To Start a Business, Follow These Steps
Are you ready to start your own business?
Creating your own business is both rewarding and difficult. In addition to securing appropriate funds, time, personal support, and professional support, you must also choose a business structure and consider tax and bookkeeping considerations.
Regardless of your choice and current stage, we offer the resources to help you achieve.
1. Find a Business Idea
Choosing the type of business to launch is the initial step toward business ownership. Consider small business ideas that align with your interests, personal objectives, and natural abilities. This can help you remain motivated when the going gets difficult and greatly increase your chances of achieving success.
To help get ideas, think about these easy startup options:
- Business consulting
- Cleaning services
- Tax preparation and bookkeeping
- Event planning
- Jewelry making
- Copywriting services
- Personal training
- Music lessons
- Computer training
- Graphic design
- Financial planning
2. Conduct Research About Your Business Idea
Once you have a concept for a small business, the following step is to determine whether it is worthwhile to pursue. Utilize market research and competitor analysis to do this. This can help you assess the interest level of your audience and:
- Understand your customers’ needs
- Identify potential problems with your product or service
- Lessen financial losses by helping you make more informed decisions
- Find niche markets you may not have known about
- Set goals that can guide your business
To effectively conduct research, you must:
Identify your target customers:
This can be accomplished by considering who benefits from your product. You should also consider characteristics such as age, geography, and even marital status.
Engage your audience:
Once you have determined who your target clients are, perform surveys and speak with individuals directly to gather additional input. Don’t forget that social media can be a great location to interact with them.
Look at competitors:
Analyzing competitor products or services can provide insight into the current state of your sector. This might assist you in discovering ways to enhance your idea. In addition, it might help you identify flaws in your product or service before you invest time and money developing it. During this process, be sure to take notice of your competitors’ prices, which will give you an idea of how much buyers are currently spending on similar products.
3. Write Your Business Plan
As the owner, developing a business plan formalizes your idea and can streamline the business creation process by forcing you to sit down and deliberately consider your options.
Having a solid understanding of your “known unknowns” is crucial since it shows that you’re purposefully not prioritizing finding a solution right now; this is preferable to being unprepared or caught off guard, especially if you struggle to answer these questions when seeking funding.
Business plan outline
- Company name and description
- Market analysis
- Management and organization
- Products and services
- Customer segmentation
- Marketing plan
- Logistics and operations plan
- Financial plan
Choose a business name
To begin with, your business name is an omnipresent aspect of your marketing; it appears in everything you do. Find a name that clearly communicates what you do, is brief and memorable, and resonates with your mission and vision statements. This is not an easy assignment, but it is extremely doable with some creativity.
Writing a business strategy is essential because it enables you to make more effective and strategic choices. It also assists you in focusing on your objectives and strategies. Among the additional advantages of a business plan are the following:
- Finding potential weaknesses
- Communicating your ideas to stakeholders
- Organizing important information about your business
- Hiring employees that are right for your company
4. Get Funding
It’s no secret that you need cash to launch a business, but there are a few steps you must take before you can get the funds you need to cover beginning expenses. Before seeking external capital, calculate your business’s costs. This will assist you in selecting the most suitable finance option for your firm. Next, be prudent with your spending and arrange your finances by developing a comprehensive financial plan.
Explore Business Funding Options
- Bootstrapping: This is the do-it-yourself strategy to establishing a business, in which personal savings and current revenue are used to fund the firm. Once a business is operational, profits are re-invested in the business to fuel its expansion.
- Friends and Family: Financing your business with loans from friends and family might be an excellent approach to obtain the funds required to launch a small business. When conducting business with family and friends, it is prudent to develop a documented contract and repayment schedule.
- Small Business Grants: Small business grants are essentially non-repayable business funding for your company. A small business grant can be obtained by submitting an application to a grantor.
- Small Business Loans: Small business loans are often available through banks and other lending institutions. This kind of financing involves payback, but it will offer you with the funds to meet initial expenses and more.
5. Choose a Business Structure
To select the optimal structure, you must strike a balance between the legal and financial protection you require and the flexibility given by several alternatives. Before you establish your firm, you should give great consideration to this decision.
Common business structures, which may have different names in your nation, include the sole proprietorship, the limited liability company (LLC), and the corporation.
- Sole proprietorship. You can register as a sole proprietor if you plan to be liable for all debts and responsibilities and are the sole owner of the business. Be advised that this path can directly damage your credit score.
- Partnership. Alternatively, a business partnership, as implied by its name, entails the personal liability of two or more business owners. If you can locate a business partner with complimentary abilities to your own, you can avoid going it alone. It is usually a good idea to add someone to your team in order to assist your business thrive.
- Corporation. If you wish to separate your personal liability from the liability of your business, you may wish to form one of numerous forms of companies (e.g., S corporation, C corporation or B corporation). This legal structure makes a firm a separate entity from its owners; hence, corporations can own property, accept liabilities, pay taxes, engage into contracts, sue and be sued in the same manner as individuals. “Companies, particularly C corporations, are ideal for fledgling enterprises that want to go public or seek venture capital backing in the near future,” said Deryck Jordan, managing attorney at Jordan Counsel.
- Limited liability company. Limited liability partnership. The limited liability company is one of the most prevalent forms for small businesses (LLC). This structure combines the legal protections of a corporation with the tax advantages of a partnership.
6. Get Federal and State Tax ID Numbers
After selecting your business structure, the next step is to incorporate. Regardless of the formal corporate structure chosen, the following procedures are universal:
- Naming your business
- Choosing a registered agent: an individual or business entity that accepts tax and legal documents on behalf of your business.
- Getting an Employer Identification Number (EIN): a number assigned by the Internal Revenue Service (IRS) to help identify businesses for tax purposes.
- Filing formation documents.
In addition to these stages, each business structure has its own specific criteria.
You can have one of these Best LLC Services form an LLC on your behalf, or you can do it yourself by following the procedures listed below.
Federal tax ID (EIN)
A federal tax ID, commonly known as an employment identification number or EIN, is a nine-digit number assigned by the IRS for tax purposes to corporations and organizations. Consider it your company’s Social Security number.
You’ll need an EIN if
- Your business has any employees other than yourself
- Your business is incorporated
- You have any partners in your business (i.e., it is a multi-member LLC)
- You take over an existing business either through purchase or inheritance
- You have a retirement plan for self-employed individuals (like a keogh plan) or solo 401(k) retirement plan
- You want to open a bank account (Not all banks require an EIN, but most do.)
- You file for bankruptcy
Having an EIN will
- Help you when you file taxes
- Protect you legally
- Help protect your personal information
- Help you establish credit
State tax ID
State tax IDs are distinct from EINs. A federal EIN is issued by the IRS, but a state tax ID is issued by your state.
Similar to an EIN, a state tax identification number helps your firm comply with state rules. Nevertheless, each state has own rules, regulations, and tax laws. To determine if your business need a state tax ID, you will need to examine the requirements of your specific state.
State to state, laws differ. Your state’s taxes department, department of treasury, or secretary of state is a good place to start. Contact them for information on any state tax ID requirements you may need.
7. Obtain a Business License and Permits
Once you have an understanding of how to launch a business, you should investigate the local, state, and federal licenses required to operate legally. Before launching a firm, it is advisable to consult with a small business attorney for advice.
Your startup is subject to the laws governing enterprises in your region, as well as industry-specific laws and regulations. A food service business, for instance, must adhere to certain licensing and rules for handling the products it sells, but it must also consider the legalities of its marketing efforts and trademark and copyright laws.
Next Step: Ready to get started? Learn how to get a business license and the required documents needed to obtain it.
8. Set up Business Banking, Credit Cards, and Accounting
Utilizing business-specific banking and credit accounts is vital for protecting personal assets.
When you combine your personal and business accounts, your personal assets (such as your home, car, and other valuables) are at risk if your business is sued. This is referred to as piercing your corporation’s veil in business law.
You can protect your business with these three steps:
1. Opening a business bank account:
- Separates your personal assets from your company’s assets, which is required for the protection of your personal assets.
- Facilitates bookkeeping and tax filing.
2. Getting a business credit card:
- Allows you to segregate business and personal costs.
- Establishes your company’s credit history, which might be helpful when raising funds in the future.
3. Setting up business accounting
- A accounting system allows you to monitor your company’s success and simplifies your annual tax filings. Quality accounting software enables you to download your bank and credit card transactions, which makes accounting simple and efficient. Discover the significance of accounting and how to get started with accounting immediately. Or, employ a business accountant to assist you with all your payroll and sales tax accounting and tax needs.
9. Get Business Insurance
Your small business and personal assets are safeguarded by business insurance in the event of a disaster. Even if your state doesn’t mandate insurance, it’s a good idea to safeguard yourself and your business.
Common types of business insurance
- Liability coverage : Liability protection insurance protects your company from lawsuits resulting from accidents, injuries, or negligence.
- Business property insurance :Will assist your business in the event of property loss or damage due to fire, theft, or natural disaster. It will help pay for property, inventory, and equipment repairs or replacements.
- Commercial auto insurance : Covers any damage caused by or to cars used for business purposes. (i.e., delivery vehicles, moving trucks, forklifts, etc.). In the event that one of your vehicles causes an accident, it will cover medical expenses, legal fees, and property damage.
- Workers’ compensation Insurance : Pays for medical expenses and missed earnings for employees injured on the job. Most states require firms to have workers’ compensation insurance based on the number of employees they have.
- Employers’ liability insurance : Protects workers in service-related occupations. It shields them from legal responsibility for negligence or malpractice (for example, estheticians, hair stylists, bartenders, etc.). Also referred to as mistakes and omissions insurance.
- Product liability Insurance : Protects manufacturers, distributors, wholesalers, and retailers. It protects them from liability if a product they manufacture or sell is dangerous and causes injury.
- Commercial interruption insurance : Will cover operating expenses if it must close or relocate (for example, because of a fire or hurricane). It will cover the costs of relocation, employee compensation, and rent.
- Cyber insurance coverage : Provides data breach-related organizations with liability coverage. Depending on the insurance, it may also cover the cost of notifying customers of the data breach and providing services to customers who have suffered identity theft as a result of the data breach.
- Umbrella insurance : Provides additional coverage to help pay for expenses that may have exceeded the limits of your previous insurance policies.
To determine what insurance you may require, you must be aware of the hazards associated with your sector. A dog grooming firm in California will have wholly different requirements than a t-shirt printing business in North Carolina.
After identifying the types of insurance your firm requires, conduct a market search. There are numerous insurance providers offering a variety of products. If you find the process intimidating, it is advisable to work with a trustworthy licensed agent. A commercial insurance professional will assist you in locating coverage that meets the needs and budget of your firm.
10. Obtain Permits and Licenses
To lawfully operate your new business, you must adhere to federal, state, and local government requirements. Typically, this requires the acquisition of one or more business permissions and/or licenses. A restaurant, for instance, may require health permissions, building permits, signage permits, etc.
11. Hire Your Team
Now that you understand how to start a business, it’s time to begin assembling your management team.
How much effort would it take to begin your small business, and what skills are necessary? These are key issues you will need to answer, as they will determine your launch’s schedule and level of investment.
If you intend to do the entire project on your own, you are restricted by the amount of time you have available. If you plan to hire personnel, you will need to account for those expenditures as well as the time required for recruiting and onboarding.
Positions for which you may wish to hire workers
- Inventory manager: to keep your inventory up to date
- Customer service coordinator: to solve customer problems
- Social media manager: to create buzz and grow your social presence
- Ads specialist: to generate traffic to your website
- Graphic designer: to create assets for your marketing material
- Marketer: to plan and write material for email, website, and other campaigns
12. Brand yourself and advertise.
Before you can begin selling your goods or service, you must establish your brand and amass a ready-to-buy audience.
- The company’s webpage. Create a corporate website to promote your internet reputation. A website is digital proof that your small business exists, as many buyers resort to the internet to learn about a company. It is also an excellent opportunity to communicate with existing and prospective customers.
- Social media. Utilize social media to disseminate information about your new business, maybe as a promotional tool to give coupons and discounts to followers after the firm is launched. Your target audience will determine the finest social media sites to employ.
- CRM. The top CRM software systems enable you to save customer information to enhance your marketing efforts. A well-planned email marketing campaign may do wonders for customer acquisition and audience engagement. To be effective, you will need to create your email marketing contact list strategically.
- Logo. Create a logo that allows consumers to readily recognize your business, and use it consistently across all media.
Request that customers opt-in to receive your marketing materials.
Ask your current and potential consumers for permission to communicate with them as you create your brand. Using opt-in forms is the most efficient approach. According to Dan Edmonson, founder and CEO of Dronegenuity, these are “forms of consent” given by web users, granting you permission to contact them with additional information about your business.
“These types of forms are typically used in e-commerce to request permission to send newsletters, marketing materials, product sales information, etc. to customers,” Edmonson explained. By requiring customers to opt-in to your services in a transparent manner, you can begin to build customer trust, given that people receive so many irrelevant emails and other messages today.
Opt-in forms are an excellent starting point for establishing trust and esteem with prospective clients. Additionally, these forms are legally required. The CAN-SPAM Act of 2003 establishes Federal Trade Commission requirements for commercial email. This law applies to all commercial messages, as defined by its definition of “any electronic mail message whose primary purpose is the commercial advertisement or promotion of a commercial product or service.” Each email that violates this statute is subject to fines exceeding $40,000.
13. Build Your Business Website
The next step after defining your brand and designing your logo is to create a website for your company.
While developing a website is a necessary step, some people may believe it is out of their grasp since they lack website-building skills. While this may have been a valid concern in 2015, web technology has advanced significantly in recent years, making the lives of small business owners much easier.
The following are the key reasons why you should not put off developing your website:
- Websites are required for any reputable businesses. When it comes to getting your business online, it doesn’t matter what size or industry you’re in.
- Facebook pages and LinkedIn business profiles are not a substitute for a company website that you own and control.
- The GoDaddy Website Builder, for example, has made constructing a basic website quite straightforward. To make a website you can be proud of, you don’t need to pay a web developer or designer.
14. Grow your business.
Promoting Your Business
There are numerous strategies for promoting your business, but the most effective include:
- Press Releases
- Google My Business
Press releases are one of the most cost-effective marketing techniques because they:
- Provides publicity
- Establish your brand on the web
- Improve your website’s SEO, driving more customers to your website
- Are a one-time cost in terms of effort and money
- Have long-lasting benefits
A Facebook profile is an excellent, cost-free way to communicate with your customers. However, success necessitates persistent effort.
A Facebook page is useful for:
- Establish your business’s local presence
- Exhibit your company’s products and services
- Engage in dialogue with your customers
- Obtain and share client reviews
- Advertise your business, although this may not be appropriate for your firm.
With billions of YouTube viewers worldwide, there is a vast audience for the material your firm may provide. Your company’s YouTube account can be utilized to:
- Increase your Google ranking and conversion rate to increase your SEO.
- Drive social media participation and strengthen customer relationships.
- Offer comprehensive descriptions of items and services.
Google My Business
With billions of YouTube users throughout the world, there is a big audience for the content your company may offer. The YouTube account for your business might be utilized to:
- Improve your Google rank and conversion rate to boost your SEO.
- Promote social media involvement and customer connection strengthening.
- Provide exhaustive descriptions of products and services.
While beginning a business is thrilling and sometimes difficult, you must be prepared to run it for many years.
Fortunately, there are a range of tools available around the country to assist small businesses like yours in growing. We’ve put together a list of the best public and private options in each state to help you get the help you need.