Operations Checklist for Small Business Owners

Most small business owners and entrepreneurs are subject matter experts in their product or service. They can tell you the best way to fertilize nutrient poor soil to yield a crop, the ins and outs of renewable energy, or how to build a wind turbine from an alternator. But they’re often not as well versed in the practices and processes required to keep a business operating smoothly.

The first business I launched in 2003 was an online nutraceutical company. I knew my product and how to market it, but I quickly found out there’s a lot more to operating a nutraceutical company than slapping a label on a bottle of vitamins and shipping it to the customer. Operating a nutraceuticals company requires regulatory compliance, proper labeling, accurate record keeping, prompt customer service, and so much more.

While practices and procedures will naturally vary from one business to the next, there are some common operational practices that every small business should employ to ensure sound operations. The following checklist represents the most essential small business operations from my professional experience that every small business owner should know.

1. Legal
2. Accounting
3. Financial Records
4. Internal Financial Controls
5. Marketing Budget
6. Human Resource Management
7. Computer and IT
8. Insurance

1. Legal

One of most important aspects of launching a successful small business is ensuring that you get started on the right foot. To avoid lawsuits, fines, personal liability, or even jail time you want to make sure you’ve covered all your legal bases. Many of the legal requirements of starting a new business can be handled by yourself or a qualified CPA. However, depending on the nature of your business, you may also want to seek legal counsel.

1. Select a business structure. Selecting the correct business structure is vital for limiting personal liability, maximizing tax benefit and raising capital. The business structure you select will depend on your industry and the nature of your industry.

2. Licensing and permits. Most states and counties require a business to obtain a general business license to operate. Some businesses are required to obtain specialized licenses or permits to operate. Failure to obtain a business license, or a necessary operating permit, can result in fines, penalities or denial of operation.

3. Employer Identification Number (EIN). The EIN is required for filing business tax returns and opening a business bank account. You can obtain an EIN online at IRS.gov or over the phone. Sole proprietorships and single-member LLCs do not require an EIN.

4. Business taxes. Every business is required to pay taxes. Business taxes include income tax, self-employment taxes, and for some businesses, sales tax. There may be additional taxes associated with running a real estate or investment company. Consult with a CPA.

5. Bookkeeping. Maintaining accurate records of business transactions is required by law in many jurisdictions. Maintain accurate records of business and financial transactions will assist you with taxes and help you avoid legal issues down the road.

6. Founders Agreement. A founders agreement establishes the rights, responsibilities, obligations, and liabilities of each business founder. The agreement also regulates matters not covered in the business’ operating agreement. If you’re forming an LLC you’ll also require articles of incorporation and an operating agreement. Consult legal counsel.

7. Vesting Schedule. Develop a stock ownership vesting schedule for founders and early employees. This will ensure commitment from founders and key employees to the long term success of the business. A vesting schedule is typically required before investors will invest in your business.

8. Intellectual Property (IP). Intellectual property includes trademarks, copyrights, patents and trade secrets. If you business is reliant on intellectual property, it important to establish and protect those rights. File a patent online as soon as possible, as the process can take several years. Apply for a trademark for important brand names and marks. Register your work and enforce your copyright protection. Take measure to protect trade secrets through use of nondisclosure agreements (NDAs).

9. Worker Classification. Correctly classify workers as employees or as independent contractors. There are important tax ramifications for each worker classification. It is common—and tempting—for small business owners to classify an employee as a contractor for the tax benefit. Misclassification of an employee as an indepedent contract can results in penalities and payment of back wages by the business owner.

10. Workers Comp. With the exception of Texas, every state in the nation requires a business to obtain worker’s compensation insurance. Works comp covers the medical and legal cost for claims arrising from work-related injury and illness. Coverage should begin the first day an employee begins working. Worker comp laws vary by state.

11. Liability Insurance. With few exceptions, businesses are required to maintain a general liability insurance policy to cover claims that result from claims for property damage or bodily injury to others caused by the business or on business premises.

12. Security Laws. Small business founders, investors and shareholders are subject to federal and state securities laws. Securities laws govern the sale and issuance of securities. In short, securities laws dictate what business owners can and cannot do with their business ownership. Securities laws also protect from insider trading and trading fraud. There are penalties for violating security laws.

13. Email regulations. Federal and state law regulate email communications and marketing. Whenever you send email to current or prospective customers it’s important to follow applicable email regulation. Failure to comply with email regulation can result in penalties, fines and having your business email blacklisted. If you email internationally, you must follow the email laws for each country.

Email laws govern opt-in versus opt-out, B2B or B2C emails, unsubscribe rules, and minimum information that must be included in all email communications.

14. Privacy Policy. A business’ privacy policy is a legal statement that outlines what personal data is collected from users and customers. The policy also specificies how the data is used and for what purposes. Employing data collection and usage practices that do not adhere to a business’ published policy, or that violate applicable privacy law, can lead to criminal liability and fines. The Small Business Administration provides a useful guide for developing a privacy policy.

15. Employee Handbook. The employee handbook, sometimes referred to as a company handbook, outlines a company’s policies and its employee’s rights. The handbook states legal obligations of the business to its employees and outlines expectations of its employees. An employee handbook should also communicate the the values and legal boundaries of the business, and establish both acceptable and unacceptable behaviors. The handbook should be developed with input from founders, management, HR and legal counsel.

2. Accounting

It’s imperative small business owners stay on top of accounting functions. I recommend finding an experienced CPA that works with small businesses to assist with the endeavor. An experienced CPA will help you avoid financial pitfalls, prepare accurate tax accounting, provide ongoing financial consulting and accounting support. Hiring an experienced CPA was one of the best decisions I made as a new small business owner.

(Daily)

1. Deposit payments. Deposit all payments from customers into the business’s checking account. Process all credit card transactions.

2. Pay bills. Review and enter invoices. Pay all expenses by check or digitally to maintain record.

3. Summarize cash sales. Create a daily summary of receipts to see how much money was made and understand current cash position.

(Weekly)

4. Reconcile bank accounts. Compare deposits shown in the accounting system to deposits listed on bank statements.

5. Review Account Receivable (AR). Identify which customers have unpaid invoices and follow up by email and phone.

6. Review Accounts Payable (AP). Identify unpaid vendor bills. Set up plan to get caught up on all accounts payable.

5. Financial housekeeping. One a week get caught up on all outstanding accounting and bookkeeping tasks.

(Monthly)

7. Balance the books. Review and reconcile all bank and credit card accounts. Numbers in bank statements, checkbooks and the general ledger should be the same. Verify that bank charges and balances are correctly reflected in the checkbook and books.

8. Reconcile credit card payments. Verify that all credit card payments have been deposited in the bank account and the balance matches the sum of daily credit card transactions.

9. Reconcile accounts receivable. Identify customers that have unpaid invoices. Call and send out overdue notices to delinquent customers.

10. Process payroll. Send out salaries and pay. Process payroll tax withholding and deposit income tax (and tax-related payments.)

11. Analyze inventory data. Review inventory data to determine costs of good sold, operating efficiency, to identify stockouts, excess inventory, and inventory that needs to be sold at a discount or written off.

12. Produce financial statements. Generate a monthly income statement, balance sheet and statement of cash flow. Compare actual expenses with budget expense. Compare your month-end statements to the prior month. What has changed and why?

13. Generate a profit and loss (P&L) statement. Report revenue, expenses and net profit in the P&L statement to show the business’ current financial position. Use the P&L to assess progress against goals and forecast future revenues and expenses.

(Quarterly)

14. Pay estimated quarterly federal taxes. If you run a C corp, sole proprietorship, partnership, or S corp, and expect to owe more than $1,000 in taxes, then a federal tax payment is due.

15. Pay state taxes. State taxes may include sales tax, excise tax, and property taxes. State tax liabilities vary by state.

(Annually)

16. Audit fixed assets. Make sure that all newly acquire assets are added in the books. Remove assets that are no longer in use. For businesses using GAAP accounting, the value of intangible assets (e.g. goodwill) needs to be revalued and adjusted.

17. Prepare W-2s and 1099s forms. Prepare and issue W-2 forms to all employees. Prepare and issue 1099s to all contractors. W-2 and 1099 forms report wage and tax information for tax filing purposes.

18. File tax returns. Work with your CPA or tax accountant to prepare and file required IRS tax and state forms.

19. Year-end closing. Reconcile all cash accounts. Compare actual inventory to inventory accounts. Reconcile transactions. Close AR and AP by creating adjusting entries. Prepare the annual balance sheet, P&L statement and statement of cash flow.

3. Financial Records

Maintaining accurate and up-to-date financial records is an important for your business’ financial health. Financial records are required to prepare financial statements, deal with bank and creditors, raise investment capital, prepare year-end returns and pay taxes. Without financial records it’s impossible to for a business to know where it stands daily, weekly, monthly, quarterly, and annually.

Financial records checklist:

1. Gross Receipts. Include income from your business. Record amounts and sources of all income. Maintain for 3 years following tax filing date. Supporting documents:

• Cash register tape receipts
• Deposit information (cash and credit sales)
• Receipt books
• Invoices
• Forms 1099-MISC

2. Purchases. Sometime referred to as cost of goods sold. Supporting documents should include payee name, amount paid, date, description and proof of payment. Supporting documents:

• Canceled checks
• Electronics funds transferred
• Cash register tape receipts
• Credit card receipts (or statements)
• Bank acount statements
• Invoices
• Other proof of payment

3. Expenses. Costs you incur (not including purchases). Supporting documents should have payee, amount, proof of payment, date and expense description. Supporting documents:

• Canceled checks
• Account statements
• Cash register tape receipts
• Credit card receipts (or statements)

4. Assets. Keep records to verify information about business assets. Financial information relating to assets includes:

• Date asset was aquired
• Asset purchase price
• Cost of improvements (if any)
• Section 179 deduction taken
• Depreciation deductions
• Deductions for casualty losses
• Use of Asset
• Date asset was sold
• Selling price
• Expenses incurred for sale of asset

Supporting financial documents:

• Purchase invoice
• Sales invoice
• Closing statements (real estate)
• Canceled checks
• Electronics funds transfer
• Other proof of payment
• Other documents identifying payee and amount

5. Employement taxes. Maintain all relevant employment tax records for previous four years. Records should include:

• EIN
• Dates of wage, annuity and pension payments
• Dates of employment of each employee
• Amounts of both reported and allocated tips
• In-kind wages paid (fair market value)
• Name, address, SSN and positions of employees
• Employee forms W-2 and W-2c returned as undeliverable
• Beginning and ending date for all employee payments made to employees during sick leave, including total amount of all payments made and weekly rate of payment
• Copies of all employee income tax withholding certificates (Forms W-4, W-4P, W-4S, and W-4V)
• Date of all tax deposits
• Amounts of all tax deposits
• Record of number of tax deposits makde by Electronic Federal Tax Payment System® (EFTPS) tax payment service
• Copies of filed tax returns
• Confirmation numbers for all filed tax returns
• Employee fringe benefits and expense reimbursements (must include substantiation)
• Credit claims documents
• Qualified sick leave wages (post Mar 31, 2021)
• Qualified family leave wages (post Mar 31, 2021)
• Qualified wages for employee retention (post June 30, 2021)
• Qualified wage documents should be kept a minimum of 6 years
• Substantiation of all employer or employee deferred social security tax

4. Internal Financial Controls

Even with a qualified CPA at the helm, your business’ financial health still lies squarely on your shoulders. Small business’ lose millions every year due to fraud as a result of lax financial oversight. Additionally, small financial mistakes can have a negative impact on small business security and operations. Implementing internal financial controls—even if it just a monthly review of accounts—will go a long way to avoiding unpleasant surprises. The follow policies and practices will help protect your money and your small business.

1. Don’t comingle of funds. Maintain business and personal finances separate. Document personal loans with a promissory note and repayment terms.

2. Review bank statements. Bank statements should be reviewed at least once a month. Investigate any suspicious deposit or withdrawals.

3. Review credit card statements. Have employees documents all expenses paid for using credit cards. Review monthy credit card statements for accuracy.

4. Conduct background checks. Perform background checks on employees involved in bookkeeping, accounting, payroll, or handling cash.

5. Create cash flow projections. Compare actual monthly cash flow to cash flow projections. Investigate any shortfall.

6. Establish inventory control systems. Inspect inventory for correct quantity and quality. Designate who can sign for incoming inventory and release outgoing inventory.

7. Monitor point-of-sale transactions. At the beginning and end of each business day, count cash in cash drawers. Use point-of-sale software that logs employee usage.

8. Petty cash authorization. Require all petty cash transactions to be authorized by a second employee. Balance the petty cash account weekly.

9. Review outgoing payments. Watch for duplicate invoices, multiple invoices from the same vendor, or new vendors. Compare outgoing payments to invoices.

10. Require detailed invoices. All invoices should provide a detailed explanation of products provided and services rendered.

11. Authorize payments personally. All outgoing payments should be signed or authorized by the small business owner.

12. Audit payroll. Look for fluctuations in pay amounts. Use direct deposit to reduce fraud.

13. Have multiple financial managers. Have more than one employee in charge of business financials. Fraud can occur when one person manages all financials.

14. Conduct annual financial audits. Each year perform separate financial audits for each finance division (e.g. bookkeeping, payments, payroll, etc.)

15. Avoid overleveraging with debt. Set a maximum debt-to-equity ration and minimum debt-to-cash flow ratio.

16. Maintain cash reserve. Keep extra cash on hand or a liquid capital resoure to cover unforseen business emergencies.

17. Perform ad hoc audits and random. Performing random audits will keep employees on their toes and minimize financial misconduct.

5. Marketing Budget

Large corporations determine departmental marketing budgets based on past and proforma revenues. The larger the revenue a department generates, the larger the budget a department commands. As a small business owner you may not have a large marketing budget, nor are you going to allocate marketing funds based on departmental revenues. However, even small businesses should budget for marketing.

There is a large mix of marketing opportunities for small businesses. One of the more important marketing activities is social media. According to Clutch.com, 76% of customers expect companies to communicate with them on social media. In addition to social media there are several other marketing activities that merit budgetary consideration.

1. Marketing plan. Develop a marketing plan that identifies your target audience, establishes clear marketing goals and objectives and defines timelines, milestones and budget.

2. Website. Basic mobile friendly website with About page, Contact page, Privacy page, Services/Products page and social media share buttons.

3. Website analytics. Download Google web analytics or another web analytics program to your website to monitor website visits, traffic sources and conversion metrics.

4. Social Media. Create a facebook page, instagram page and business Linkedin profile with company, contact and product information. Update your instagram account with unique, compelling pictures and announcements.

5. Google Business Profile. For brick’n mortar businesses with a physical location. Allows you to get listed on Google. (google.com/business/)

6. Web directories. List your website in relevant business, industry and local web directories include Yelp, Foursquare, Bing Places and chamber of commerce.

7. Email marketing. Communicate with customers via email. Harvest emails from your small business website to support email marketing campaigns to website visitors.

8. Search Engine Optimization (SE0). Developed optimized web pages and web content that can appear in SERPs (search engine results pages) and drive targeted traffic to your website.

9. Social Media Advertising. Setup business advertising accounts Facebook and Instagram to get in front of target customers quickly.

10. Google Ads. Appear at the top of search results on Google.com on other websites through the Google Display Network and AdSense programs.

11. Strategic Partnerships. Establish strategic marketing partnerships with websites and other business who also target your consumer demographic.

12. Generate Reviews. Encourage your happy customers to provide online reviews in Google for your business and products.

13. Business Groups. Join local business groups in your area and industry to start networking you business.

14. Linkedin Networking. Grow your personal and business network by inviting people to connect with you and your business on Linkedin. As your connections list grows you can establish valuable marketing partnerships and promote your services.

15. Referrals. There is no more powerful marketing message than a referral. Invite your current customers to refer their friends and family.

Where you allocate your marketing budget is going to be a function of several factors including the nature of your industry, your target customer, as well as your small business’ objectives. However, where you allocate your budget it not nearly as important as how you allocate you budget.

I’ve found that many small businesses budget for marketing on a “ad hoc” basis — they throw money at marketing as they feel they need to. This approach to marketing budgeting does not support a stable growth strategy and often leads to marketing dollars being inefficient.

I recommend small business owners establish a “milestone” driven marketing budget. Once the right marketing mix is determined — and budget allocated — milestones should be set for each marketing channel. Until financial milestones are achieved, addition budget is not allocated to the channel. Hence, channels that produce results receive more investment while those channels that underperform are scaled back or eliminated.

Milestone driven marketing budgeting requires (1) indentifying the correct revenue or profit-based performance metrics for measuring channel performance and (2) accurate record keeping. Adopting a milestone driven budgetary approach to marketing requires effort, but ensures maximum return on marketing investment and optimal business performance.

6. Human Resource Management

Any small business that is not a sole proprietor needs to develop policies and practices that enable it to make good hiriing decisions and comply with federal, state, and local labor laws. Implementing sound HR policies and practices will reduce liability and ensure your business promotes an equitable and inclusive work environment free from discrimination and harassment.

HR Management for small businesses should focus on 5 key tasks: Hiring, Compensation, Peformance Management, Policies, and Equal Employment Opportunity.

1. Hiring

Small business recruiting and hiring practices should attract qualified applicants and comply with both state and federal labor laws.

• Use multiple recruiting sources including internet job boards, employee referrals, social media, company website, workforce recruitment program, internal job postings, rehires and employment agencies.
• Ensure job postings comply with federal, state and local nondiscrimination laws.
• Have candidates complete a standard application form that avoids that does not request information protected under federal law.
• Develop a detailed job description for each position within your company.
• Ensure all screening and selection practices (pre-employment tests, background checks, referral checks, skills tests, and drug tests comply with federal, state and local law.
• Ensure the hiring process effectively communicates key value propositions of working with your business.
• Keep applicants informed of their status throughout the interviewing and hiring process.
• Extend all job offers in writing.
• If possible, involve more than one person in the hiring process to avoid implicit bias or the appearance of explicit bias.
• Implement a standard onboarding process for new employees.

2. Compensation

Develop a comprehensive compensation program that addresses pay, insurance, PTO (paid time off), sick leave and any other benefits. Compensation practices should be designed to attract and retain, and comply with state and federal laws.

• Develop a compensation plan competitive with other employers in your space.
• Ensure employee wages are equitable across your company.
• Compensation schedules and practices must avoid pay disparities based on race, color, religion, sex, national origin, disability and genetic information.
• Avoid the practice of basing compensation on a candidate’s pay history.
• Use standard job-relevant metrics to evaluate and reward high performing employees.
• Provide employees with criteria used to determine salaries, wages and benefits.
• Compensation policies should provide that non-exempt employees are paid applicable minimum wage and receive overtime pay.
• Compensation documentation should outline pay policies for breaks, meal times, travel and training in line with state and federal law.
• Implement timekeeping practices and controls to prevent undocumentated off-the-clock work.
• Make sure exempt employees meet federal job duties tests.

3. Performance management

Clearly communicate performance goals and objectives. Provide employees with regular feedback as well as the resources required to achieve performance objectives.

• Train supervisors and managers to conduct employee performance reviews.
• Conduct employee performance reviews and evaluations on a regular basis (annually at minimum).
• Provide under performers the opportunity to improve their performance.
• Make sure employee goals are clear and objective.
• Ensure employees receive all federally mandated and job specific training required to perform their job.
• Engage with employees regularly to evaluate career training needs and promote career development opportunities.

4. Policies

Document employement policies to ensure compliance with applicable state and federal labor laws. This document is often referred to as an employee handbook.

• Ensure policies relating to employee benefits, pay, sick leave, nondiscrimination and conditions of employment comply with local, state and federal laws.
• Ensure employment policies and company procedures are in line with HR best practices.
• Ensure your employee handbook does not include these policies.
1. prohibiting lawful off-duty conduct
2. pay secrecy
3. probationary periods
4. unflexible discipline
5. refusal to hire candidate with a criminal conviction
6. no-fault punctuality and attendance rules
• Ensure your employee handbook does include these policies.
1. At-will employment
2. anti-harassment
3. nondiscrimination
4. leave and time off benefits
5. employment classifications
6. timekeeping and pay
7. break periods
8. employee conduct
9. attendance
10. COVID-19
11. reasonable accomodations
• All policies should be in accordance with local, state and federal law.
• Include clear language that prohibits prohibits discrimination, harassment, and retaliation based on Equal Employment Opportunity guidelines.
• Review and update your employee handbook a least once each year. Policies must be in accordance with all updated laws.
• Have employees sign an acknowledgment of receipt when they are first given an employee handbook and each time it is updated.
• Train managers and supervisors on company policies and procedure. Ensure supervisors consistently and impartially enforce workplace policies.

5. Equal Employment Opportunity (EEO)

Promote an equitable and inclusive work environment by ensuring policies and practices are free from discrimination and harassment based one one of the following protected classes: age, sex, race, color, national origin, religion, disability, and genetic information.

• Written policy expressly prohibiting all forms of discrimination, harassment, and retaliation protected under applicable state, federal and local law.
• Policy should clearly outline a document complaint process that provides various was of filing a complaint.
• Policy should be enforced to ensure all complaints are taken seriously and that prompt, impartial and thorough investigation of the complaint is conducted.
• Hiring and job-related decisions cannot discriminate based on protected class.
• All company and employment policies must promote an equitable and inclusive work environment.
• Policy must prohibit retaliation of any kinds againts individuals who exerise their legal rights.
• Company managers, supervisors and employees must receive training on discrimination and harassment policies.

6. Recordkeeping

Maintain records and documentation in compliance with federal, state and local regulation. Certain employee records must be retained for a specified amount of time. Effective recordkeeping policies and practices will ensure compliance with applicable employment laws.

• Complete all new hire paperwork. Required: Form I-9, Form W-4, Notice of Coverage Options, Wage and hour, state and local notices, new hire reporting. Recommended: Employee handbook acknowledgment, payroll authorizations, emergency contact, benefits information, receipt of company property.
• Create a personnel file for new employees.
• Maintain medical records, and other sensitive personal documents, in a secured location separate from personnel files.
• Restrict access to sensitive employee records to authorized personnel.
• Document all employee performance issues and warnings.
• Retain all records for the minimum period required by federal, state and local law.
• Provide employees access to their personnel files in accordance with applicable law.
• Dispose of all sensitive documents and employee records in accordance with applicable law.

7. Computer and IT

Nearly every business—large or small—depends on computer a IT systems. Common business applications of computer and information technology include digital record keeping, email marketing, internal and external communication, employee training and database management. Technology is ubiquitous and intertwined with almost every facet of modern-day small business operations.

1. Network / Connectivity (Internet, Local/Wide Area Network, MPLS). Reliable, secure and high-performance connectivity is critical to business success. Things to consider:

• Setting up a network and internet can take up to 90 days
• Install a scalable network that support growth in data needs
• What will be the network needs of employees
• Is network performance critical to business operations?
• If network performance is critical, will you need network redundancy to maximize uptime?
• Will the network require secure remote network access? (VPN)
• Will you require mobile internet access for employees on the road?
• Will your busiesss require secure private network for compliance?

2. Phone System. Even with the increase usage of mobile communication and social networking, most small businesses still benefit from a phone system. Most common systems to consider include PBX, hosted PBX/VoIP, cloud-hosted PBX/VoIP or maye a mobile phone service/system will support your small business needs. Things to consider:

• How vital is a phone system to your business?
• Is uptime critical?
• How many lines will you need?
• Will you need multiple extensions?
• Do you have staff to man an on-premises system?
• Will you need to tether your phone system to a data center?
• Do you need a phone system to support call center activites?
• Will you be placing long distance or international calls?
• Features to consider: reporting, online voicemail access, multi on-hold options.
• Will your phone system need to support video conferencing?
• Will you need special phones for conference rooms?

3. Hardware. Any small business that requires information technology to function requires computer hardware. Since hardware is one of the largest technology expenditures, it’s important you purchase the correct hardware to meet your needs. Things to consider:

• Will you adopt a PC or MAC platform? MACs are expensive. But they provide quality, performance and security. PCs are mor popular than MACs, offer greater hardware flexibility and support a greater variety of apps. Some argue that PCs don’t provide the level of reliability or performance as a MAC. MACs are preferred by design teams.
• Do you need desktop or notebook computers?
• Will computer hardware need to support a network? Or are computers stand-alone?
• Does your business require a peer-to-peer or client server setup?
• Do you need backup drives for longer term storage?
• Do you need mirrored drives to back up the most recent file changes?
• Can you use thin client or zero client cloud-based desktop machines? (will save you money, highly scalabl, have low support requirements, are highly secure and reliable)
• Does your business require data center infrastructure? (e.g. storage, switches/routers, firewalls, etc.)
• Explore using cloud infrastructure to lower costs, improve scalability, reduce management needs, and enhance security and uptime.
• What mobile technology will your business require? (e.g. smart phones, tablets, netbooks)
• Will your business require printers, scanners, UPS devices, audio visual equipment or multifunction devices?

4. Software. If your small business has hardware, it will also need to software. There are a wide array of software and Service as a Software (Saas) options to support small business operations and processes. The following are the difference types of small business software to consider.

• Office applications (ie. word processing, desktop publishing, email)
• Accounting/payroll
• CRM/Marketing software (SalesForce, HubSpot, Zendesk, Monday.com)
• Order management/ticket system
• Graphic design/editing
• Inventory management
• ERP (SAP, Oracle)
• Database management (SQL Server)
• Antivirus (McAfee, Norton)
• File-sharing (Google Apps, Dropbox, Sharepoint)
• Project management/collaboration
• Virtualization software (VMware, V2Cloud, Citrix)
• Specialized software for your industry (e.g. medical, insurance, construction, etc.)

When evaluating software options, you’ll also want to consider the following:

• How many users will you have? This will determine the cost and software package(s) you’ll need to purchase.
• Do you use a Window or Macintoch operating system? The software you run must be compatible with your operating system(s).
• Look into SaaS solutions. They are often more scalable and cost effective than software you host and run on your own machines.
• Many software licenses are available at a lower cost through third party suppliers.
• Who will manage software licensing?
• Does the software you’re considering allow for additional licenses at an incremental cost?

5. Email. Business email is used to support various small business functions including internal communication between employees, customer service, marketing and invoicing. When exploring email options and opportunities, consider the following items.

• What is the primary use of email in your business?
• How many email users will you need to support?
• What volume of emails will you send and receive?
• Can you business get by with a free email solution? (e.g. Gmail, Outlook, iCloud Mail, Zoho Mail)
• What type of security do your email communications require?
• Do you need a Decidated IP, or can you start out with a Shared IP?
• Will you requir tracking analytics to measure open rates, click-through, bounce rates and unscribe rates?
• What integration options do you require (e.g. CRM, Ticketing, ERP.)
• Will you host your emails on an in-house server?
• What storage, backup, archive and recovery services will you need?
• Do you require instant messaging?

6. Website. A small business website establishes a business’ legitimacy and supports various business operations, including customer support, human resource management, marketing, sale generation and compliance. Things to consider:

• Which business initiatives will your website support?
• Will you be capturing sensitive data?
• What security measures are required for your industry?
• Will you website be database driven? (e.g. WordPress, Magento)
• Will you support ecommerce?
• Have you purchased a domain name through a registrar? (Godaddy, etc)
• Do you require a custom designed website? Can you use a website template?
• Will you need to support video?
• What are the hosting requirements for your website?
• Does your website require a shared or dedicated server?
• Will you host your website on in-house servers, in a colocation facility, using managed hosting or cloud hosting?
• Do you require secure login?
• Do you have an SSL certificate/encryption?
• How to you plant to manage, maintain and update your website?
• Do you want a website you can maintain? Or will you use a third party to manage your website?
• Will your site require load balancing?
• What applications do you plan on using on your website?
• Is website uptime critical to your business?
• Will you be tethering your website to another software/tool or CRM?

Note: If you do not have experience managing a website, using a reputable web development firm is recommended.

7. Backup & Disaster Recovery. Data loss due to system failure, breach, deletion, or file curruption is a certain eventuality. Once data is lost, it cannot be restored without a backup in place. Putting together a disaster recover plan that includes a secure and reliable backup system is essential for any small business that relies on data. When deciding if and how to implement a data backup and recovery system, consider the following:

• What type of data does your business rely on?
• Does you business have critical and non-critical data?
• What would be the cost if the data is lost?
• What is the cost of backuping up data?
• How often does data need to be backed up?
• How long does data need to be stored?
• How sensitive is the data? What security is required?
• Have you looked into cloud-based data backup and storage?
• Does your data require continuous data protection (CDP)?

8. In-house IT & Outsourced Support. Hiring competent in-house IT staff can be cost-prohibitive for many small businesses. Notwithstanding, small businesses depend on reliable IT infrastructure and systems to operate and grow. Small business owners must decided whether to employ an in-house IT staff or to contract with an outside IT services firm. Things to consider:

• Is IT infrastructure mission critical to your business?
• How would an email or internet outage impact operations?
• Do you require 24/7 technical support?
• Who currently manages network administration?
• Can your cloud provider also provide managed IT and support?
• Who maintains software upgrades and fixes?
• Who managed access and usage of critical IT systems?
• Do you collect, manager or store sensitive or regulated data?
• Are your servers located onsite or in a collocation facility?
• How important is security to for hardware and software?
• How will you handle workstation support needs for employees?

9. Office Space. We sometimes don’t think about office setup as it relates to computer and IT, but office setup plays an important role in supporting IT infrastructure and operations. When selecting business office space consider the following as it relates to your IT infrastructure:

• What carriers and internet service providers (ISPs) are available?
• What services to the carriers/ISPs provide?
• Are there any connectivity issues or limitations that could impede business?
• Is there existing cables to hookup computers?
• Are phone lines installed?
• Is existing IT infrastructure up to date or need to be updated?
• Do the offices provide sufficient power to support all hardware and IT needs?
• Are there sufficient network and power outlets?
• Will the floor plan accomodate office equipment and IT hardware?
• Is there a backup power supply if the primary power supply fails?
• Does the building meet your security needs to protect equipment and data?
• Is there space for an on-site data center if you need to install servers, routers, phone systems, etc. in the future?
• Does the office space provide adequate ventilation and temperature control to support employees and an on-site data center?

10. Compliance, Regulation and Security.

• Does your business operate in a regulated industry? (e.g. healthcare, financial services, legal services, government contracting, records management)
• Does your industry have information management and security protocols and requirements?
• Are you required to transmit sensitive data?
• Are you required to storage sensitive data?
• Are there data transfer and storage protocols required by law? (e.g HIPAA)
• What are the monetary and legal consequences for data breaches or non-compliance with data management protocols?
• What type of data encryption will you require? At rest, in trasit, or both?
• Can you store all data and backups in-house using softare? Or will you require an off-site data warehousing service?
• Do you have in-house IT staff to support database configuration/management to support compliance?
• Are you require to perform data security testing (e.g. DDoS) to ensure system and data integrity?
• What type of user access security will your IT systems require?

8. Insurance

Running a small business is not without risk. Some business risk can be avoided or mitigated by making sound decisions. Some risk can only avoided by having the right insurance. The type of insurance you require will depend on your industry and the nature of your business. While there many types of business insurance and levels of coverage, the following checklist covers the most common types of business insurance.

1. Liability. Require for all businesses. A general liability (GL) policy covers claims for property damage or bodily injury to others caused by your business. The majority small businesses have a general liability policy with a $1 million per occurrence and a $2 million aggregate limit.

2. Professional Liability (Errors & Omissions). Covers claims related to errors and omissions from professional service providers (e.g. agents, consultants, attorneys, doctors, financial planners.)

3. Employment Practices Liability (EPL). Covers claims related to discrimination, sexual harassment, wrongful termination, retaliation, and other types of unlawful workplace conduct.

4. Commercial Auto. Covers claims related to accidents or injuries caused by business employees while driving a vehicle in the course of conducting business.

5. Commercial Property. Covers the cost of damages to business property including the building, furniture, tools, equipment and premises.

6. Workers’ Compensation. Requited in most states. Provides benefits to employees injured on the job or who contract a job related illness.

7. Business Interruption. Covers a percentage of business income that is lost when a business is temporarily closed due to a covered incident.

8. Umbrella. A commercial umbrella policy provides a business owner added protection against liability claims that exceed the limits of other insurance policies. Covers legal bills, medial costs and damages.

9. Cyber Liability. Also known as data breach or simply cyber insurance, this coverage provides protection against claims, costs, and damage resulting from a data breach.

10. Life and Disability. There are a number of insurance policies that provide coverage against lost of business income due to disability or death of key employees. The two most common policies include Business Overhead Expense (BOE) coverage and Key Person coverage.