Looking to start your own business? Here are 10 things you need to know.
We talk a lot about growing your business and achieving success, however it is important to touch upon the fundamentals of starting a business off on the right foot.
Setting out on your own is both an exhilarating and daunting experience. The more prepared you are, the more likely you are to avoid pitfalls and mistakes that could be detrimental to your business.
I started LI Advantage in 1996 in the basement of an office building and this year, our 20th anniversary year, I am excited to be included as one of Inc. 5000’s Fastest Growing Private Companies. This growth didn’t happen overnight; I had to put in my due diligence and make some mistakes along the way to find my footing.
The U.S. Small Business Association offers many valuable resources and tips for business owners and entrepreneurs to use when embarking on a new venture. Following these 10 simple steps when starting a business can aid you in planning, adapting, and managing your new business.
Step 1: Compose a Business Plan
Having a business plan is crucial to the success of your company. This record will project where your company will be 3-5 years from now and will create the direction in which your company will grow. Your business plan should include an executive summary, company description, market analysis, organization & management, service or product line, marketing & sales, funding request, financial projections, and an appendix.
Not sure where to begin? The SBA Business Plan Tool provides a step-by-step guide to help you get started.
Step 2: Get Proper Training and Business Assistance
There are countless counseling and free training services that are offered to aid you in starting your business. These services will guide you through anything from creating your business plan, securing finances, and relocating or expanding your business. Take advantage of these free services!
Step 3: Choose a Business Location
Choosing where to locate your business is certainly one of the most important decisions a small business owner can make. It requires a great deal of planning and research. You must look at demographics, scope out the competition, assess your supply chain, stay on budget, understand state laws and taxes, and a great deal more.
On the other hand, if your business doesn’t require a storefront or meetings on premise, this could be an area where you can save money during the first few years of operation. I operated out of a basement for the first two years I was in business until we grew enough to move into a bigger office. We now own a building that we are quickly growing out of!
Step 4: Finance Your Business
The first step is identifying your start-up and operating costs. Do your research and make sure you have a good idea of what kind of capital you will need to get started. Assess what you can afford to invest and weigh the pros and cons of bringing on a partner or investor to get to where you need to be to get your business off the ground. If you find that you still need to acquire additional funds, other avenues you can explore include venture capital, government backed loans and research grants if applicable. The SBA offers loan programs that may be worth looking into. The most important thing is to make sure you do your research before entering into any binding contracts, whether it be a partnership or loan.
Step 5: Determine the Legal Structure of Your Business
No one starts a business and looks forward to paying taxes, but unfortunately it comes with the territory. Determining which type of business entity you establish determines which income tax forms you must file. Working with a reputable payroll company can help make sure you stay compliant when it comes to filing the necessary employment taxes. Decide which style of ownership is best for you to: sole proprietorship, partnership, S corporation, Limited Liability Company (LLC), cooperative or nonprofit.
Not sure which business structure is right for you? Click here for a breakdown of what they all mean.
Step 6: Register a Business Name
Too often, people pick a name for their business without doing enough research and then are forced to change due to trademark issues. If you want to operate under any name other than your own personal name then you’ll need to register it as a “doing business as” (DBA) name with your state government.
Step 7: Register for Local and State Taxes
Register with your state to obtain a tax identification number, unemployment, workers’ compensation, and disability insurance. Not all states have the same requirements so you’ll need to find out what tax obligations pertain to where you do business.
Step 8: Gather Business Licenses and Permits
Get a list of local, state, and federal licenses and permits required for your business to run legally. For example, if you are looking to sell alcohol or operate an oversize or overweight vehicle, you’ll need special licenses and permits to do so. There are hefty fines and in some cases forced closure for businesses who to attempt to operate without the necessary licenses. It’s not worth the risk.
Step 9: Understand Employer Obligations
If your business is doing well, but you are struggling to do it yourself, it may be time to look into hiring employees. Before you hire your first employee you’ll want to make sure you are compliant with federal and state regulations. Click here for 8 steps to help you start the hiring process.
Step 10: Never stop trying to improve
Congratulations, you did it! You’re a business owner! It can be easy to get swept up in the day-do-day operations of running your business but never forget why you got into business for yourself in the first place. There is always something new to learn in your field that will help you grow and get the most out of your chosen path.