The new year is coming and you want to finally start that business you've been dreaming about. Starting a business can be a fun and rewarding journey. Whether you’re an entrepreneur with a groundbreaking idea or an business professional with something great to offer the world, understanding the steps and procedures involved is essential to your success. If you want to learn how to start a business then keep reading because this article is for you.
How to Start a Business
This article will have some USA focus to it however, a majority of the tips in this article will pertain to you and your country.
Step 1. Conduct Market Research
Thorough market research is a good first step before establishing a new business. This research should assess market demand, competitive forces, your target customer base, and the potential profit margins for your proposed business idea.
With careful market analysis you can gain the insights you need to make smart, data-driven decisions in your business planning process. This upfront understanding of the landscape, target audience, and financial upside can pay dividends as you look to boost your odds of successfully bringing a new offering to market.
Step 2. Write a Business Plan
A business plan forms the strategic backbone of any new business endeavor. By clearly defining your objectives, tactics, operations model, and expected financials, you create a document that can reaffirm your belief that creating a business is indeed a good idea.
Beyond financing pursuits, maintain that carefully crafted plan as an evolving playbook. Revisit it regularly as market dynamics shift, updating areas in need of adjustment based on new learnings and growth data. A well-honed plan steers the ship through economic upswings and downturns alike. With it, the difference between a pipe dream and a game-changing business often comes down to thoughtful planning and skillful execution.
Related: Why So Many Businesses Fail Year One
Step 3. Choose a Business Structure
Selecting the right business structure is essential for legal and tax purposes. In America, common business structures include sole proprietorships, partnerships, co-operatives, and limited liability corporations (LLCs).
Sole Proprietorship:
A sole proprietorship is an unincorporated business owned and operated by a single individual. It offers simplicity and full control over business decisions, but the owner assumes personal liability for the business’s debts and obligations.
Partnership:
A partnership is a business structure in which two or more individuals share ownership and responsibility. It can be a general partnership, where all partners have equal liability, or a limited partnership, where there are both general partners and limited partners with restricted liability.
Co-operative:
A co-operative is a business owned and controlled by its members, who pool resources and share profits and decision-making authority. Co-operatives are typically formed to meet the specific needs of the members and operate based on democratic principles.
Limited Liability Corporation (LLC):
A limited liability corporation, also known as a corporation or a company, offers limited liability protection to its owners, known as shareholders. This means that shareholders’ personal assets are generally protected from the debts and liabilities of the business. Corporations have a more complex structure and require formalities such as holding shareholder meetings and maintaining corporate records.
For transparency, our business here at Open World Digital is filled under an LLC. An LLC gives you the owner protection and separation from your business in the case of any legal issues. If you were to be sued for some unfortunate reason, you and your personal finances would be protected.
However, LLCs do come with some fees and upkeep. As a California resident our LLC cost $70 to register and it could cost up to $800 per year when tax season comes around.
When deciding which structure you want for your business it all depends on how you want to operate your business. For additional information on which option is right for you, contacting a legal professional or accountant would be in your best interest. And make sure to visit your state government's website to register your business with the state.
Step 4. Register Your Business Online
Most businesses don't need to register with the federal government to become a legal entity, other than simply filing to get a federal tax ID. Small businesses sometimes register with the federal government for trademark protection or tax exempt status. But, every state and even country is different. It's best to check your local governments website to confirm whether you need to register or not.
Note: Before you register your business, make sure the business and domain name you want is available first before registering your business.
Step 5. Obtain Licenses and Permits
If applicable to your industry and business activities, you may need to obtain specific licenses and permits to operate legally.
The types of licenses and permits required vary, so I'd advise you to consult with your local government’s official website to ensure compliance. Most business, especially digital business don't need permits to operate. But, some common business that do need permits are:
Restaurants and food establishments
Alcohol sales
Construction and contractors
Childcare services
Automotive repair shops
Professional services
Retail shops/sales
Step 6. Get an Employer Identification Number (EIN)
An EIN is like a social security number for your business and is used for opening business bank accounts and paying taxes. Acquire one from the IRS website. You will never need to pay to acquire this number, the government will give this to you for free.
Step 7. Open a Business Bank Account
Separating your personal and business finances is necessary for effective financial management. Doing this helps make tracking your finances easier and makes tax reporting and filing much easier. I'm not going to give you financial advise but, I would recommend going with a physical bank instead of a trendy online business bank. And if your business could benefit from a credit card, you can obtain that from the same bank you opened the account at.
Step 8. Consider Business Insurance
Business insurance is an optional procedure when starting your business but it may be something you want to consider. Getting business insurance protects your business from potential risks and liabilities in ways that an LLC might not cover. Again, consult with a professional or do some additional research based on your business type to assess your specific needs and find suitable coverage options.
Step 9. Get Funding and Support
You might be a business that needs significant funds to get your start or, you're a digital business that can operate with minimal funding. Either way, there are some options to help you get the funding you need. A couple main ones are:
Small Business Administration (SBA) Loans - The SBA guarantees bank loans and provides access to capital with reasonable long term repayment plans. Popular options are 7(a) and 504 loans.
Business Credit Cards - Business credit cards allow entrepreneurs easier spending flexibility & separation from personal expenses. You can also get bank loans from that same bank you opened your bank account and card.
Create a detailed budget and financial plan to ensure you are only taking in as much as you need and can afford.
Step 10. Purchase a Domain, Build a Website and Set Up Social Media
Purchase a domain name for your business and set up a professional website that will appeal to your future customers. There isn't a domain registration site I would recommend specifically, just make sure the site you use has an option to transfer easily to a WordPress or Wix for your web design. Additionally, create social media accounts to connect with your target audience, increase brand visibility, and promote your products or services effectively.
Step 11. Build Your Brand Presence
Developing a strong brand presence is key to attracting customers and standing out in the market. Invest in branding efforts such as designing a logo, creating marketing materials, and implementing a consistent brand identity across all communication channels.
Content is king. Give your potential customers a taste of who you are and be engaging with the content you make.
Final Thoughts
Starting your journey as a business owner can be a stressful but fun experience. You have a good idea, product, service that the world should be introduced to and you can do that by finally taking that first step. Once you start getting your info out on your website, blog, and social medias, we can help your market your business to get it in front of the right people.
And for more quality information like this, check out our other blog posts.
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