Starting a Business is serious business.
This site is for anyone serious about starting theirs.
A complete guide on how to start a business, from start to finish.
Because you shouldn’t need a business degree to run a successful business.
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Consider who your clientele will be. Don’t just say, everyone. Identifying your ideal clientele will help you ask deeper, more meaningful questions, later. Make sure you do some serious research into the following questions:
You probably have answers to many of the questions for a business plan floating around in your head, but putting them down on paper is crucial. Do not skip this step. You do this even though you know it may need to change or be rewritten. Business plans often must be adapted. But you do not go to battle without a plan. Good business plans set goals you can keep your eye on when you’re struggling. They define timelines for important bench marks like, when should you be profitable? Good business plans help you predict and plan for risks and obstacles that may arise. They also help investors see the viability of a company.
The first financial aspect to consider is, do you have enough savings to make it until your business turns a profit? It takes a while. It’s often a smart idea to hold on to your day a job or a part-time job while you build the foundation of your business. This way, if it takes longer than expected, you have a cushion.
The break-even analysis
At what point does your business break even? Determine this number and say it over and over to yourself until you see it in your dreams:
Fixed Costs ÷ (Average Price – Variable Costs) = Break-Even Point
There are two different ways you can think about using this:
Watch your expenses. Look, we all like nice things, and the old adage is true, you get what you pay for, but keep in mind, many a business has gone under due to overspending too early. There is an art to riding this line. Maybe you don’t need that giant office space or the top-of-the-line piece of equipment. As a small business, you want to turn a profit quickly and avoid drowning in debt.
Consider your funding options. Startup capital for your business can come from various means. The best way to acquire funding for your business depends on several factors, including creditworthiness, the amount needed and available options.
Small business loan. It’s very common for people interested in starting a new business to inquire about a small business loan. It’s funny that this term is so widely known, because actually securing an uncollateralized business loan is very rare. For most small business entrepreneurs, this is not really an option.
Business grants. A grant is better than a loan, because you don’t have to pay it back (assuming you fulfill the terms of the grant). There are government and private grants available for small businesses. Grants for small businesses are similar to scholarships in that they are many and varied and finding a good one is hard but can change your life. Check grants.gov for federal grants. The key to landing a business grant is finding one that pertains to your exact situation.
Investors. It’s possible an investor could find your business interesting enough that they’d like to be part of it. In exchange, an investor will likely want to own a percentage of your business or receive a princely fixed rate of return.
Crowdfunding. Lots of small businesses have gotten their startup costs covered this way in recent years. Try GoFundme or SeedInvest.
The structure of your business will have big implications on everything from your personal liability protection to how you pay taxes. Take some time to consider which will work best for you.
New business owners are often surprised to learn that forming their business with the state is arguably the easiest part of the process. Online formation companies have made this even easier. They take the guess work out and hold your hand through the process, usually for under $100. It’s kind of a no-brainer if you’re using a good service (We’ve written reviews of our favorites).
LLCs and corporations are formed at the state level by filing registration paperwork (Articles/Certificate of Organization/Incorporation) with the secretary of state. Each state has its own specific rules and fees surrounding this process, but the basic steps are similar across the board:
If you are operating as a sole proprietor or partnership and want to use a name other than your own legal name, you may need to register that you’re Doing business as (DBA) another name. This is also known as an assumed, trade, or fictitious name. You may also need to do this if you are opening a franchise. As a sole proprietor, having a DBA will also allow you to open a business banking account under your business name, which is a very good idea.
An EIN is like a social security number for your business. All corporations and multi-member LLCs, or LLCs with employees are required to obtain an EIN. It’s a good idea to get one even if you are a single member LLC as it helps bolster the separation between you and your business. EINs are free and are assigned by the IRS. The application process is quick and you’ll receive your number immediately.
What licenses you’ll need to operate depends entirely on what type of industry you are operating in. The best thing to do is contact your city hall. If your industry is a trade, you’ll want to contact the Department of Labor & Industries. Federal licenses are reserved only for those industries that are regulated at the federal level. This includes: agriculture, alcohol, aviation, broadcasting, firearms, commercial fisheries, maritime transportation, mining and drilling, nuclear energy, and transportation.
You’ll want a business bank account to run all customer payments through, even if you’re a sole proprietor, so that you can keep your business and personal finances separate. This is crucial for good bookkeeping and accounting.
You’ll also need a business banking account to set up any kind of debit or credit card processing.
A Good bookkeeping system is imperative to a successful business. You can take complete control of this system by tracking all your financial transactions on a spread sheet, or you can hire a bookkeeper to do it all for you. But for most small business owners, the best option is to spend a little time familiarizing yourself with the basic concepts of bookkeeping, and then employing a high quality accounting software to help you get it done.
Regardless of how involved you are in your own bookkeeping and accounting, you’ll want to familiarize yourself with the basic concepts of double-entry bookkeeping.
Double-entry bookkeeping is the standard bookkeeping method for modern business accounting. In double-entry bookkeeping every financial transaction is first recorded in a journal and then a general ledger. Each transaction is recorded twice—for every credit recorded in one account, an equal debit is recorded in another account and vice versa. This way, the total credits will always equal the total debits, and if they don’t, a bookkeeper knows an error has occurred.
The chart of accounts is like a table of contents for the general ledger. It makes it easy to find the name of an account, its number, and a brief description. The general ledger is set up the same way, but it is in the general ledger that transactions are recorded and balances kept.
Credits and debits are crucial to understanding bookkeeping, but they often confuse beginners who assume debit simply means subtract and credit means add. Before you can understanding bookkeeping, you’ll first need to alter your concept of these terms.
All businesses can benefit from general liability insurance, but some businesses are required to have certain other types of insurance. General liability insurance covers property damage, bodily injury, and personal injury to yourself or a third party.
If your business provides a service, you may also want to consider professional liability insurance. It covers you if you do something wrong or neglect to do something you should have done while operating your business. Small businesses often also carry Business Property Insurance and Business Income Insurance. Many insurance companies offer packages that include these three policies.
If your business has employees, you’ll need to carry workers’ compensation and unemployment insurance.
Third party vendors are an essential part of a small business. You’ll need partners to set up credit card processing, book keeping, and Running a business can be overwhelming, and you and your team probably aren’t going to be able to do it all on your own. That’s where third-party vendors come in. Companies in every industry from HR to business phone systems exist to partner with you and help you run your business better. Be discerning with third party vendors, though. They’ll have access to sensitive data and often that of your customers.
Branding is an essential component of a new small business. Brands build trust and recognition. Once you have a brand logo established, you’ll be able to use it on your website, social media platforms, and everywhere else that potential customers come into contact with your services or product.
A critical new component of small business marketing is setting up good Customer Relationship Management (CRM) software. Do this early. You’ll have a much easier time and become more comfortable with the process of collecting and storing your customer information for marketing purposes if you do it from the start.
A good marketing plan is also essential to develop and implement early on. Spend some time developing one before you open your doors.