Most people at some point in their lives have identified a need and thought “I could turn that into a business”. What ends up stopping most people is that they just don’t know how to get started. Starting a company can sound daunting, but most small businesses can be launched quickly and easily.
Step 1: Do your research
Demand: Is there a current need or demand for your product or service?
Market: How many people would be interested in your offering?
Location: Are you able to reach your customers?
Saturation: How many similar options are available to consumers?
Pricing: What will your customers be willing to pay for your product or service?
Step 2: Develop your business plan
Your business plan is a roadmap for how to structure, run, and grow your new business. You’ll use it to convince people that working with you, or investing in your company is a wise investment. You can search the web to find examples Business Models but the usually break down into the following sections:
Key partnerships: What businesses or services will you need to run your business? (ex. suppliers, manufacturers, subcontractors etc…)
Key activities: What is your competitive advantage? (ex. selling direct to consumers, or using new technology, etc…)
Key resources: Which resources create the most value for your customer? (ex. staff, capital, or intellectual property, etc…)
Value proposition: What is the unique value your company brings to the market?
Customer relationships: How will customers will interact with your business? (ex. is it automated or personal, in person or online, etc…)
Customer segments: Who is your target market? Develop personas for your customer segments.
Channels: How will you talk to your customers? Most businesses use a mix of channels and optimize them over time.
Cost structure: Is your company focused on reducing cost or maximizing value? Define your strategy.
Revenue streams: How your company will make money. (ex. direct sales, membership fees, and selling advertising, etc…)
Step 3: Get seed money
How much money do you need to start your business? If you don’t have that amount on hand, you’ll need to either raise or borrow the capital.
Step 4: Pick a location
You’ll need to register your business, pay taxes, and get licenses and permits in the place you choose to locate your business.
Step 5: Choose a business structure
Your small business can be set-up as a sole proprietorship, a partnership, a limited liability company (LLC) or a corporation. The business entity you choose will impact many factors from your business name, to your liability, to how you file your taxes.
Step 6: Register your business name
Once you have chosen a name for your business, make sure to check if it’s currently in use. If it’s available, you will need to register it. A sole proprietor must register their business name with either their state or county clerk. Corporations, LLCs, or limited partnerships typically register their business name when the formation paperwork is filed.
Don’t forget to register your domain name once you have selected your business name.
Step 7: Get federal and state tax IDs
An Employer Identification Number (EIN) is your federal tax ID. You will need it to pay federal taxes, hire employees, open a bank account, and apply for business licenses and permits. It’s free to apply for an EIN, and you should do it right after you register your business.
Your business needs a federal tax ID number to:
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- Pay employees
- Operate as a corporation of partnership
- File tax returns for employment, excise, or alcohol, tobacco, and firearms
- Withhold taxes on income, other than wages, paid to a non-resident alien
- Use a tax-deferred pension plan
- Work with certain types of organizations
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Apply for an EIN with the IRS assistance tool. It will guide you through questions and ask for your name, social security number, address, and your “Doing Business As” (DBA) name. Your nine-digit federal tax ID becomes available immediately upon verification.
Step 8: Apply for licenses and permits
Your accounting system helps you create and manage your budget, set your rates and prices, conduct business with others, and file your taxes. You can set up your accounting system yourself, or hire an accountant to take away some of the guesswork. If you decide to get started on your own, make sure you consider these questions that are vital when choosing accounting software.
Step 9: Choose an accounting system
The licenses and permits you need from the state, county, or city will depend on your business activities and business location. Your business license fees will also vary. Business activities that are commonly regulated locally include auctions, construction, and dry cleaning, farming, plumbing, restaurants, retail, and vending machines.
Some licenses and permits expire after a set period of time. Keep track of when you need to renew them — it’s often easier to renew than it is to apply for a new one.
Visit your state’s website to find out which permits and licenses you need.
Step 10: Begin promote your small business
Once your business is up and running, you are ready to start attracting customers. Start by identifying your unique selling proposition and begin creating a marketing plan.
Need help with your USP and Marketing Plan?
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