Passion and skills are the keys to making a winning idea a reality. The process of getting your business started can be overwhelming, however. Keep these tips in mind as you perfect your business idea to help you get off to a smart start.
What do you need to start a small business?
Starting from scratch is the key to starting a successful business. While you may be eager to get a product out to market, you should take the time to build a solid foundation now in order to increase your business’s chances of success in the future.
How to start your own small business
Business decisions are typically made carefully before an idea goes to market or a dream becomes a reality. Many businesses follow some of these steps, even if they don’t follow the same path:
Market research
Performing market research can help you mitigate risk when it comes to determining how much demand there is for your product or service, as well as the level of competition in the market. Additionally, it contains demographic data on your target customers, such as their income and place of residence.
When it comes to research, you generally have two options – you can review existing sources or you can conduct your own analysis. Saving time and money by relying on previously collected data can be beneficial, but it may not be current or specific enough.
Focus groups, one-on-one interviews and surveys are all ways to engage customers directly if you start your research from scratch.
Business plan
The purpose of a business plan is to explain the goals you have for your business and how you intend to achieve them. The plan will enable investors to assess the potential profitability of your business if you need funding for start-up costs.
Partners and employees can also be attracted to your business plan.
There are two approaches you can take when creating a business plan: a traditional approach and a lean approach. The traditional business plan contains comprehensive details that are often required for obtaining financing.
Compared to traditional plans, lean plans are shorter and often contain more charts. Simple business models with fast start-up plans are often ideal for them.
Apply for EIN or Tax ID
A startup tax ID guide explains the importance of obtaining an Employer Identification Number for small businesses. The IRS may require that you request an employer identification number (EIN) once your business is registered. The number is required for filing your federal taxes, hiring employees, and sometimes for opening a bank account for your business.
Finance
People sometimes are discouraged from pursuing their dreams because of start-up costs. Although you may not have a lot of money at your disposal, there are several ways to fund your business, including:
- Bootstrapping
- Venture capital investments
- Small business loans
- Crowdfunding
Choose your business structure
There will be legal and tax implications for a foreseeable future regardless of how your business is structured – sole proprietorship, corporation, or something in between. Thus, this is a crucial decision. Here are some examples of popular business structures:
- Sole proprietorship
- Partnership
- Limited liability company
- Cooperative
- Corporation
- S corporation
Business name
Now that you’ve determined your structure, it’s time to determine how the public will recognize your business. The name of your business should:
- Brand and value reflection
- Describe the services you provide or the products you sell
- Social media and other marketing platforms can utilize it as a logo
As well, you should make sure that your business name isn’t already taken.
Your organization’s name should be taken care of by trademarking it and purchasing a recognizable domain name once it has been chosen and confirmed to be available.
By opening business-related accounts on social media channels (LinkedIn, Twitter, Facebook, Instagram, etc.), you can establish a presence on these platforms.
There are also some business structures that require a doing business as (DBA) name, which is an assumed or fictitious name that’s different from your business entity name. When opening a business bank account, a DBA may be required.
File registration documents
You may not always need to register your small business with the government, but it can provide you with personal liability protection, legal protections, and tax benefits.
- Federal registration
- State registration
- Local registration
