Have you been daydreaming about starting your own business? After working for a mid-sized company for years, you’ve grown tired of the type of work you’re doing. You’ve also realized that you’ve gathered enough experience and knowledge that you could leave your current job and take a chance on succeeding on your own. You’ve even considered working in a completely different industry and setting. And of course, there’s the luring appeal of being your own boss. But, you also know that having your own business has its challenges, risks, legal requirements, funding needs and personal investments of time, resources and energy. The process of bringing your dreams to reality may be overwhelming, to say the least.
Here is a general summary of 10 steps you should complete when establishing your new business.
1. Do Your Research
You’ve likely already looked into the profit potential of your business idea. Now you need to use market research tools to focus on the actual figures to determine if there is a realistic opening in the market for your proposed products or services. Ask yourself:
- Is there a genuine need for my product in this industry?
- Who are my potential customers? What are their ages, genders, interests? Where might they shop?
- Who might be my competitors? How are they profiting? What are their strengths and weaknesses? (A good place for feedback about your competition is from online reviews like Yelp or Amazon.)
- What are competitors charging for the similar products or services you want to offer?
2. Develop and Print Out Your Business Plan
For your business plan, you will need to have your planned actions, in a step-by-step format on paper. Not only will this help you know what you need to do, but you will also show potential partners and investors how you will develop, manage and possibly expand your venture. Put on your “sales suit” and get ready to sell your ideas. However, Forbes magazine recommends that you don’t “go overboard” with your plan because you never know what changes you might have to make in the future once your business is up and running.
3. Secure the Money You Need
At this point (after your business plan is established), you will know how much money you will need to get started. Maybe you could try to overestimate the total amount of money you will need, to provide some wiggle room. If you’re fortunate, you already have a chunk of your own savings available for a start-up. If not, you might need to seek a lender for commercial business loans. Banks offer numerous programs for small business financing such as lines of credit, and loans for commercial real estate and business equipment. They can also direct you to Small Business Administration (SBA) loans provided by the U.S. government. Besides having flexibility, SBA loans are often easier for approval and have better interest rates.
To explore your funding options, here is a list of other resources you can consider:
- Friends and family
- Angel investors
- Venture capitalists
- Credit cards
- Crowdsourcing sites
4. Determine Your Business’s Category
As a requirement of registration, you will need to choose a category for your business. You can choose from sole proprietorship, limited liability company (LLC), partnership, cooperative or corporation. When making this decision, keep in mind that each structure has its own pros and cons, which can impact your liability, restrictions, required documentation, and the amount you will need to pay in taxes. Choose carefully.
5. Create Your Brand
You have narrowed down the products or services you will be selling, so now you need to create your image and consider what makes your business appealing and how it stands out in the crowd. You may want to publish your motto, values, and a statement of dedication to the quality of your inventory and customer satisfaction. Have fun selecting a name that is easy to remember, pronounce and makes your products easily identifiable to customers. Also, make sure the name hasn’t already been registered by another company!
6. Choose Your Location
As in any real estate decision, your business will be greatly affected by its location. Some places are more friendly for entrepreneurs than others. You will need to go over your state and local regulations with a fine-toothed comb to make sure you cover everything you need to do to follow the rules. Consider how much the taxes will contribute to your expenses. One of the biggest tasks you could face is finding a reasonable commercial lease. Here are some tips when you get to this stage in the process:
Try to negotiate with the landlord by finding out how willing he is to rent out the building. If you know there aren’t any other interested parties, he or she might be able to lower the rent.
Remember that your situation could change in the future, so you might want to ask the landlord for a shorter lease term instead of getting locked into a several year commitment
Inspect the interior and exterior of the property and make sure you inquire about the repairs or improvements you will need. The landlord might agree to pay for these or give you the money to make the changes yourself.
7. Notify the Government
You need to register with the Federal and state governments, to make your business name official and legal. The exception to this is if you are using your legal name for your business. However, you may want to register anyway because of the tax, liability and legal benefits.
8. Receive Your Federal and State Tax IDs
The U.S. government will issue an Employer Identification Number (EIN), which puts you on the radar of the IRS. Get ready to pay taxes! Also, check with your state if you also need a state tax ID.
9. Stay Compliant
During all of your research into laws and regulations, you will know if you need to file for permits or licenses for your type of business. In order to keep compliance, you will need to follow the due dates for renewal. Keep your paperwork organized for this.
10. Go to the Bank
Armed with your new EIN, a possible state tax number, and all of your permit, license, and any other paperwork that supports your establishment, go to the bank and open a business checking account. The bank is going to look at all of your documents for verification. If anything is missing or not correct, the bank could send you away to get what you need to set up the account. Do the best you can to keep organized.
Begin Your New Venture
After all of the research, brainstorming, product testing, consulting with experts, gathering of documents, driving to the bank, scouting locations, marketing, and managing all the other details, you are ready to open the doors of your very own company. Getting a constant flow of sales and banking profits may not be easy at first, but if you maintain your enthusiasm and energy and keep your eye on future possibilities, you can get through difficult times. One way to keep yourself going is to remember not to overextend yourself and try to maintain a healthy balance between work and your personal life. Congratulations on making your dream a reality, and best of luck with your future success!