Starting your own business is both a scary and exciting prospect. With more and more people coming to the realization that they want to be their own boss, there has been a boom in startup businesses around the country. This is excellent news for the economy and those looking to provide value, but what exactly do you need to get started?
1. Get The Correct Structure
Before you start thinking about selling anything, you must understand what structure you want to set your business up. The most suitable for sole proprietors is what is known as a Limited Liability Company (LLC).
If anything went wrong or you found yourself in financial trouble, it would only be your business and its assets that would be liable to be sold rather than your personal effects. You can find LLC services specializing in setting everything up correctly because the process can be tricky.
There is paperwork involved, and as with most things in life, there is a lot of bureaucracy. This is the best option when you are starting because it affords you some extra flexibility in taxation. For example, it allows the availability of pass-through income taxation, which avoids the trap of double taxation. Essentially you will pay one rate of tax on your earnings as an individual.
2. Understand Your Market
Understanding your market, from your customers to your competitors, is vital. If you don’t have a solid grasp of this, you will not sell your offerings efficiently. The worst-case scenario is that your business will fail within the first year.
3. Make A Business Plan
A business plan is not optional for success but vital for it. If you go headfirst into setting up a business without a well-thought-out plan, there is a slight chance you will succeed, but the odds are against you. The things you must include in your initial plan has:
• Executive summary: This covers the outline of the plan. It will let the reader understand your business and what plans you have for its success. It is best to keep it brief.
• Company description: This will be an overview of your company. It would help if you went into as much detail as possible about what services or products you will offer and why they will benefit the customer. I.e., what problem you are solving.
• Market analysis: This section should cover who your competition is and your research on what you will do better than them. It would help if you covered your strengths and weaknesses when compared to the competition.
• Organization and management: This will describe how you will structure your business. It should include the legal framework, such as the LLC setup explained previously, and who will run its various operations.
• Service or product line: This section should detail what you are selling, how it is being sourced, and any Intellectual Property (IP) you might have or are in the process of acquiring.
• Marketing and sales: Here, you will cover your plans to market your product or service and which sales channels you will use.
• Funding request: If you attempt to get outside funding to set your business up, you should mention it here. This can include funding from friends and family and what equity stakes you will provide.
• Financial projections: This final section should be based on reality and not what you want to happen. You must show the reader that your plan has legs and will succeed.
4. Fund Your Business
Once you are happy that you have done a complete market analysis and written your business plan, you can move onto the funding stage. To get the ball rolling, you will need to secure a substantial amount of cash. This will allow you to buy stock, lease locations, and have some form of cash flow to get you through the first year.
5. Choose A Location
These days, location is not as important as it once was. With online sales roaring ahead of traditional retail sales, you can often choose a cheaper area to begin. Nevertheless, you must ensure that it is not too far away for your employees to travel, and if you are setting up a hospitality business, you will still need to find somewhere with a large footfall.
6. Spread The Word
You have your funding, you have written your business plan, and you’ve made it all legal, so the final step is to get out there and promote your business! If you are selling locally, you could speak to local news outlets to let them know you have opened a shop. Furthermore, you could utilize the power of the internet and buy ads and allow people to visit your website easily.
Many people dream of starting their own business. If you have a great product to sell and set up the necessary documentation, your next step is to sell, sell, sell!