Believe it or not starting a new business is pretty quick and simple. The processes involved can usually be done online and it can be set up in a few hours.
The difficult part is making money and keeping the business going.
According to the Small Business Administration and Bureau of Labor Statistics, about 20% of small businesses fail in the first year, and half of them don’t make it past five years.
I find that the best way to get going first is to get some of your ideas out of your head and put them down on paper. Take those notes and start to shape them into something more formal, like writing a business plan that helps define your vision, and don’t be afraid to modify this as you go. Often this is more of a living document, and it helps to go through and answer some of the following questions to know what you will put into your business plan.
Visualize Your Company
What products or services will your business be offering? What will you call it? You’ll need a name, a logo of some type and a description of what you do. I think that branding is huge in terms of sustainability, and identifying your niche is part of that process. Who is your target audience, and how will you stand out from competitors?
Will you be the sole owner or will you have partners or investors who have equity as well? There are definitely advantages and disadvantages either way, and you should know how you would like to be established.
You’ll need to know what startup capital you’ll need as well as first year and second year budget requirements and maybe beyond. Along with this you should have a pro forma with revenue estimates by year. Done well, these can give you a glimpse as to what it will take financially to not just get the business open, but to keep it going and growing.
Here are a few budget items that will have to be considered:
– Office Space – Will you work form home or go to an office? How much space do you need and what are the costs associated in the types of spaces you’d like to rent or buy? What kind of furniture, equipment and supplies will you need? From personal experience, finding the right office location can take a lot of time, so I would begin this process earlier than you think. There are often modifications that need to be made and lease negotiations that can take time. Think months here, not weeks, in most cases.
– Payroll – Will you have employees or contractors? Hourly or salary? What kinds of benefits will you offer, if any, from the start?
– Marketing – Although basic websites and social media outlets are inexpensive or even free, you may require professional design services and assistance from a marketing agency to help with your digital presence and more. What about other ads or printed materials?
– Insurance – Physical locations require general liability insurance and other types of coverage, and your specific industry may require professional liability as well. What other types of insurance coverage will be needed, if any?
Making it Official
Once you have more of the company fleshed out on paper, you should be able to make it official. You will need to get an Employee Identification Number (EIN) through the Internal Revenue Service (IRS). You’ll also need to register with your Secretary of State and file for the business recognition. You can usually do this online as well in each state. You can choose what type of company you are creating (such as an LLC, Corporation, etc.), designate company officials, and more.
I would recommend consulting with a Certified Public Accountant (CPA) if you’re not sure what type of business you want to form, and to understand the tax advantages or disadvantages of each. I would also recommend working with an attorney to create your Operating Agreement (for an LLC) or the Articles of Incorporation (for a corp.).
Next get your bank account(s) up and running. If you have an established history with a financial institution already, then this is likely the best route to go with first, but do some research to see if there might also be a better fit. In addition to getting bank accounts opened, you should also get a company credit card account opened, as this will help establish credit history for the company if a time comes where you need to borrow money in the future, such as a line of credit or some other type of business loan.
Get your business license. Find out if you are under the jurisdiction of the city or the county where you live, and get you business license, which is essentially just a tax for you to be able to operate each year, but it’s usually necessary for physical offices. Along with this usually comes a certificate of occupancy and/or a Fire Marshall inspection. Your industry may require other licensing as well in order to do business, such as the health department.
Get to Work!
Once you have everything in place, it’s time to get to work. You should be a prepared to start delivering your services and making your products to sell right away. You don’t want to fall behind by now having to wait before you can start earning money.
Also, get the word out! Promote your business in any way that you can. Your website and social media outlets, Google My Business listing, and more. Get your friends and family to help spread the word. Join you local Chamber of Commerce to start networking with other businesses and set up a ribbon cutting ceremony where they highlight your business. Reach out to local media with a press release about you opening and get some free coverage. Spend some money on ads, if you have budgeted for it, and get some more visibility as well.
Once people start coming in and buying your goods or services, hopefully you will have given them something of great value for their money. If so, you’ve done your job and they’ll likely be returning customers and spreading the good word about your business.
Get a Free Consultation
If you’re a little overwhelmed, or would simply like to get some guidance or bounce you ideas off someone else, contact us for a free consultation and advice. We have started several successful businesses and consulted with dozens more throughout the years.