I started my business in 2017. It’s only been a few years, but in that short span of time, I’ve learned some things that I wish I had known when I started my business. It’s easy to get started, but once you get started, there are certain things that are good to know sooner than later. This post will help you to know things that will benefit you better earlier than later. Here’s a step-by-step guide to starting your business.
Step 1: Choose Your Business Idea
The first thing you have to do is decide what your business will be about. That is not always an easy thing to decide. When I retired from the federal government a few years ago, I knew I wanted to be an entrepreneur. But while my interests were many, there was no one certain answer for me. So, it took me a year to discover what to focus on. The first thing to know is that a business should fill a need. So whatever your idea is, it should benefit the needs of people. Here are some suggestions for finding the right business idea:
Examine your skillset. What is it you do well that could generate a profitable business? Ask yourself these questions: What have I spent so much time doing that I’ve become an expert at? What marketable skills and experience do I have? Will people be willing to pay for my products or services?
Consider what people need. Keep a listen out for what’s happening around you. What is it people need but don’t know how to get? What’s a problem in the news right now that you hold a solution for? For instance, in 2020, when businesses were closing and people didn’t know where they would find work, they needed to resort to other marketable skills — skills they probably didn’t have. Do you possess a skill that people would love to know how to do to help prepare them for the open job market? They may be willing to pay you to teach them a new marketable skill.
Invent a new product or service people need. Once you’ve identified a need to be filled, invent a product or service to meet the need. Maybe there’s already a solution to the problem, but it needs improvement. Create a new and improved solution to the problem to help people.
Step 2: Plan a Business
A business idea is nothing if you don’t put it into action. So, it’s important to plan your business. Planning your business is more than just thinking about it. It’s about putting it on paper or implementing processes to take the idea to the next level. To plan your business, do the following:
Choose a business name. Choose a name for your business. Your name will need to be unique, so this is not always an easy task. It may take several attempts to find a memorable name that fits your business that is not taken already. Some sites that can assist you with generating a business name are Wordoid, Domain Name, Lean Domain Search, and DomainHole.
Find a location for your business. Will this be a brick-and-mortar business or online? Your business could be a combination of both. Either way, your business location informs the type of licensing and permits you’ll need as well as your business’s growth potential. If this will be an online business, contact me and request my presentation on how to start your online business.
Conduct market research. Do you know much about the market you’ll be serving? Before you go any further, conduct thorough market research. That can involve conducting surveys, doing search engine optimization (SEO) research, or holding focus groups. The market research will help you to better understand your target market and competitors to craft an effective business plan. Your research will also help to confirm the need for your business.
Write your business plan. A well-crafted business plan is important for your business journey. Your business plan will not only help you get organized; it can be the resource you use to help you get the necessary funding and help you reach important milestones. I have a complete presentation and handbook on funding your venture. Contact me to gain access to this crucial resource. Your business plan can be as comprehensive or condensed as you’d like. But it should contain these important elements:
Product Development: What problem does your business solve? What will set your product or service apart from the competition?
Sales and Marketing: Who are your potential customers? How will you get their attention in this competitive market, and what strategy will you use to convert them into buyers?
People and Partnerships: What people skills will you need to get this venture moving? Who will you hire and what are their credentials? What external relationships and collaborations will you need to make for your business to succeed?
Financial Planning: How many clients or sales will you need to break even? How much money will it take to get there, and where will you get the funding?
Step 3: Get The Funding You Need
Your business will not get far without the appropriate funding to get started. Learn how to qualify for business credit. You will need to cover startup costs to initially get started, and you will need funding throughout the various stages of your business. I have a complete presentation and handbook on funding your venture. Contact me to gain access to this crucial resource.
Calculate your business costs before seeking external funding. That will help you choose the right funding source for the needs of your business. Be aware of the various funding sources that are available to you. That is where my presentation, Funding Your Venture, can be beneficial to you. So contact me to access that.
Step 4: Choose a Business Structure
You will need to register your business as a legal business entity, like an LLC, corporation or nonprofit. Doing this has two major advantages: it increases credibility and provides protection from personal liability in the event your business is sued. You will need to know which business structure is right for your business:
A sole proprietorship is an informal business structure that isn’t incorporated or separated from its owner. That means all profit from the business goes to the owner. You're automatically considered a sole proprietor if you do business activities but don't register as any other kind of business. A sole proprietorship can be a good choice for low-risk businesses and owners who want to test their business idea before forming a more formal business.
A partnership, like a sole proprietorship, is an informal unincorporated business structure but with multiple owners. Similarly, partnerships do not have liability protection that you find with a formal business structure. Partnerships can be a good choice for businesses with multiple owners, professional groups (like attorneys), and groups who want to test their business idea before forming a more formal business.
Limited Liability Company (LLC)
LLCs protect you from personal liability in most instances. Your personal assets — like your vehicle, house, and savings accounts — won't be at risk if your LLC faces bankruptcy or lawsuits. LLCs can be a good choice for medium- or higher-risk businesses, owners with significant personal assets they want to be protected, and owners who want to pay a lower tax rate than they would with a corporation. Check out my quick guide to starting your LLC, Starting Your LLC.
A corporation, sometimes called a C corp, is a legal entity that's separate from its owners. Corporations can make a profit, be taxed, and can be held legally liable. Corporations are owned by shareholders and have more formal regulations than LLCs. Learn more about corporations and the different types of corporations.
Nonprofit corporations, or 501(c) (3)s are organized to do charity, education, religious, literary, or scientific work. Because their work benefits the public, nonprofits can receive tax-exempt status, meaning they don't pay state or federal income taxes on any profits it makes. Nonprofits must file with the IRS to get tax exemption, a different process from registering with their state.
Step 5: Form Your Business
Now that you know your business structure, you need to legally form the business. The step may vary depending on the business structure you choose, but there are some general steps involved. To form your business, you will need to:
Name your business.
Choose a registered agent. That is someone that will accept tax and legal documents on behalf of your business.
Get an Employer Identification Number (EIN). That is a number assigned by the Internal Revenue Service (IRS) to properly file your business taxes.
To form your LLC, visit my article, Starting Your LLC.
To start your corporation, you’ll need to know the type of corporation your business will be, such as C corporation, S corporation, or B corporation. From there, you’ll need to:
Name your corporation.
Choose a registered agent.
Hold an organizational meeting.
File formation documents.
Get an EIN.
Starting a nonprofit involves some of the same steps as starting a corporation or LLC. However, the process is a little more involved and requires more paperwork. You can also apply for tax exemption with a nonprofit organization. Essentially you will:
Name your nonprofit.
Choose a registered agent.
Select your board members and officers.
Adopt bylaws and conflict of interest policy.
File the articles of incorporation.
Get an EIN.
Step 6: Set Up Business Banking, Credit Cards, and Accounting
Using an account specifically designed to meet your business needs is important for your business. Learn the importance of separating your business account from your personal account and Why Business Credit Matters. Be sure to:
Open a business bank account. You will need your EIN to do this.
Get a business credit card. Learn how to qualify for business credit.
Set up business accounting. Be sure to have an accounting system that helps you track the performance of your business and simplifies annual tax filings.
Step 7: Get Insured
Business insurance can be a good decision, depending on the type of business you have. Business insurance helps you manage risks and focus on growing your business. General liability insurance is recommended for most small businesses, even home-based businesses.
Step 8: Acquire Permits and Licenses
You want to ensure that you’re complying with federal, state, and local government regulations throughout the forming of your business. That may even involve obtaining one or more business permits and/or licenses, depending on the state and local requirements of where your business is located. You will need to refer to your state and local authorities to know more.
Step 9: Establish Your Values
This is a step that didn’t come about until later for me. But it’s something I’ve wished I had done at the beginning of forming my business. Know what your business stands for and everything you do from then on should revolve around it. Establish your brand through and around your values.
Step 10: Create Your Logo
Now that you’ve established your values and what you stand for, your logo should also reflect that and the business name. Find a great designer to create your logo. Contact me. I know a great reference.
Step 11: Build Your Business Website
Now it’s time to create your website. Some platforms that will help with this are WordPress, GoDaddy, and Wix. Websites are essential because they help to display the legitimacy of your business. If you have experience building websites, great! If not, consider hiring someone to build your site and a content writer to create the content. Learn more about taking your business online by requesting access to my presentation, Reclaiming Your Time: Taking Your Business Online.
Step 12: Promote and Market Your Business
There are many ways you can promote your business, but the most effective ways are:
Google Business Profile
SiMMs Production & Services, LLC provides freelance writing and editing services. That includes writing blogs for your website, creating social media posts, and writing press releases for your business. Contact me to get access to my presentation to learn other ways to promote your online business.
Starting a business is exciting, but it can also be challenging. Continue to look to my blog as I provide resources and information that every small business can use.
Congratulations on your business! I wish you nothing but success. The world is now one step closer to solving a much-needed problem. If you have questions along the way, don’t hesitate to reach out. Contact me if you need to.