and implementing them, allowing everyone to act based on a common goal.

Of course, you don't have to go as far as putting all decision-making in the hands of your user base by establishing a DAO model. However, making members active participants in your startup's future will foster a sense of community and brand loyalty that few other strategies can achieve. As such, you should make sure to let them join the conversation.

3. Create Seamless Customer Experiences From Start to Finish

To build brand loyalty, it is important to help your customers avoid unpleasant experiences. You can achieve this by creating a seamless customer experience across all touchpoints. This means customers should be able to interact with your brand in a consistent and cohesive way, no matter if they are browsing your website, interacting with your social media channels, or using your products.

One way to achieve a seamless customer experience is by investing in an omnichannel marketing strategy, an expert customer service team, efficient QA testing, and the creation of an efficient sales funnel. While many founders might be intimidated by the potential cost and effort required to improve these areas, this has become easier over time because of advances in artificial intelligence and other technologies.

A great example of what a seamless customer experience can look like is Casper. The sleep startup has experienced rapid growth over the past years by allowing users to buy mattresses online without having to pay inflated prices due to intermediaries. Completing an online quiz to choose the best type of mattress, receiving it in an easy-to-handle box, and being able to easily return it after a 100-night free trial make for a great and seamless customer experience.

By focusing on your customers' experience, you can build brand loyalty from the first interaction. This will build your brand loyalty and reputation over time, as well as provide you with important information to streamline different processes and develop new products in the long term.

UNDERSTANDING YOUR WORTH AND WHERE YOU ADD VALUE IS ESSENTIAL.

How many times have you seen someone pass on a deal or opportunity because they did not understand or appreciate the value of the commodity? Not only does the commodity have to add value, but the general consensus also needs to be that the product is valuable. Assessing and assigning value is both art and science -- it's creating value and a corresponding narrative so that most appreciate and acknowledge the commodity's usefulness.

Over the course of my career, I've been in roles that allowed me to add immense value, but some of the recipients didn't readily recognize it. I'd often be left disappointed and confused as to why they couldn't see all the value they were provided. I've come to realize that in some instances, I failed to communicate my full value and they failed to perceive it.

Whether it's a product, person, or idea, you have to be able to clearly state the value proposition for the intended audience. 

Below are the three ways to better demonstrate value: 

Communicating value

In retrospect, my failing was in not adequately conveying the value I brought to the table. I've always preferred to work behind the scenes and let the work speak for itself. Therein lies the problem -- the work doesn't speak, just like the product doesn't speak. It was incumbent on me to represent the value so that all could not only experience the value but also understand the derived value that was communicated.

Ultimately seeing is believing -- it's aligning those senses that allow the audience to see, hear, touch, and experience the product, person, or idea. That level of congruence helps drive more effective communication of derived value.

Because if you leave out just one of the senses, you may have lost your ability to effectively communicate with the audience. That's a communication wobble -- it creates tension because something is missing. The solution is to avoid wobbliness and present a sturdy, compelling narrative that satisfies the senses.

Translating value

There's a saying that some people don't know a good thing until it's gone. Gone is an endpoint we are trying to avoid, we want people to be well aware of the good thing and for them to always want the good thing. From a product perspective, you want a great, indispensable product that consumers depend upon so that they never want to let it go. That's brand loyalty driven by the strength of the product and the corresponding positive experience.

A big part of translating value is telling the consumer exactly what they're getting and why they need it in their life, and then consistently delivering on that value. The same applies at work when trying to influence people on an idea -- there needs to be a compelling why and clear positive outcomes. Translation is making sure the broadest audience understands and appreciates what they will get. Creating that congruence is key and that is why some seemingly similar products, people, or ideas can break through while others cannot.

Proof of value 

People are naturally selective and critical when evaluating a product, person, or idea. People are looking for verification to ensure they're getting what the label has communicated. If you're an employee, you have to be both respected and show demonstrable value conveyed through results as well as feedback. I describe this conveyance as humbly yelling from the mountaintop what you've contributed, because there can be a lot of noise that has to be filtered through to be seen, heard, and appreciated.

This process is elevating the evidence. In a product, it's positive customer reviews, testimonials, word of mouth, and validation of the claims, and it's also having a reliably wonderful product experience. When taken together, it provides ample proof for the consumer. 

For the employee, the proof is others co-signing on the value of the work or idea. And with each person who declares the value derived, how the business function was improved, and how the process enriched the company, the employee's brand and respectability increase because their value is validated. 

At the end of the day, it's more than just adding value. You need to be perceived as valuable through results and visibility. This is an important distinction because value is in the eye of the beholder.

LITTLE-KNOWN WAYS TO RAISE FUNDING FOR SOLEPRENEURS OR SMALL TEAMS

Launching a business as a solopreneur or with a small team can be an exciting and rewarding experience, but it also comes with a unique set of challenges, particularly when it comes to accessing funds.

With limited time and resources, finding the right funding opportunities can be a daunting task for new business owners. However, there are little-known but effective ways for solopreneurs and small teams to raise capital and fuel their growth.

To help you tap into these underutilized methods, a group of successful business leaders shared some helpful funding options that can assist small startup teams to access the capital they need to turn their ideas into successful businesses.

1. Apply for local or government grants.

Raising investor capital isn't easy in the early phase of your business. That's why Josh Kohlbach, CEO and founder of Wholesale Suite, recommends looking for local or regional government grants first. 

"Governments in many countries and cities try to support businesses by offering them valuable seed funding," Kohlbach says. "These grants often provide access to various other valuable resources like mentorship, networking opportunities and more."

2. Open lines of credit with little to no interest.

According to Matthew Capala, CEO of Alphametic, opening and using a line of credit that has low or no interest during the first year and then paying it down can be a great strategy for businesses that need access to a little extra cash from time to time. 

"I used this approach with my business to be able to build a business line of credit and also to remain liquid in the early days," Capala explains. "When you are a solopreneur, this is a much easier approach than with a team, but you can still use lines of credit in this way for expansion."

3. Explore angel investing networks.

Like other types of investors, angel investors provide startup capital in exchange for equity or ownership of the company. One key advantage is that they tend to provide greater value in terms of resources for the businesses they back. 

"Angel investing networks pool resources and expertise to identify investment opportunities," says Kristin Kimberly Marquet, founder and creative director of Marquet Media, LLC. "To access these networks, solopreneurs and small teams can attend networking events, pitch competitions and industry conferences to meet potential investors."

4. Try crowdfunding to raise money quickly.

Syed Balkhi, a co-founder of WPBeginner, recommends crowdfunding as a viable option for small businesses or individuals selling single products. 

"Sites like Kickstarter, GoFundMe and others are popular platforms that allow entrepreneurs to connect with an audience and raise money for their projects," Balkhi says. "This works especially well in an age where people want connections with brands and to co-create something."

5. Offer pre-sales on your products or services.

If you're in the pre-launch phase for your product or service, Chris Christoff, co-founder of MonsterInsights, advises running an advanced sales campaign at a special price to generate preliminary funds and interest. 

"It's worth mentioning that you should only use this strategy if your product and associated features are set in stone," Christoff adds. "You don't want to make promises and then change things at the last minute."

6. Participate in industry-specific accelerators.

According to Stephanie Wells, co-founder and CTO of Formidable Forms, entrepreneurs can participate in industry-specific accelerators that can help them raise investment in exchange for a certain percentage of equity in their company. 

"Participating in such programs can help refine your pitch, attract potential investors and present your startup in the right way to generate the required funding," says Wells.

7. Create additional sources of income.

Developing additional income streams that are related to your primary business can be an excellent way to bring in more money for your company. 

"Examples include selling affiliate products on your website or through your videos, offering your services as a consultant and creating either physical or digital products you can sell," says Kalin Kassabov, founder and CEO of ProTexting.

THE 5 SUPERPOWERS OF HIGHLY SENSITIVE PEOPLE

A decade ago when Susan Cain published her bestseller Quiet, the world sat up and rethought the value of being an introvert. Suddenly thousands of think pieces appeared extolling the benefits of quieter personality types and those who need a lot of alone time to recharge got a hefty boost to their self-confidence (and PR). 

Is something similar about to happen for highly sensitive people? 

Like introversion, high sensitivity is a scientifically validated personality dimension. And like introversion, being more reactive to your surroundings has traditionally been seen as largely a negative. The highly sensitive have long been derided as thin-skinned, over-emotional, dramatic, or fragile. 

But a series of articles and experts have lately been arguing that highly sensitive people might face challenges in a world not necessarily built for them, but their acute sense of the world around them also gives them huge if often undersung advantages in both life and work. And now a new book, Sensitive by Jenn Granneman and Andre Solo, may be poised to take the conversation more mainstream. 

In a recent article for Greater Good, writer Jill Suttie delves into the new book, mapping out exactly what it means to be highly sensitive as well as the advantages being on the high end of the sensitivity spectrum gives people. Here are the five "superpowers" of the highly sensitive in brief: 

1. Empathy. 

"Sensitive people have empathy in spades, so much so that the difference can be seen in brain scans," the book's authors write. The ability to sense and understand what other people are feeling is great for personal relationships and good citizenship, but a boatload of studies (and experts) insist empathy is an essential foundation for excellent business leadership as well. 

2. Creativity. 

"A mind that notices more detail, makes more connections, and feels emotion vividly is almost perfectly wired for creativity," write the authors. We think of ideas as appearing out of thin air like some sort of holy inspiration. But the testimony of many of history's most creative people reveals creativity is often about blending observations and perceptions in fresh ways. The more you perceive, the more you have to work with.  

3. Sensory intelligence

"Sensory intelligence means taking in more information from your environment and making good decisions based on that information, explains Greater Good. This ability might not be that important in the boardroom but it's greater for athletes, the site notes, who can use their high sensitivity to quickly grasp what's going on around them and respond before the competition. 

4. Depth of processing

"Not only do sensitive people take in more information, they also process it more deeply. This means that they often see patterns that others don't see and are able to 'connect the dots,' which can make them good planners," explains Greater Good. It doesn't take much explaining to see how this could be a key skill for excelling at work generally and as a leader in particular. 

5. Depth of emotion

At first sight having your feelings turned up to 11 sounds like a downside. And certainly strong emotions can be uncomfortable sometimes. But intense feelings also make for a richer life and stronger relationships, two factors psychologists tell us are key for happiness and satisfaction. 

And that skill with relationships probably spills over into the office. "If you're sensitive, your deep emotionality is why you're an exceptional listener, why people naturally trust you, and why you're probably the go-to confidant when anyone in your friend group needs advice," write the authors. 

SVB FALLOUT: 5 QUESTIONS YOU NEED TO ASK YOUR CFO RIGHT NOW

Silicon Valley Bank's sudden implosion throttled startups, as founders raced to secure their finances before the regulators moved in. Here's the good news: thanks to the Federal Deposit Insurance Corporation's intervention, much of the original concern around accessing funds has been assuaged. Federal banking agencies pledged to backstop all SVB depositors, including both insured and uninsured funds. 

The government swooping in to help clean up the SVB mess -- tied to a classic asset-liability duration mismatch -- is a Hail Mary for entrepreneurs, but founders are still a ways off from the stable ground. While the threat of contagion appears to have diminished, it's not zero: regional banks took a beating in Monday's market, and three banks have now closed in the span of a week. (The others, Signature Bank and Silvergate Capital, were crypto-focused lenders.) And don't forget about the debt ceiling crisis looming over Capitol Hill, with Republicans hardly in the mood to expand spending. 

Given this uncertainty, it's imperative that founders check in on the financial posture of their organization. Here are five questions you should be asking your chief financial officers right now.

1. Where do we keep our cash -- and how do we diversify it? 

There are a number of lessons founders are gleaning from SVB's collapse, but foremost is the importance of diversifying funds. "Just parking all of your cash in one bank and just assuming that that's the prudent thing to do is not necessarily the right decision," explains Tyler Griffin, a managing partner at the San Francisco-based Restive Ventures. "I think we all woke up to the fact that being more thoughtful about treasury is really important."

Know where your cash sits and spread it out among multiple financial institutions. The more diversified your cash position, the stronger your hedge becomes, especially in times of crisis. Better yet, understand the kind of accounts your cash is being held in. As Amy Spurling, the CEO and founder of the employee stipend platform Compt points out, cash held in stock and sweep accounts is fully insured, "so any default in their bank still means they are covered." Sweep accounts, for example, are often tied to an investment account, and can automatically transfer funds once hitting a certain balance threshold. For the most part, deposits of up to $250,000 are insured by the FDIC. 

2. What's our cash burn rate and our cash runway?

It's essential to understand how liquid your company is so you know where to go if you need cash on the fly. After all, figuring out how much cash on hand you have, and how quickly you're going through it, dictates your spending. Understanding how you need to be spending your cash both in the short-term and long-term will help inform your position -- especially if cash is tied up and is not immediately accessible.

Your cash runway or the amount of time until available cash runs out, also informs a company when it's time to fundraise again. While startups were flush with investments in recent years, attracting new funding may now prove difficult. "In the last few years, low-interest rates have distracted many founders from being efficient and effective with their treasury function as they could just raise additional capital," says Justin Bayless, CEO of Ten Figures, a management consulting and private investment firm based in Phoenix.

"Now founders must focus on their existing treasury in order to lead through this difficult time without having easy access to capital," Bayless says, adding that navigating all the turmoil may even turn out to be a competitive advantage. 

3. How many of our customers are in tech?

If most of your clients are technology companies, Compt's Spurling says you might take a revenue hit for whatever you're selling them. This, in turn, will influence your cash burn.  "This is an all-hands-on-deck situation," Spurling adds. "It requires extreme crisis management. No day-to-day activities are getting done; it's the agile movements for survival that are taking priority."

4. Where does our vendor's bank? 

Even a sound, diversified banking strategy won't shield your company completely from banking fallout. Such was the case when SVB's collapse severely affected payroll providers and sent founders scrambling so they could pay their people on time. When you partner with a vendor and map out their financial picture, make sure you're comfortable with the financial institutions your vendor's bank with.

Also key? Founders need to examine a vendor's safety management protocol and take care to see how accessible these vendors might be in times of crisis. That's according to William Hauser, the vice president of finance at the San Francisco-based Production Board, an investment management firm. This is especially important, Hauser says, for payroll and credit cards. 

5. What is our relative risk level?

If your company wasn't already doing stress tests with your financial institution, that will likely change, particularly as uncertainty around future bank runs remains. Now it will be essential for companies to understand the risk they take by holding deposits at whatever financial institution they decide to bank with, says Praful Saklani, the co-founder and CEO of the contract management system firm, Pramata. This should especially be the case for deposits in excess of $250,000. 

"None of us were actually paying attention to what exactly is the balance sheet of your checking account," Saklani says. "Because of this situation, people are now going to have to inspect the balance sheets and understand, how much risk am I really taking on, and how well-managed is this bank?"

TRAITS SUCCESSFUL ENTREPRENEURS RELY ON DURING TIMES OF CRISIS

It's no secret that we're facing the possibility of an economic downturn. And business leaders need to be resilient if they want to make it through unscathed. There are plenty of ways to prepare for situations like these, but shifting your mindset can be as powerful as any business tactic.

Steve Sims, an entrepreneur and author whose path to success is both unconventional and fascinating, is a master of resilient thinking. He has been able to find success in the most unlikely places and is known for making the impossible possible, either through brilliant thinking or sheer boldness, depending on your perspective.

In his new book, Go For Stupid: The Art of Achieving Ridiculous Goals, Sims outlines the three mindset traits that all successful people have. They're all focused on resiliency, so whether you need to prepare for an economic downturn or you simply become a better business leader, I'd recommend you read closely, and start shifting your thinking.

Relationships

Every entrepreneur knows that business is all about relationships, whether it's with your employees, customers, suppliers, or other stakeholders. Relationship building is how trust and loyalty are born and, by extension, how money is made. But in times of crisis -- which is often when you'll need them most -- these relationships will be tested.

To build more resilient relationships, Sims suggests seeking out people with shared "values, standards, commitments, and beliefs" for a stronger and more fruitful connection. 

Smart leaders partner with others who share their cultural values to achieve success. If your relationships are purely financially driven, your connection will be limited. When there's no shared understanding of values and beliefs, conflicts are bound to occur. This is why leaders should value relationships even when money isn't involved, and recognize that they can improve in areas where they are lacking support. 

Leaders also have the opportunity to create a team culture with a shared set of values, beliefs, and goals. As Sims notes, when leaders prioritize relationships and culture, they can bring together people who have different skill sets and strengths to achieve great things. A shared culture provides a common language and framework that allows for effective collaboration even when team members have different areas of expertise.

Moral of the story? The people with whom you share values, standards, commitments, and beliefs, will always be your strongest connections. Seek them out and prioritize them, even when money isn't involved.

Curiosity

When you stay curious, you never take anything for granted. You will find yourself always looking for smarter approaches and better ways to do things. Curiosity helps leaders challenge the status quo, question assumptions, and push the boundaries of what's possible.

In the face of a looming recession, curiosity can be especially helpful. Instead of sticking to the same old methods and approaches, you can use your curiosity to explore new strategies and solutions. By asking "Is there a better way?" and "What if we did it differently?" you can find innovative solutions to complex problems.

Curiosity can also help you approach challenges with a sense of play and experimentation. By gamifying business, you'll make work fun and engaging for your team. This can help boost morale and productivity, even in the face of challenging circumstances. 

In my experience, most entrepreneurs are inherently curious, yet many feel it's a hindrance -- a distraction that keeps them from focusing on what's most important. But in times of crisis, curiosity could mean the difference between success and failure.

Time

Sims emphasizes that successful leaders value time as their most valuable resource. That's because they view time differently than everyone else. They know they can make more money, but they can never generate more time. 

If you know me, you know I'm obsessed with efficiency and time-saving. But what I've learned over the years is that you can't just focus on saving time. You also need to focus on optimizing your time. 

We tend to view our time as linear -- where each hour of the day is given equal value -- but in practice, that's not really the case. Surely there are some times of the day when you're ultra-productive and others when you're not. I know that 9:00 am on a Monday, after I've had a relaxing weekend, worked out, and I have a cup of coffee in my hand, is a highly valuable time for me, whereas 4 p.m. on a Friday, after I've been on Zoom all day, isn't as productive.

Once you become aware of this, you can hack your schedule to prioritize high-value, revenue-generating tasks over less mentally intensive work like administrative activities or meetings. That way, you get the most out of your time and can pour your energy into what will make your company thrive.

BY NICK SONNENBERG, FOUNDER, LEVERAGE@NICK_SONNENBERG