Starting a business is one of the most exciting and rewarding experiences you can have, but how do I begin you may be asking? There are many different ways to go about starting your own business. It is critically important to consider your business idea, how much time you can devote to running it, and the amount of money you want to put into your business, before you make any firm decisions. Starting your own business requires careful financial, strategic, and legal planning. We have compiled some easy steps that will help you start your business in the right way and direction.
Begin With The Correct Mindset
We often hear about overnight successes because they make great headlines in the news. It’s rarely that simple, and the reporters don’t report on the long years of dreaming, or the building and positioning before a big public launch. For this reason, remember to focus on your business journey and don’t measure your success against someone else’s. Their timing and other factors were likely different from yours.
Consistency is a Big Key
New business owners tend to feed off their motivation initially but get frustrated when that motivation wanes. This is why it’s essential to create habits and follow routines that power you through when motivation goes away.
Take the Next Step
Some business owners dive in headfirst without looking and just make things up as they go along. Then, there are business owners that stay stuck in analysis paralysis and never start. Perhaps you’re a mixture of the two—and that’s right where you need to be. The best way to accomplish any business or personal goal is to write out every possible step it takes to achieve the goal. Then, order those steps by what needs to happen first. Some steps may take minutes, while others take a long time. The point is to always take the next step.
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Further Examine Your Business Idea
Most business advisors tell you to monetize what you love, but they miss two other very important elements: it needs to be profitable and something you are good at. For example, you may love dancing, but how viable is your business idea if you’re not a great dancer or performer?
Or, maybe you love making napkin holders and want to open a kitchen shop in your small town that already has three. You know it won’t be easy to corner the market when you’re creating the same product as other nearby stores.
If you don’t have a solid idea of what your business will entail, ask yourself the following questions:
What do you love to do?
What is it that you dislike doing?
Can you think of an idea that would make those life easier?
These questions can lead you to a solid idea for your business. If you already have an idea, these questions might help you expand on it. Once you have your firm idea, measure it against whether you are good at it and if it is a profitable idea.
Your business idea doesn’t need to be the next Molly Maid or Dog Walkers Inc. These are service businesses. Instead, you can take an existing physical product and improve upon it.
Know Your Market and Your Competitors
Most entrepreneurs spend more time on their products than they do getting to know the competition. If you ever apply for outside funding, the potential lender or partner wants to know: what sets you (or your business idea) apart? If market analysis indicates your product or service is saturated in your area, see if you can think of a different approach. Take housekeeping, for example—rather than general cleaning services, you might specialize in homes with pets, or focus on garage clean-ups.
Do Your Primary Research
The first stage of any competition study is primary research, which entails obtaining data directly from potential customers rather than basing your conclusions on past data. You can use questionnaires, surveys and interviews to learn what consumers want.
Do Your Secondary Research
Utilize existing sources of information, such as census data, to gather information when you do secondary research. The current data may be studied, compiled and analyzed in various ways that are appropriate for your needs, but it may not be as detailed as primary research.
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Create The Business Plan For Your Business
Your business plan is a dynamic document that is a roadmap for establishing your new business. This plan in document form makes it simple for potential investors, financial institutions, and company management to understand and get a solid snapshot of your business’s premise. Even if you intend to self-finance, a business plan can help you bring out your idea and identify potential problems. A well-rounded business plan should include the following sections:
Executive summary. The executive summary should be the first item in the business plan. The trick here is that it should be written last. It describes the proposed new business and highlights the goals of the company and the methods you will use to achieve them.
Company description. Your company description covers what problems your product or service solves in the marketplace, and why your business or idea is better compared to similar others. For example, maybe your background is in aviation maintenance, and you’ve used that background to create a new type of flight control actuator—you have the proper credentials to make the most dependable.
Market analysis. This section of the business plan analyzes how well a company is positioned towards its competitors. The market analysis should include target market, segmentation analysis, market size, growth rate, trends and a competitive environment assessment.
Organization and structure. Write about the type of business organization you expect and the management strategies you propose. It should also include who the staff management team will be and their qualifications? Will your business be a single-member LLC, or a corporation?
Mission and goals. This section should contain a quickly explained mission statement and detail what the business wishes to accomplish along with the steps to accomplish them. These goals should be specific, realistic, action-orientated, measurable, and time-bound.
Products or services. This section describes your business’s operating procedure. It includes what products you’ll offer to consumers at the beginning of the business, how they compare to existing competitors, the costs of your products, who will take responsiblity for creating the product, how you’ll source materials and how much they cost to make.
Background summary. This portion of the business plan is the most time-consuming to assemble. You need to compile and summarize any data. This includes but is not limited to articles and research studies on trends that could positively and negatively affect your business or industry.
Marketing plan. The marketing plan identifies the characteristics of your product or service. It summarizes the strengths, weaknesses, opportunities and threats of your business, and analyzes competitors. It also exhibits a discussion of how you will promote your business, how much money will be spent on the marketing aspect, and how long the campaign will run.
Financial plan. The financial plan is the core of the business plan. Without money the business will not be able to move forward. Include a proposed budget in your financial plan along with projected financial statements, called an income statement, a balance sheet, and a statement of cash flows. See an accountant for more detailed information on each of these if you feel appropriate. Usually, five years of projected financial statements are acceptable. This section is also where you should include your request for funding, if you are looking for outside funding.
Decide On Your Business Structure
When structuring your business, it’s essential to consider how each structure impacts the amount of taxes you owe, daily operations and whether your personal assets are at risk.
- LLC: A limited liability company (LLC) limits your personal liability for business debts. LLCs can be owned by one or more people or companies and must include a registered agent. These owners are referred to as members.
- LLP: A limited liability partnership is similar to an LLC but is typically used for licensed business professionals like an attorney or accountant. These arrangements require a partnership agreement.
- Sole Proprietorship: If you start a solo business, you might consider a sole proprietorship. The company and the owner, for legal and tax purposes, are considered the same. The business owner assumes liability for the business. So, if the business fails, the owner is personally and financially responsible for all business debts.
- Corporation: A corporation limits your personal liability for business debts just like an LLC does. A corporation can be taxed as a C corporation or an S corporation. S corporation status offers pass-through taxation to small corporations that meet certain IRS requirements. Larger companies and start-ups hoping to attract venture capital are usually taxed as C corporations.
Before you decide on a business structure, discuss your situation with a small business accountant, as each business type has different tax treatments that could affect your bottom line.
Register Your Business
There are several legal issues to address when starting a business after choosing the business structure. The following is a good checklist of items to consider when establishing your business:
- Choose your business name and register your business. Make it memorable but not too difficult. Choose the same domain name, if available, to establish your internet presence. A business name cannot be the same as another registered company in your state, nor can it infringe on another trademark or service mark that is already registered with the U.S. Patent and Trademark Office (USPTO).
- File business formation paperwork with your state. You’ll officially create a corporation, LLC or other business entity by filing forms with your state’s business agency–usually the secretary of state. As part of this process, you’ll need to choose a registered agent to accept legal documents on behalf of your business. You’ll also pay a filing fee. The state will send you a certificate that you can use to apply for licenses, a tax ID number and business bank accounts.
- Apply for an Employer Identification Number. All businesses other than sole proprietorships with no employees must have a federal employer identification number. Make your application to the Internal Revenue Service. You’ll typically receive your number in just minutes.
- Apply for the licenses and permits you need. Legal requirements are determined by your industry and jurisdiction. Most businesses need a mixture of local, state and federal licenses to operate. Check with your local government office for licensing information tailored to your area.
- Open a business bank account. Keep your business and personal finances separate. Here’s how to choose a business checking account—and why separate business accounts are essential.
- Apply for business insurance. You should consider general liability insurance for your business in case of property damage, lawsuits or other problems. Product liability insurance and commercial property insurance may be beneficial, too. In most states, workers’ compensation insurance is required by law if you have employees.
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Market Your Business
This probably doesn’t need to be said but a web presence is essential, even if you’re a brick-and-mortar business. You can make a standard informational website or an e-commerce site where you sell products online.
After getting a website or e-commerce store, focus on search engine optimazation (SEO). By doing good SEO it will ensure when a potential customer searches for specific keywords regarding your products, the search engine can point them to your business’s website. SEO is a long-term strategy, so don’t expect a ton of traffic from search engines at the startup—even if you’re using the proper keywords.
Provide quality digital content in the form of articles, and even tutorials, on your site that makes it easy for customers to find the correct answers to their questions. Content marketing ideas include videos, customer testimonials, blog posts and product demonstrations. Content creation and marketing should be one of the most critical tasks on your daily to-do list. This is used in conjunction with posting on social media.
You don’t necessarily need to be on every social media platform available. However, you should have a presence on Facebook, Instagram, and Twitter because they offer e-commerce features that allow you to sell directly from your social media accounts.
Are you wondering whether it would be better to register your business as a DBA vs LLC? Read
Should I Register My Business As a DBA or LLC, and learn which would be better for you!
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