The nearly thirty million small businesses in the US make up a huge portion of the economy and employ about sixty million workers. Why do people decide to start their own companies? A variety of reasons. From wanting to be their boss, to wanting to pursue their passion, to needing a more flexible schedule, entrepreneurs emerge every day in this country. If you are considering starting your own business, you are certainly not alone. However, just because you have the drive and desire doesn't necessarily mean that your business will be a success. It takes work, know-how, and the discipline to create a plan and stick to it. In this article, we look at some of the key steps on how to start a business.
Step 1: How to Start a Business - Research, Research, Research
Of course, the first step is going to be to formulate an idea and visualize what that business could potentially look like. Once you have the idea, however, you need to do some practical work by way of research. As with anything, starting a business is going to require some homework on your part. What exactly do we mean by homework and the research required? Essentially, you want to identify and clarify some key points as they relate to your business endeavor. First off, is there a need for your productservice? What sort of competition might you be facing? And perhaps most importantly, what group of people will you be focusing on as far as potential buyers?
To gather the relevant information, you could reach out to focus groups, hand out surveys, or even just talk to people you know regarding your ideas and get their feedback.
Step 2: Come up with a Plan
One thing just about every new business is going to need is a solid business plan to get started. Think of your business plan as a blueprint of sorts. This is your map toward creating, launching, and running the business. Business plans can be as simple or as complex as you need. If you are seeking investors, you're likely going to have to come up with a more traditional business plan. This will outline all key facets of the business, look at market forecasts, detail the structure of the company as well as your marketing game plan in getting started.
Step 3: Review Your Financing Options
In beginning any type of company, you are going to need money to get started. Depending on the company type, the amount of money could be more manageable, however, you still do need some capital in the early stages of your small business. To this end, and to see where you currently stand, you could generate a spreadsheet listing out all potential sources of money that you have available to you. You might also list out all of the expenses that you know you're going to incur as you attempt to launch your new company. So this could include things such as necessary licenses, marketing costs, staff costs if applicable, insurance, any equipment you may need, and so forth.
Once you have a pretty good picture of what cash you have access to and what you will need to pay for in the incipient stages of the company, then you can start to figure out where you might get additional capital if such is required. You could look into financing options, crowdfunding, loans from family/friends, among other options. The key is to make sure you have a comfortable financial cushion as you get started with your new business.
Step 4: Select Your Business Structure
This is a pretty important consideration for any new company. That said, many when starting a business will opt to begin as a sole proprietorship. This is because that particular business entity is the easiest and least expensive to create. Remember, the type of business structure you choose largely affects how you will be taxed, so you may want to discuss it beforehand with an accountant. Keep in mind too that you can always change your business structure. Let's say you start as a sole proprietorship for ease's sake, as you grow you can always opt to incorporate or form an LLC to better protect your business as well as your assets.
Step 5: Register Your Business Name
The name you choose for your company is important—make no mistake about it. If you are forming a sole proprietorship, you do have the option of just using your name, however, is this going to be suitable for the company? If you want something catchier and more relevant, you could choose to go with a DBA (doing business as/). If you're forming a partnership, LLC, or corporation, you're going to need to register your company name; part of this involves making sure that no one in your state is currently using that name. When you file the paperwork to form the company you will also file the paperwork specifying your company name as well.
Step 6: Apply for Licenses
Not all businesses will require a license to operate. That said, several industries/business sectors do require a license and/or permit to operate. You want to be sure you remain in compliance to this end. Failing to get the proper licenses could result in fines and penalties. You can check with both your state and local governing bodies to see what if any licenses and permits you may need to start your business.
Step 7: Assemble Your Team
If you haven't already, you're going to want to start hiring people that will fill out your team. While some new businesses only consist of one or two people, others do require a team of skilled professionals coming together to get things up and running. Additionally, if you are not in a position to put together a team of employees, you could opt to begin by outsourcing certain tasks that you may not be able to handle on your own. Gig and freelance workers are in abundance—especially now. Interviewing and potentially working with freelance employees could be more cost-effective in the early stages of the company.
Step 8: Promote And Advertise Your Business
When all components are in place and you are ready to launch, then it is time to start spreading the word about your new company. After all, you could have the best idea in the world but if no one knows you're there, what good is it doing you? There are a ton of ways to promote your new business that are highly cost-effective; some are even free. Using social media, getting reviews, blogging about your company are all extremely cheap ways to advertise.
First Union Lending is here to help. If you need cash for your small business or start-up, we have a program for you. Call today!