HOW TO START A BUSINESS
Table of Contents
1.
Be Ready to Start Your Business Startup Journey
2.
Find Your Purpose
3.
Decide What Type of Business You Want
4.
Research the Market and the Competition
5.
Develop Your Business Plan
6.
Choose Your Business Structure
7.
Determine the Best Location for Your Business
8.
Register Your Business and Get Licenses
9.
Get Your Finances in Order
10.
Fund Your Business
11.
Get Business Insurance
12.
Buy Your Business Tools and Software
13.
Now You Are Ready to be Open For Business
14.
Bottom Line
15.
Frequently Asked Questions (FAQs)
Starting your own business is an exciting, and scary, adventure to start out on.
The rewards are worth the risk, if you do the proper planning, and put a lot of
thought into it to be successful. The biggest question on most people’s mind is
where to even begin. The answer to that question is a little bit different for
everyone that sets out to start their own business, but the fundamentals are the
same for almost every business. This comprehensive guide will help you get
started thinking about the right things, and help you to set yourself up for a
successful business startup.
1. Be Ready to Start Your Business Startup Journey
You have probably heard of many business startup success stories, and rarely
about business failures, because the success stories make for better news stories.
It’s not always a success when people throw their life savings into starting a new
business. it’s rarely that simple, you don’t hear about the years of dreaming, and
prep work that some people do before they start a successful business.
Everyone’s journey is different, so don’t get frustrated if you think other people
starting up their business had more success sooner than you. Every dream of
business ownership is different, every business is different, even if they seem
similar.
2. Find Your Purpose
The first thing to start thinking about is why. Why are you doing this. Why do you
want to start your own business. What are you doing it for. Who are you doing it
for. What is your goal. Remember these reason, remember your goal. There will
be times you will get frustrated when you are starting your own business. Level
set yourself when this happens, and remember the reasons and your goals to
keep yourself motivated when things get a little tough.
3. Decide What Type of Business You Want
To be successful in business, to feel successful, you should really find something
that you enjoy doing. It also needs to be profitable, and something that you are
good at or willing to put in the effort to learn and become good at it.
Here’s Some Great Business Ideas to Get You Started In Thought:
•
Franchise
•
Online Blog
•
Online Store
•
Dropshipping Business
•
Mechanics Shop
•
Cleaning Business
•
Bookkeeping or Accounting Business
•
Clothing Business
•
Landscaping Business
•
Consulting Business
•
Food Truck Business
•
Restaurant Business
•
Retail Shop
•
Photography Business
•
Videographer Business
•
Vending Machine Business
4. Research the Market and the Competition
When you pick the type of business, now it’s time to do your homework. Who will
your customers be, and what are they looking for. Are there other businesses
doing or selling similar products or services? If so, how are they doing it. What is
their offering. How can you compete with them. It’s important to know what your
target customer is looking for, how they are getting it, and what will set you apart
from your competition so they will buy your products or services.
5. Develop Your Business Plan
The first page of your business plan is your executive summary. This is your one
shot to make the best first impression that your plan for your business will be a
success. It should include a mission statement, a brief description of the products
or services that your business will offer, and a summary of your financial growth
plans.
The second section of your business plan will be where you describe your
company. This is where you would document your business’s registered name,
the address of your business, names of key people in the business and their
unique skills or expertise. You should define your business structure, whether it’s
a sole proprietorship, a partnership, or a corporation. If you have partners, you
would want to describe the percentage and roles for each partner.
The third section of your business plan should include what your business goals
are, as an objective statement. This is where you lay out what you would like to
accomplish in the short term, as well as over the long term. If you are going to try
to get a loan, it is in this section that you would explain the clear need for asking
for the extra funds, and how that money will help your business grow. It’s
important to explain how you plan to make your growth targets.
The fourth section of your business plan is where you will describe your products
and services in detail. The types of details you should include are how your
product or service works, what your price points will be, what your customer
target market is, your supply chain, your sales strategy, how you will fulfill your
orders, and how you will distribute your products.
Next you will want to perform a market analysis and document what sets your
products or services apart from your competion. Your should explain who your
competitors are, what they do well, and what you will be able to do better to set
you apart and bring customers to you.
You should document your marketing and sales plan. Tell your potential lenders
how you will convince customers to buy your products instead of the competitors
products. Explain how you will be able to build customer loyalty that will lead to
customers repeatedly coming back to you for more sales.
Next you will need to make some financial projections, which is one of the most
critical parts of your business plan. You should outline how your business will
make enough money, bring in enough business, to be able to pay back the loan if
you are using this business plan to apply for a loan. You should estimate what
your anticipated monthly or quarterly sales will be, your expenses, and your
profits for a three year period or more. It’s very important to be as honest and
accurate as you can here, so you can achieve these goals, and surpass them.
The last section of your business plan is the appendix, which is where you will
include any additional details, and supporting information. Some details you may
want to include are key employee resumes, licenses, permits, equipment leases,
patents, receipts, bank statements, contracts, and your or your business credit
history.
6. Choose Your Business Structure
Now it’s time to start thinking about how you want to structure your business.
Whether you want to have a sole proprietorship, a partnership, or an LLC, each
structure has specific positives and negatives. A big impact that could affect you
depending on how you structure your business is tax liability and legal liability.
Structure Your Business As An LLC
A limited liability corporation, or LLC, does just that, it limits your personal liability
for the business debts. An LLC can be owned by one or more people, or by one or
more companies, and has to have a registered agent. This structure provides
liability protection for the business owners. It is a very easy business entity to
setup. The only negative is that you will probably have to file additional
paperwork with your state in an ongoing basis, and there is probably an annual
fee.
Structure Your Business As An LLP
A limited liability partnership, or LLP is similar to an LLC but is usually used by
licensed business professionals like attorney’s. To setup an LLP, you have to have
a documented partnership. This type of business structure provides limited
liability protection for the partners for the debts and actions of the LLP. Each
partner is required to actively participate in the business. Partners are personally
liable if there are any malpractice claims filed against the business.
Structure Your Business As A Sole Proprietorship
When you are just starting out in starting up a new business, the easiest and most
common business structure that new business owners setup is a sole
proprietorship. In this structure, you as the business owner assume all liability for
the business. If the business fails or falters, the owner is personally and financially
responsible for the business debts. There is no additional paperwork required by
your state, but you may have to file some paperwork once per year for your
county.
Structure Your Business As A Corporation
A corporation can be a complex and expensive business structure to stand up,
and much like an LLC, it does limit your personal liability for business debts. There
are options of the type of corporation, such as a C-corporation (C-corp) or an S-
corporation (S-corp). An S-corp status gives you the ability to have pass through
taxation to small corporations that meet certain IRS requirements. Larger startup
companies hoping to attract venture capital are usually taxed as C-corps.
7. Determine the Best Location for Your Business
Location is everything, if you are looking for visibility and foot traffic. If you are
going to start a new coffee shop, for instance, you would want to make sure it is
easily accessible to customers that will drive by and see your sign, to quickly
swing on in and get a cup of coffee. It is a good idea to look for a place that is next
to a business that compliments your business, or brings a lot of customers in so
you can take advantage of their customers stopping by your business next. That
may help you to save on your marketing budget as well, if other businesses in the
area bring in a steady amount of customers your way.
8. Register Your Business and Get Licenses
Pick A Name for Your New Business
It’s important to pick a business name that is unique, and doesn’t limit you from
other people wanting to buy your business some day when you are ready to
retire. It’s a good idea to pick a short business name, and make sure that the
domain name for your business website is available so that you can buy the
domain name and use it for your business. The business name needs to be
unique, and never used before, so you don’t get surprised by a lawsuit one day
for someone else that owns it.
Register Your Business
Depending on the type of business structure that you setup, you may need to
register your business in your state, or just the local county level. Your county
office should have a website for specific details on how to get a business license
in your county. All businesses, other than a sole proprietorship with no
employees, must also file for an employer identification number (EIN). You submit
this through the IRS website.
Get Business Specific Licenses and Permits
There are specific legal requirements for different types of businesses to also get
specific licenses and permits. This could be at the federal, state, county, city, or
local level. There are too many possibilities to list, but a few examples would be a
sales permit, or specific licenses for your trade. Check with your local government
office, and your attorney, for specific licensing requirements for your area.
9. Get Your Finances in Order
The first financial step for starting up any type of business are to open your
Business Bank Account. This is a crucial step so that you can start taking in and
spending money, and keeping that money separate from your personal finances.
It would also be a good idea to line up a bookkeeper, or get yourself a top name
brand accounting software to keep your finances in order.
This will also help you manage and track your inventory. Higher end accounting
software will include features like managing your accounts receivable and
accounts payable so that you can track all your income and expenses for the
company. You will also be able to create custom invoices, run reports, pay payroll
(typically an additional cost), and calculate your taxes. You will appreciate this at
tax time!
If you will be selling items, either on your website, or in person, it would also be a
good idea to invest in a good point of sale system (POS). A good POS will let you
accept customer payments online or in person, and process credit card
transactions.
10. Fund Your Business
There are several ways that you can fund your business. Many people start their
business from their own personal savings, and credit cards. If your lucky enough
to have a wealthy family member you may be able to get some startup money
from your family, or even your friends. You just have to make sure you set
expectations that they won’t own your business, and when or how they will be
paid back over time.
Another thing you can do is apply for small business grants, or look for angel
investors to invest in your new business. If you put together a sound business
plan, you can also apply for a small business loan. Another route is to seek out
some venture capital, or crowdfunding sources.
For your equipment, you can typically acquire equipment financing from where
you buy the equipment from.
11. Get Business Insurance
No matter what type of business you plan on starting up, you need to have good
insurance in place before you fully open up for business. You need to protect
yourself. If you have any employees you will also need to get worksers
compensation insurance as it is required by law. It is a good idea to work with an
insurance agent to make sure you get the best policies, and exactly what you
need, as they are the experts.
A few types of insurance that you will need is workers comp, if you have
employees. You will want to get liability insurance to protect your business against
any third party claims of bodily injury, property damage, among others. You may
want to get property insurance to cover you physical assets, your office, and your
equipment. Spend some time researching all of the types of insurance available,
because when the need arises, you may just protect yourself from being forced
out of business if you have the right protection in place.
12. Buy Your Business Tools and Software
Buying the right business tools can help you manage, and run a more successful
business. It will also make your life a whole lot easier.
Accounting Software
Great for tracking your business income and expenses. Lets you easily prepare
financial statements, and file your taxes. One of the top names in this area is
Quickbooks.
Customer Relationship Management (CRM) Software
CRM software will help you manage your customer relationships, track your sales
and marketing data, and help you to keep track of when you need to engage with
your customers, and potential cusomters. A top name for CRM software is
monday.com.
Point Of Sale System (POS)
We have a great article on the top names in POS systems. This system enables
you to accept credit card payments.
13. Now You Are Ready to Be Open for Business
Now you are ready, next steps include building a website for your business. You
can either hire someone or a company to build your website, which will be
expensive, or you can do it your self with a website design software.
You will want to bring in as many online visitors to your website, so the most
important step you can do is to do some search engine optimization (SEO) of your
website, so you will rank higher on the search results, to bring more traffic to your
website. Next you will want to make sure you create lots of relevant articles and
content to give your website visitors good info to learn about. This will also help
your search engine rankings.
Develop a Social Media Strategy for Your Business
Your potential customers are all over the internet. You will want to start using
social media every day, engaging, writing good posts, to attract these potential
customers to your business social media page, then to your website, and if you
have a physical business you will want to entice them into coming to your place of
business as well.
14. Bottom Line
Starting a business is no small task. It can be scary. It can be fun. The more
plannign that you put into the steps in this “How to Start A Business” article will
help you get those idea juices flowing. Take your time, do what you love, have fun.
You will have great ups, and you will also have some downs to experience. Take it
all in strides, and remember why you are doing it to keep yourself motivated so
you give it your all and build yourself a successful business.
15. Frequently Asked Questions (FAQs)
How can I start a small business with no money?
There are several ways you can start a business with no money. You will need to
develop a strong and successful business plan. This will enable you to apply for
loans, grants, and other investors.
Do I need a special license or permit to start a small business?
The answer to this question is typically a big YES. It all depends on what type of
business you are going to start, and where it is located.
How can I get a loan for a new business?
You need to develop a strong business plan, that will show that you have done
your homework, and have a winning plan for success. This will enable you to
apply for a loan with a bank or other financial institution. You may also want to
consider approaching investors with an option for a potential revenue sharing
opportunity that will entice them to invest in the business, for a percentage of the
profits.
What is an easy businesses to start?
One of the easiest businesses to start is an online dropshipping business, where
you don’t have to invest in any product, and take on that risk. Other businesses
that are easy to start are small retail stores, service type stores, or a small
restaurant, if you have a background in any of those.
Another great business to start is to start with something that is already working,
and buy a business! This way you know by reading their financials, that your
money is going to give you an immediate source of income to recoup that money.
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