There are many ways to find business ideas, and literally thousands of options. However, you don’t have to sort through all those options to find the right idea for you. The best businesses come from people who followed their passion and turned it into a company. No matter what your passion, even if it’s something like snow cones, you can start a business based on this guide, or if you love to make candy, start a candy business. Whatever it is, you’ll be doing what you love while building a successful company.
But how do you turn your passion into a business? Here we will provide some tips to get you started.
Do Your Homework
It’s important to understand the industry you’re getting into. You can easily find industry statistics online to see if it’s growing or declining. You can also find out what’s trending in the industry, and what kinds of people are customers in the industry. For example, you might find out that your business idea is trending with millennials. That will help you to design your product to meet the needs and wants of that group and help you to figure out where you should market your product. For example, you might want to market to millennials on TikTok and Instagram.
You should also research competitors in your market. Look at their strengths and weaknesses and try to come up with a way that you could gain an advantage over them. It could be quality, price, or added features. It could even be customer service. You can look at customer reviews to find out what people like and don’t like about those competitor companies.
Next, you need to figure out what you’re getting into financially. Consider everything you might need to be able to start selling your product or service. At a minimum, you’ll have the following expenses:
- Business registration with the state
- Business licenses and permits
- Business insurance
- A website for your company
- A marketing budget
- Whatever it costs to acquire your product from a supplier or manufacturer or;
- Your cost to make the product
- A deposit on a rental location unless you’re going to run your business from home
Once you know your potential costs, you’ll need to figure out where you’ll get the funds if you don’t have them personally. You may be able to get funding from family and friends, or you could apply for a bank loan or SBA loan.
How Much Can You Make?
First, determine how you will price your product. You’ll need to consider what it costs to acquire or make your product, and markup those costs to a level where you can make a good profit. However, you also need to look at prices for similar products to make sure your prices are competitive.
Once you know your price, consider how much you may be able to realistically sell on a daily, weekly, and monthly basis. Is this going to be enough to support the lifestyle you desire?
Consider Pros and Cons
Before you jump in, you need to weigh the pros and cons of starting your business to decide if it’s the right move for you. Based on the work you’ve already done, you should be able to come up with pros and cons to consider. Maybe the business offers flexibility and good money, but the industry is in decline. Or maybe the startup costs are high, but your numbers tell you that you should be able to recoup your costs quickly.
Then just do some thinking and decide if you’re willing to accept the cons for the benefits that the pros offer.
Write a Business Plan
Writing a business plan will help you to think through every aspect of your business, so you’ll have a better understanding of what you’re getting into. A business plan is also necessary if you apply for a bank or SBA loan.
Your business plan should include:
- Executive Summary: Brief overview of the entire business plan. Write this after your plan is complete.
- Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
- Product and Services: Describe your products or services in detail.
- Market Analysis: Assess market trends.
- Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and try to find a way to give your business a competitive advantage.
- Sales and Marketing: Develop sales and marketing strategies.
- Management Team: Overview of management team, detailing their roles and professional background.
- Operations Plan: Your company’s operational plan is the logistics of how you will run your business on a day-to-day basis.
- Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
Choose Your Business Structure
You need to decide what your company’s business structure will be. Here are the main options:
- Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return. You do not have to register your business with the state.
- Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns. You usually do not have to register a partnership with the state.
- Corporation – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation. You must register your corporation with your state.
- Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts. You must register your LLC with your state.
- S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.
If you want to start a business, why not follow your passion? You already have knowledge about it, and you can do what you love every day. The most important thing to do is your homework so that you know exactly what you’re getting into. There are a host of resources online, so start Googling and get on your way to starting a successful business!