Are you one of the millions of people who want to start their own business? Perhaps the better question is, will you be one of the few that go on to become small business owners?
For many aspiring small business owners, the hardest part is knowing where to begin. It’s not like when we were kids setting up lemonade stands and mowing lawns. The stakes are higher, the competition is stiffer, and the rules are stricter.
With that said, new businesses are popping up all the time. Starting a small business – while not easy – is not impossible. Here’s a road map for making it happen:
Writing a business plan
Every business idea needs a business plan to back it up. Consider it a proof of concept. A solid business plan can be presented to lenders, investors, and potential partners as a way to convince them of the merits of your idea. Writing a business plan also helps weed out any flaws in your thinking by exposing them on paper. Read the Small Business Administration’s guide on how to write a business plan for more information.
Starting a small business requires money. Some people tap into their savings, while others borrow from friends and relatives. Many aspiring small business owners apply for personal loans with no credit score needed. Using credit cards is another option. Most startups rely on multiple funding sources to get the money required to get off the ground.
Picking a name
Here comes the fun part. What will you call your business? Choose a name that’s easy to say, easy to remember, and does a great job describing what you offer. That said, it’s essential to adhere to your state’s laws regarding business naming policy. For instance, you’re usually barred from picking a name similar to an existing competitor (like calling your burger restaurant “Mick Donnell’s”).
Launching a website
Business websites offer a wonderful chance for small companies to reach people around the world. With this in mind, setting up a website for your business should be a top priority. Many online services offer easy website-building tools to those with little experience. However, given the high stakes, you may want to hire a professional web designer to create the best business website possible.
Choosing a legal structure
Now back to the boring (but essential) stuff. You’ll need to decide on the legal structure of your small business. Is it a sole proprietorship? A partnership? An LLC? A corporation? Compare these business structures, then factor in your business plan to determine the best choice. Please note it’s difficult to change your legal structure once the business gets going, so make sure to choose wisely.
Registering your business
Until now, your small business is still more of an idea than a reality. But we’re getting close! By registering your business, you establish it as a legal entity. While you still need to run the business to make it real, registration makes it a true business in the eyes of the law. It’s an exciting stage of starting a business, but we still have a few more steps left.
Applying for licenses and permits
Certain types of businesses require specific licenses and permits to operate legally. The most common example would be bars and restaurants, which need liquor licenses and food service permits to remain open to the public. Which licenses and permits are required for which types of businesses will vary from state to state.
Getting state and federal tax identification numbers
The last thing any small business owner wants is tax headaches. While proper accounting and bookkeeping are critical in preventing tax problems, the first step is getting an employer tax identification (EIN) number from the federal government. The SBA describes it as a social security number for your business. Depending on the state, you may also need a state tax ID.
Conducting market research
Things are starting to get serious. While you should be conducting market research during the business plan phase, further research will be required in the weeks leading up to your grand opening. Doing so will help you gauge demand, pricing, and other crucial factors before opening up for business.
Selecting a business location
Choosing a business location will be one of the most important decisions you make. Even if you’re opening an online store, you’ll still need a physical location for tax and legal purposes. It also helps to reassure customers that you’re a legitimate business. When opening a brick-and-mortar location, things get more complicated, as zoning laws will limit your options while local taxes may affect your revenue.
There’s no shortage of people who want to start a business. But the number that goes through with it is limited. Which among them go on to achieve success will depend mostly on how they choose to set up their business. It won’t guarantee business success, but it does improve the odds. Good luck!