Many start their own business every day and depending on the type of company it is, getting started could be as simple as designing your first website for a friend or selling your first print online. However, it will be much easier on you in the long run if you take the time to get everything in place first. The five steps below can help you lay all of the important groundwork that you need to do before you open the doors of your new company, whether those doors are real or virtual.
1. Do the Research
How many times do you see a new shop open or a service appear, only to disappear just a few months later? Chances are that at least some of those times, you’ve probably thought that the idea behind the company really didn’t seem like such a great idea in the first place. Other times, you may have been surprised to see the company fail. What at least some of these companies might have shared in common is that their owners might not have done their market research before launching. Market research includes considering whether there is a need for your business, looking at competitors, considering market saturation, finding out where your customers are and looking at what people will pay for your service or product. Surveys, focus groups, interviews and questionnaires are all ways to get more information about potential customers. You can learn a lot from this research and may end up tweaking your ideas or revamping them entirely.
2. Write a Business Plan
To get a loan or interest investors, you will need a business plan, but even if you don’t do either of these things, a plan is useful. Like market research, it can show you some of your weak points before you are up and running. Elements of a plan should include that research as well as what your product or service is, your mission statement, your financial projections, how you will have a competitive advantage over other companies and how you will reach and interact with your customers. You can find examples of plans online to help you decide what else to include. As you are writing the plan, you are likely to notice that your ideas about some aspects of your business are underdeveloped or just need more work to be successful. Although you can’t predict everything that will happen, this is a great opportunity to take note of and address some of those issues before you start.
3. Find the Funding
Whether you need a little money or a lot, your next step is to find it. If you have an exciting high-tech startup idea, you may interest venture capitalists and angel investors. However, your business might not be right for seeking this type of funding, or you might decide that you don’t want others to have those kinds of stakes in your company. You might be eligible for grants. Another approach is to put some of your own money into the business. You may have more access to cash than you realize. For example, if you have a life insurance policy, you could sell it for cash. A guide from Apex Life Settlements can help you understand how to go about selling your policy and whether it’s the right choice in your situation. You should also think about how you are going to handle cash flow. Can you get through dry periods when you are waiting on clients or customers to pay you? Do you need a reservoir of savings?
4. Choose a Location
Whether you are setting up an online store, you need a small office or you are taking over an entire building, you need to consider several things when it comes to location. If you are working from home, you need to make sure that you are not violating any zoning ordinances. If you need a physical office or storefront, think about what neighborhoods in your town would be right for it. You may even want to think about whether your town or even your state is the best place. For example, is the tax situation for your kind of company better one state over? If your presence is virtual, you should think about where you would like your site hosted.
5. Do the Paperwork
There are a number of decisions to be made and potentially a lot of paperwork to fill out for this step. First, consider what kind of structure you will have. This could be a sole proprietorship if it is just you. This is a simple kind of business entity, and if you need to change it later, you can do so. Keep in mind that your company and personal assets are the same in this model. However, even if you are a sole proprietor, you might want to set up a separate bank account. Other types of entities to consider are a type of partnership, a limited liability company or a corporation. You may want to work with an attorney to prepare your paperwork correctly. This may be the case in particular if your structure differs from your tax status.
You have probably already chosen a name at this point, but you’ll need to make sure no one else is using it. You might also want to register it in some way. For example, you may want to set it up as a DBA, or you might need to trademark it in some situations. In fact, at this stage, you should consider your intellectual property and if there is paperwork that you need to do to protect it. Paperwork can also mean registering your business and getting an employee identification number and possibly a tax identification number. These requirements vary based on what type of entity you have chosen and where you are located. Another important paperwork step is making sure that you have all the necessary licenses and permits. This will also vary by location and industry. Remember to look at what you need at the federal, state and local level. You may want to talk to an attorney about preparing other paperwork as well, such as having a standard type of contract.