Owning your own company means being your own boss. Not only do business owners get to choose their professional path—they get to determine the direction of their company as a whole. Many would say that becoming a small business owner is the epitome of the American Dream.
If you want to be a business owner, where do you start? Here’s some advice and a few tips on how to start your own business, no matter what type of business you are trying to start.
How to Start Your Own Business
Do you have a great idea and want to get it out there? Starting your own business isn’t as simple as just selling things. In order to achieve long-term success, you need a plan and a deep understanding of the technical parts of business ownership. Before you even get started, it would be a great idea to earn a degree in business or entrepreneurship. This will give you the building blocks you need to ensure you are off to a solid start.
Once you feel familiar with the underlying principles of business, budgeting, compliance and corporate leadership, you will want to follow these steps.
Conduct Market Research
Even if you have a great idea, it’s crucial you know what else is out there. If you attempt to compete in the market without solid research, you are flying blind. You can only truly differentiate if you know the current options and where your product fits best. Make sure there is enough demand to sustain your product.
Write a Business Plan
You will increase your odds of success with a business plan that outlines your direction. As you clarify your thoughts and strategy, you will often run into questions that force you to reconsider your assumptions. Your business plan will also help clarify your vision to potential investors.
Determine How to Fund Your Business
Part of your business plan will be to pinpoint your startup costs. Depending on what you need, you may choose to self-fund, approach investors, crowdfund or obtain a small business loan. There are a number of programs out there to help finance your idea. For lenders, you will likely need a detailed five-year business plan that lays out your idea clearly.
Determine Your Legal Business Structure
How you pay taxes and approach liability will come down to how you structure your business. Before registering, you will want to choose if you are going to be a:
- Sole proprietorship: The automatic status of a business is one that does not protect your personal assets or liabilities, holding you accountable for the debts of the business.
- Partnership: Two or more people forming a business will choose between a limited partnership (LP) or limited liability partnership (LLP) to structure the control breakdown and financial structure.
- Limited liability company (LLC): Protects you from liability in case of failure.
- C corp, S corp, B corp or Close corporation: Categories for corporate entities separate from their owners
- Nonprofit corporation: Charities, educational institutions, religious entities, libraries, labs or other public-service companies that qualify for tax-exempt status.
- Cooperative: An organization owned by a group and where earnings and profits are shared by the user-owners.
Some of these can be combined as tax status and not business structures. That means an LLC could be taxed as a nonprofit. As you work to determine your legal business structure, you may consider consulting an attorney.
Register Your Business
When you’ve determined the right structure for your business, you will need to determine the location of your company. First, you will register your business name. Then, you will register with the IRS before also registering with your state and local agencies. Most small businesses will also need to get an employer identification number (EIN) for tax purposes.
Apply for Licenses and Permits
There are a number of permits and licenses your business may need to carry, depending on what you plan to do. These permits are specific to your state and may include:
- City business license
- Building permit
- Zoning permit
- Health permit
- Occupational permit
- Alarm permit
- Sales/seller permit
- Alcohol/tobacco/liquor permit or license
- Occupational licenses
Obtain an Insurance Policy
To protect yourself from legal claims or costly damage, you will need business insurance. This should cover your business property, operations and products. Some states will require certain types of business insurance, which could include:
- General liability insurance
- Product liability insurance
- Professional liability insurance
- Commercial property insurance
- Home-based business insurance
- Business owner’s policy
Open a Business Bank Account
Most banks are going to offer business bank account benefits that aren’t available to personal accounts. This will offer protection by keeping your personal funds separate from your company’s funds. It will also look more professional to your customers, employees and stakeholders. You will have a more transparent set up with a bank account dedicated to your business expenses and profits. Holding business credit cards will also help build your company’s credit history. You will want to carefully consider the different discount rates, transaction fees, service fees and ACH batch fees that your bank charges.
Hire and Retain Staff
If you start to grow large enough to need an assistant or employee, you will want to hire great people for the job. It is important to choose employees that are driven and dedicated. You will want to pick people who can grow with your business and align with your long-term vision. As you hire top talent to join your team, you will want to offer competitive wages, benefits and company culture to help keep those employees on board.
Promote Your Small Business
Having a background in marketing is going to be extremely helpful for spreading the word and increasing your business reach. Without awareness, you are going to struggle to bring in funds through sales or donations. In today’s business environment, you need a robust website, social media presence and marketing strategy in place to truly compete in digital spaces. One of the first things you should do is secure a domain name for your website and set up a Facebook page for your business.
Take the First Step
If you’re interested in starting a business, earn your bachelor’s degree in entrepreneurship, bachelor’s degree in business studies, or your MBA online from JWU Online. For more information, complete the Request Info form, call 855-JWU-1881, or email [email protected].