Are you thinking about starting your own small business? Find out where you should start and how you can achieve success quickly.
Before you get to your business registration, you will need to prepare thoroughly and understand that there is a good chance that things will go wrong. But don't be afraid. You will be able to adapt to changing conditions and situations.
If you have already decided on the industry, you can start creating your business plan and doing in-depth market research on your niche. For this, consider the demographics of your potential clientele.
Keep in mind that, depending on the type of organization you choose, the amount of work and fees can increase dramatically. Follow our 10-step guide and turn your business into a solid and profitable fighting machine.
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If you've already decided what you want to sell online in your industry and understand what market you want to enter, it's time to check out the existing companies in your industry.
Find out what the current leaders are offering to people and think about how you can do it better and properly represent your unique product. Why people should buy from you?
The main thing is that your idea is relevant and innovative in its own way. If it is, you can start developing a business plan.
Do you understand why you're launching your business? If you don't, define it, i.e. define whether your business will serve a personal purpose or a market purpose.
If your goal is to meet market needs, then the scale of your venture will always be larger than a venture created to meet personal needs.
Alternatively, you can also open a franchise in an existing company. If you choose this path, everything will be easier. After all, the concept, brand, and business model have already been developed. You will only need to find a good location and funds.
Next, decide on your business name.
No matter what name you choose, it should fit the essence of your business idea and resonate with the core values of your company.
Additionally, the name you choose will need to be available. Check for your name availability on the Secretary of State's website. And, depending on the type of your business structure, consider naming rules and requirements of the state.
Don't rush to open your venture. Take your time to prepare and think about who your customers will be. Why would they want to hire your company or buy from you?
You should decide for yourself why you want to work with such clients. Do you want to make people's lives easier? Do you like to create new art and add colors to the world? This way, you can make your mission clearer to yourself and your team.
Also, think about how you will deliver your product/service to your customers and how to properly communicate the value of your product to people in a way that makes them want to give you their money or get back to you.
Tip: To clarify your business idea, you need to understand why you are creating your venture, who your TA is, and what your business name will be.
Remember, if you are not obsessed with your idea, or if there is not the right market for your product, you may need to brainstorm other ideas.
If you've already decided on your business goals (including the end goal) and target audience, there's one more aspect to consider. Think about how you will fund your start-up costs and find evidence of demand for your business idea.
A well-crafted business plan will help you do this.
Thorough market research and the demographics of your potential customers will help you develop a quality business plan.
You need to understand your TA's behavior, preferences, and needs. Research your industry and conduct an analysis of your competitors to better understand your opportunities and limitations in the marketplace.
Make sure your company offers distinguished products/services compared to your competitors, which has a significant impact on the competitive landscape. This way you can deliver unique value to your potential clients
When making a business plan, it's also helpful to think through your exit strategy. Having the right idea of how you will exit the business allows you to look into the future.
No matter how enthusiastic you are about your venture, don't get your hopes up that everyone everywhere will always be your customer. Instead, take the time to make your exit plan.
This way, you can preserve the value of the company and avoid destroying your partnership or maybe even family relationships. Think of 3-4 ways to "exit the game" in advance.
Tip: A well-thought-out business plan will help you understand where your company is headed, how you will overcome possible challenges, and what it will take to keep your business running.
Registering any venture has its price. Therefore, you need to figure out what your start-up costs will be and how you will cover them.
Keep in mind that to make sure your startup doesn't "sink in" before it starts to make a profit, don't overestimate the amount of your startup capital. After all, it will definitely take some time before you start generating a steady income.
One way to determine how much money you will need is to perform a break-even analysis.
A break-even analysis is a financial calculation that weighs the cost of a new business, service, or product against the unit selling price to determine the point at which you will break even.
Such an analysis is an important element of financial planning that will help you determine when your product/service will become profitable.
Here's the right formula to pay attention to:
Break-Even Point (Units) = Fixed Costs ÷ (Sales Price per Unit – Variable Costs per Unit)
Use it as a tool to learn about the minimum figures your business needs to achieve and avoid losses. In addition, the formula will also help you understand exactly where your profits are coming from.
This way, you can set the right production goals for your venture.
The most well-known reasons for a break-even analysis are as follows:
How much profit do you need to cover your expenses? Which products or services are making a profit, and which ones are making a loss?
What are your fixed and variable costs? What is the total cost? What is the cost of individual physical products? Calculate your workforce costs.
Think about how you could reduce total fixed costs and variable costs per unit. How could you improve sales?
At the very beginning of your business, it's important to avoid overpayments and understand what types of purchases are really important to your company. It doesn't always make sense to buy expensive new equipment to achieve your business goals.
Spend as little as possible when you start out and only on what is necessary for the growth and success of the business. It does not make sense to rent more office space or buy a professional printer for a huge team if yours is less than 10 people.
You can luxuriate later when you will steadily make a profit and become an established business.
So what about the start-up capital? Here much depends on your creditworthiness, the amount needed, and your available options.
That said, you can consider the following options for obtaining capital:
You can apply for a small business loan through the U.S. Small Business Administration (SBA) or an alternative lender.
Such grants are competitive and have their own mandatory conditions that your business must meet. Look for federal, state, and local options that are unique to your company.
Amounts can be as high as several million dollars or even more, as long as the investor is directly involved in running your business.
Crowdfunding is a method of raising money to implement and maintain scientific, creative, social, environmental, and other ideas. That is, those who wish to invest their funds do that or attract sponsors who can then make a profit from the funded projects.
However, this method can also be done on a pro bono basis, when people voluntarily give money to support a startup they like or to charity.
There are 4 basic types of legal business organizations with their own pros and cons. Thus, before registering your venture, decide which type is right for you.
This type of business is the easiest in terms of legal formalities. Much less paperwork to file (compared to other types).
An SP is ideal for the service sector. That's why this type is most often chosen by lawyers, accountants, private doctors, hairdressers, manicurists, and other service professionals.
However, SPs have one serious disadvantage, which lies in unlimited financial responsibility. This means that fines and court compensation can affect the personal property of the entrepreneur. Banks are also very reluctant to lend to SPs for business development.
I.E. the collective business management. Partnerships are typically divided into two main subtypes: general and limited liability partnerships. General partnerships strongly remind SPs, where all members are fully responsible for undertaking financial burdens.
In a limited liability partnership, however, members risk only their own contribution to the enterprise - personal assets are not subject to fines and other payments.
Partnerships are perfect for teams of equal specialists (e.g. lawyers, auditors, SEO experts, developers, etc.).
It is a universal type of business that is suitable for almost any business.
This type is, however, the most bureaucratized - there is just a huge number of official papers to fill in and keep, so it's quite challenging to understand without an experienced consultant.
At the same time, U.S. investors prefer to invest in corporations because they are easier to monitor in terms of how the money is used.
An LLC is the most common company type for small businesses.
An LLC combines most of the advantages of a corporation and a partnership. Plus, there is less paperwork than in a corporation.
We recommend that entrepreneurs who are starting a small business in the United States choose this type of legal entity. The only disadvantages here are different conditions for doing business in different states.
Thus, you will need to study the laws of the state where you plan to register your company.
Next, you'll need to get a number of business licenses to run your company legally. This includes registering with federal, state, and local authorities. To do this, you'll need to prepare several documents as follows:
If you choose a corporation as your business entity type, you will need to complete and file your Articles of Incorporation. This main registration document will include basic information about your company:
Similarly, LLCs need to have Articles of Organization (also known as the Certificate of Organization) and an Operating Agreement, i.e. an internal company document that doesn’t need to be filed with the state.
For marketing purposes, it's also possible to register a "doing business as" name. A DBA is any registered name used by a venture for marketing purposes other than the official legal name. Such a name is also sometimes called a "trade name," "fictitious name," or an "assigned name."
A DBA is not a business entity in the United States and, unlike an LLC or corporation, does not provide personal property protection.
Such a name is an assigned or invented business name that is often used by sole proprietorships, partnerships, LLCs, and corporations to promote their trademarks.
Your best bet is to contact or visit your local county clerk's office to inquire about the specific requirements and fees for such a name for your business.
After you register your business, you may need to obtain an Employer Identification Number (EIN or FEIN) from the IRS.
Although it's not required for sole proprietorships without employees, you can still apply for one to save yourself the hassle if you decide to hire someone.
The IRS has provided a checklist for those who will need an EIN to do business. If such a code is needed for your company, you can get one for free online.
According to state laws, you must also file certain forms to meet your federal and state income tax obligations.
Depending on the structure of your business, you will be able to determine which forms you need. For information on state and local tax obligations, visit your state's website (the Secretary of State's website).
Some businesses may need federal, state, or local licenses and permits to operate. Your local city hall is the best place to get a business license. You can then use the SBA database to look up licensing requirements.
Note that, entrepreneurs and independent contractors in certain professions are required to have professional licenses.
A professional business license is a necessary permissive attribute for businesses wishing to do business in the U.S. However, not everyone needs one.
Some states have a tiered system of permits. Thus, legal entities, depending on the geography of their business activities are required to issue a license/permit at the local, state, or federal level.
Consequently, depending on where you live and your business structure type, you may need to obtain additional licenses or permits from governmental agencies.
Therefore, when planning to register a business in your chosen state, it's recommended that you first consult with local experts or licensing boards. This will help save time and effort, as well as protect the business from troubles in the future.
Each state has a list of professional activities that require special licenses. The most common professions include:
You should also find out if you need a seller's permit, which gives your business the authority to make sales and collect sales tax within the state.
Generally, most companies that sell or lease tangible property while doing business in a particular state will need such a permit, but there are certain nuances as well.
For example, in NY, if you are exclusively into selling medical supplies and pharmaceuticals, you don't need such a document.
On the other hand, sales tax in that state will be charged on sales of new tangible
A seller's permit has many names, including a “resale permit,” “permit license,” “reseller permit,” “resale ID,” and so on. The names vary from state to state. You can apply for the permit on the official website of your chosen state.
Although not all businesses are required to collect sales tax (or obtain a seller's permit), it's worth checking on this issue before starting your business.
Complete and file Articles of Incorporation or Articles of Organization, file a DBA, obtain an EIN, hire a registered agent and a professional attorney to prepare an OA (in written form), understand income tax forms, and get the necessary licenses/permits.
The next important step is to purchase the right insurance for your business. This should be done before you officially start your company. You want to avoid incidents such as property damage, theft, or even a lawsuit from your clients.
All of the above events may result in significant expenses. Having insurance for your business will allow you to get solid protection.
There are some basic insurance policies that will be helpful for most small businesses. For example, if your business will have employees, you will at a minimum need to get accident, sickness, and unemployment coverage.
You may also need other types of insurance policies, depending on your location and industry. General liability (GL) insurance or a business owner's policy is the most popular for most small businesses.
Other types of insurance available for LLCs include:
If your business provides services, you might also want to consider professional liability insurance. It will help if you do something wrong or fail to do something you should have done while your business was running.
Unless you plan on being the only employee in your organization, you will have to recruit a strong team to get your company up and running.
Keep in mind that the people in your business need as much attention as you give to your products or services. After all, it's the people who create your product.
It's just as important to determine in advance how your team will work and interact together. Definition of roles and responsibilities, distribution of profits, losses, tasks, ways of feedback, and teamwork should be spelled out in your OA.
This will help you avoid internal disputes among members of your company. Also, in the future, if not all of your employees are in the same room, you will be able to avoid headaches.
If you realize that running your business will be a daunting task for you and your team, you may want to call upon outside organizations to help.
Companies in every industry, from business formation and registered agents to HR services, exist to partner with you and help you run your business easier.
Choose your partner carefully. Your business partner will have access to vital and potentially sensitive company data, so finding a provider you can trust is critical.
Ask the company about its experience in your industry and track record with existing clients, read customer reviews online, and find out how the company has helped other ventures achieve business growth.
Not every business needs the same vendors, but there are common products and services that almost every company needs. Consider the following features that are necessary for every type of business:
Find the right credit card processing provider and make sure you offer the most convenient payment options for your clients. You want to offer multiple payment options for convenience.
As your business grows, you can save time by hiring an accountant or a professional accounting software provider.
To build your online reputation, you will need a quality website.
These days, for many customers, a website is the face of the company. People will visit it to learn more about your organization, see your case studies or portfolio, discover your story, and get to know your team.
A high-quality and user-friendly website is also a great way to interact with your existing and potential clients.
Use social media to create your company page and spread the word about your new business. Social media is a great tool to set up promotions and offer discounts to your followers after the launch.
The choice of social media platforms (e.g. Facebook, Instagram, YouTube, Twitter, etc.) depends largely on your TA.
A CRM system helps you build a dialogue with your customer more effectively through automation. You will also avoid mistakes and errors in your work and, consequently, increase your sales.
Imagine an Excel spreadsheet with your customer base. Only when you click on a customer's name does a handy card open that contains the entire timeline of your work with the customer, from the first call to the purchase.
This is where you can do the following:
When a client calls you, a CRM system prompts you to open his/her card, and you can immediately greet your client by name. Even if it was another manager before you, you can easily answer questions without the necessity to call back.
CRM can send messages to customers informing them of their order status and reminding them about the appointment. As a result, you save time, both yours and your client's. This means that you make them more loyal and purchase-oriented.
The best CRM software solutions also allow you to store customer data to improve your marketing.
In addition, a well-designed email marketing campaign can do wonders for customer engagement and communication with your audience. To be successful, you need to strategically build your email marketing contact list.
Corporate identity and a logo are created so that a potential customer remembers the company on a subconscious emotional level. Logos come in many different forms.
Some of them carry obvious information, while others are more abstract. Both, however, should have a certain idea that directly relates to your business.
Hire a professional designer and create a unique logo that helps people easily identify your brand. Be consistent in its use across all of your platforms and constantly add interesting content about your business and industry.
Additionally, creating a marketing plan will help:
Therefore, a marketing plan is important for any business, project, and clientele creation.
Such a process is just as important as providing a quality product or service, especially at the beginning.
Tip: Create a strategic marketing campaign that combines different marketing channels, such as your company website, social media, email newsletters, and subscription forms. Ask customers to sign up for your marketing newsletter.
As you build your brand, always ask your existing and potential customers for permission to communicate with them. The easiest way to do this is to use opt-in forms. So that you could contact them for more information about your business.
People get too many "opt-in" emails and other messages these days. So if you get transparent permission from your potential customers to use your services, you can build trust with them.
Your launch and first sales are just the beginning of your mission as an entrepreneur. To make a profit and stay afloat, you always need to work on growing your business. It will take time and effort, but you will get out of your venture what you put into it.
Without the desire to constantly develop your business, conquer new heights, and reach new goals, chances are, you will not be a successful entrepreneur.
A business can't "go on the beaten path." Otherwise, sooner or later, you will find yourself at the bottom. Technology, competitors, as well as clients and their needs change.
If your company stands still, it will not be able to meet new requirements. That's why it's essential to grow and develop your business constantly.
To sell more (and grow your business accordingly) you can:
While these tips will help get your business up and running and set you up for growth, there's no such thing as a perfect plan.
A venture grows by continually improving all (down to the smallest) business processes and ruthlessly removing any obstacles and slowdowns, with the market and customer needs in mind.
You want to make sure you are thoroughly prepared to start a company, but don't be surprised if something goes wrong. To run a successful business, you must be able to adapt to any changes.