So, you’d like to start your own business and become your own boss. But what to do next? Follow our 9 key steps below to successfully launch your business in 2022.
Before you start
Starting your own business might be the best decision you’ve ever made. Who doesn’t want to have complete autonomy over their working hours and finances. To reach such a point typically involves a lot of sacrifice however, as there is a long laundry list of setup steps to be completed and admin before your first dollar even arrives.
Some advice? Be consistent and focus on completing one task at a time. Setting up your business can feel overwhelming at times with a seemingly endless list of tasks, not to mention trying to bring in new clients, hiring staff, business insurance and more.
The rewards are there however for those who keep it simple, complete each task as required and move onto the next step in the plan. Speaking of which, Step 2 below alludes to this, a Business Plan, very useful for keeping your goals on track.
1. Find a business idea
What is the easiest business to start? What are you good at? Following your passions isn’t necessarily the best advice if your passions don’t make any money. Follow your talents.
It depends on your expertise, time commitment and capital. Many small-business ideas carry low startup costs and can be run from home. Conducting some market research can also be useful in assessing market needs and potential customers.
Some few tips to help you along the way:
- A traditional business: Start a clothing business. People will always need to dress themselves, and regularly buy new clothes.
- An innovative business: Develop a mobile app based upon the latest tech innovations. Once upon a time, we used to call a taxi company for a taxi. Now, theres’ an app on your smartphone that can book a taxi in seconds.
- A professional business: Do you have a particular set of skills that others would be happy to pay good money to access your expertise and knowledge? You could become a tax advisor, an accountant, a reflexologist, a psychologist or social media consultant.
Your skills will likely direct your business aspirations. Find out what you’re good at and explore the opportunities that may exist to start a business based upon this. Are you a qualified beautician? Or know-how in drop-shipping ecommerce products?
Whatever your skills or interests, a business plan will be a very useful resource before you start to keep an overall eye on the project plan, costs, steps required along the way and in general, to keep you focused.
2. Write your business plan
A good business plan guides you through each stage of starting and managing your business. You’ll use your business plan as a roadmap for how to structure, run, and grow your new business. It’s a way to think through the key elements of your business.
Business plans can assist in securing funding or bring on new business partners. Investors want to feel confident they’ll see a return on their investment. Your business plan is also the tool you’ll use to convince people that working with you — or investing in your company — is a smart choice.
There’s no right or wrong way to write a business plan. What’s important is that your plan meets your needs. Many startups use a specific lean startup business plan.
Lean startup business plans focus on summarizing the most important points of the key elements of your plan. They can take as little as one hour to make and are typically only one page long.
Key elements of a lean startup business plan include:
- Key partnerships: Note the other businesses or services you’ll work with to run your business. Think about suppliers, manufacturers and partners.
- Key activities: List the ways your business will gain a competitive advantage. Highlight things like selling directly to consumers, or using technology for specific gains.
- Key resources: List any resource you’ll leverage to create value for your customer. Your most important assets could include staff, capital, or intellectual property.
- Value proposition: Make a clear and compelling statement about the unique value your company brings to the market.
- Customer relationships: Describe how customers will interact with your business. Is it automated or personal? In person or online? Think through the customer experience.
- Customer segments: Be specific when you name your target market. Your business won’t be for everybody, so it’s important to have a clear sense of whom your business will serve.
- Channels: List the most important ways you’ll talk to your customers. Most businesses use a mix of channels and optimize them over time.
- Cost structure: Will your company focus on reducing cost or maximizing value? Define your strategy, then list the most significant costs you’ll face pursuing it.
- Revenue streams: Explain how your company will make money and list them all. Some examples are direct sales, memberships fees, and selling advertising space.
3. Secure financing to fund your business
Start-up costs are one of the obstacles that sometimes prevent people from ultimately pursuing their dream. The good news, however, is that even if you don’t have much money at your disposal, there are various options for financing your business, including
- Bootstrapping: Self-funding is advantageous because you maintain complete control of your business. On the downside, it can come with the highest personal financial risk.
- Small business loans: If you don’t have enough money, but still want to keep full ownership of your business, a loan from a business bank might be advantageous. Be prepared to show the bank a comprehensive business plan, as well as your estimated expenses and financial projections.
- Crowdfunding: Some people invest in a business in exchange for perks, as opposed to a share of the profits or company ownership. Because these perks are usually merchandise or name recognition, your business may need to be in the general consumer product or creative industries to take advantage of crowdfunding.
- Venture capital investments: Venture capitalists or “angel investors” may be willing to fund your business, but they usually expect board membership or a stake in the company.
4. Choose a business structure
The business structure you choose influences everything from day-to-day operations, to taxes and how much of your personal assets are at risk. You should choose a business structure that gives you the right balance of legal protections and benefits.
You’ll need to choose a business structure before you register your business with the state. Most businesses will also need to signup for a tax ID number and file for the appropriate licenses and permits.
Choose carefully. While you may convert to a different business structure in the future, there may be restrictions depending on your whereabouts. This could also result in tax consequences and unintended dissolution, among other complications.
Consulting with online company formation providers as well as business counselors, attorneys, and accountants can prove helpful.
Common business structures include:
- Sole proprietorship
- Limited liability company (LLC)
- C corp
- S corp
- B corp
- Close corporation
- Nonprofit corporation
5. Get federal and state tax ID numbers
You will need to acquire a variety of business licenses before you can legally operate your business. For example, registering your business with federal, state and local governments is an essential step and there are several documents you must prepare before registering.
- Articles of incorporation and operating agreements: To become an officially recognized business entity, you must register with the government. Corporations need an “articles of incorporation” document, which includes your business name, business purpose, corporate structure, stock details and other information about your company. Similarly, some LLCs will need to create an operating agreement.
- Doing business as (DBA): If you don’t have articles of incorporation or an operating agreement, you will need to register your business name, which can be your legal name, a fictitious DBA name (if you are the sole proprietor), or the name you’ve come up with for your company. Most states require you to obtain a DBA.
- Employer identification number (EIN): After you register your business, getting an employer identification number from the IRS is a step you should complete. You may want to apply for one anyway to keep your personal and business taxes separate. If you do need an EIN, you can register online for free.
- Income tax forms: You also need to file certain forms to fulfill your federal and state income tax obligations. The forms you need are determined by your business structure. You will need to check your state’s website for information on state-specific and local tax obligations.
Consulting with an experienced and qualified company formation service can often save startup businesses a lot of time, effort and money with these steps.
6. Obtain your business license and permits
Before you open for business, take a moment to make sure that you have all the correct licenses, permits and insurance policies to operate legally. The last thing you want at this stage is to be shut down by a government agency.
Some businesses may also require federal, state or local licenses and permits to operate. The best place to obtain a business license is at your local city hall. You can also use the SBA’s database to search for licensing requirements by state and business type.
If firms do business in certain industries, such as agriculture and broadcasting, you might need a federal license. Other industries, like health care, typically require professional licenses.
Even if you don’t fall into one of these categories, you may be required to have some form of permission to conduct business. Freelancers and consultants, for example, sometimes have to have a home occupation permit.
7. Open a business checking account
Taking the effort to establish a company checking account and a corporate credit card can make it a great deal simpler for you to manage your company’s finances.
Maintaining a wall of separation between your personal and work accounts not only makes filing your taxes considerably less complicated but also helps automate a number of the financial tasks involved in operating a company. If you have no money to start with and you want to understand how to get started, completing this will be extremely useful.
What works for one company may not perform well for another, and it’s vital to understand that not all business bank deposits are the same. There are various factors to consider when evaluating commercial bank accounts including:
- Transaction restrictions are set on a daily, weekly, and monthly basis.
- Account benefits and services
- Access to branch banking and ATMs
- Integration simplicity
- Deposit account interest rates
- Offers for introductory bonuses
- Service charges
You should also consider how you’re going to take payment for your products or services. Investing in a Credit Card Terminal may prove a wise investment.
8. Get business insurance
Your insurance needs will depend on what type of business you have, but there are also requirements that vary from state to state. Examples of types of insurance to consider include:
- Workers’ compensation: Mandatory in most states, workers’ compensation provides coverage for on-the-job injuries or illness. Employees typically receive wage replacement and medical benefits in exchange for mandatory relinquishment of their right to sue for negligence.
- General liability insurance: This insurance usually covers accidents, injuries and claims of negligence.
- Product liability insurance: Often essential for businesses in manufacturing or distribution, product liability helps protect against financial loss due to a defective product that causes injury or bodily harm.
- Professional liability insurance: If you provide a service, professional liability, or errors and omissions insurance, helps safeguard you from malpractice and negligence lawsuits.
- Commercial property insurance: Property damage and loss caused by fire, smoke, storms, vandalism and other events are usually covered by commercial property insurance.
- Business owner policy: Designed for small and medium-sized businesses, BOP combines general liability insurance and property insurance into a single, more cost-effective policy.
9. Promote your firm
Many business owners spend so much effort and money creating their products that they have little money left over for advertising when they finally release them. Another possibility is that they spent so much time developing the product that marketing it comes as an afterthought.
Establish an Online Presence
Having a web presence is essential even if you already have a physical storefront. Website development is a simple and rapid process; in just a few days, you can have your own online presence up and ready for business. It’s possible to build a site that teaches clients something useful or that acts as an online marketplace.
Add a section to the website detailing the business’s presence and availability if customers may pick up their orders or get their services in person. Businesses, particularly those operating online, might benefit from including a “About Us” page, detailed descriptions of their goods and services, answers to frequently asked questions (FAQs), a company blog, and contact information.
Social Media Accounts: These are free. Now that you have a plan, domain name, website, and email account, it’s time to snag your social media handles and set up your accounts.
Being on social media may not seem like a big deal, but it’s an excellent way to connect with your audience and customers, attract new leads, share your ideas, and develop a community around your brand.
Even if you aren’t a fan of social media, it can have a huge impact on your business, especially at the beginning. Some popular social media channels for business include Instagram, Facebook, TikTok, Twitter, LinkedIn, and Pinterest.
How can I start a business with no money?
Startups with little to no money can avail of free resources that can teach you almost everything you need to know including YouTube, internet searches, your local library or free business advice by working with a volunteer mentor from SCORE.org, a nonprofit partner of the Small Business Administration.
How much money do I need to start a business?
Starting a business can be achieved for as little as $100. Depending on the business type, local state fees and other requirements, this can increase with other add-ons.
What unique business can I start?
Unique businesses you can start including launching your own food truck or drop kitchen, become a virtual teacher, start a local grocery delivery service in your community or provide freelance bookkeeping services for a particular business niche.
Tom is the founder of Gottagrow.io. He reads the offers, deciphers the details including features, pricing, included services and more to find you the best products and services.