How to Start a Business: Some Initial Steps and Advice
Marc Anthony once said, “If you do what you love, you’ll never work a day in your life.” When you choose something you love, you are willing to pull out all the stops to make sure it is successful and enjoy every moment of it.
When inquiring about Marc Anthony’s theory, Jessica Kinson, owner of Les Bella Photography, had this to say about choosing to do what you love: “Make sure that you are passionate about what you are trying to do. Make sure you love it and believe in it. Most importantly make sure it makes YOU feel good.” Doing what you love should make you happy and free. Both Jessica and Marc Anthony are on the same page here.
If you love what you do, what you have to offer will be easy to deliver to the public. Do something that will have you jumping out of bed, even on your worst days, because it makes you happy to be able to do it. Let’s talk more about the ins and outs to establishing a successful and marketable business.
BUILD A BUSINESS ON YOUR PASSION
When asked about the important first steps to starting a business, Scott Sparks owner of Vermont Hempicurean had this to say: “Follow your passion and have a mission statement. Don’t just decide to make cupcakes because you read that they are popular. If you don’t have a passion for baking, you will most likely fail.”
Scott went on to say “Look to see if there is a need that is unfulfilled, or a need people don’t know they have. Stay organized, research, and find resources to help, such as the Small Business Administration (SBA) or the Brattleboro Development Credit Corporation and The Vermont Small Business Development Center if you are in that area.”
As a small business owner in the Brattleboro area, Scott had great advice for getting started. The one that was most moving to me was, “When you fall, which you will, pick yourself up, brush yourself off and learn from the mistake.”
Starting a business is a big step; however, knowing where to start and what to do to start makes that step more comforting.
- What: What are you passionate about? Would it be a good idea for a business? Is this something you can teach others? Is this something you can get your family on board with?
- Why: Why do you want to do this? Why are passionate about it?
- Who: Who will your target audience be?
- How: How can you make this work as a business? How will this benefit your target audience?
Once you have answered those questions it is time to write your business plan. This will include the answers to your what, why, who and how. It should also include a brief description of the business, how you plan to market the business, and the financial data. Though I won’t go into the topic in depth here, you can find a helpful template to get you started here.
Your business plan is a living document and will take some time to complete. However, as you grow and develop in the business world, you will find that some things in this document are subject to change.
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PROS AND CONS TO RUNNING YOUR OWN BUSINESS
After speaking with a couple small business owners, this is what I gathered for pros and cons to being in business for yourself:
- You get to decide what you want to do (You are in charge).
- You make your own schedule.
- You get to experience the pride that comes with this accomplishment.
The downsides to consider would be:
- You are 100% responsible for the business.
- You might struggle finding the right work\life balance.
- You will encounter financial ups and downs.
Like everything else that we do in life, there will be good and bad results. The most important thing to keep in mind is your WHY. If your reason for starting your business is great enough, few things can stop you from being a success but you.
RESEARCH THE MARKET
It is already established that starting a business won’t be all rainbows and sunshine. Now that we have looked at what the beginning process looks like, lets dive into some other aspects that are important to getting your business off the ground. Doing research as we touched on briefly, is key to making sure that you are taking the right steps and that the business will be successful.
You will need to do research, not only on what your clients/customers need or how your product/service will benefit them, but also on what other similar businesses in the surrounding area are offering. Not only do you want to make sure that the competition isn’t offering what you are. You also want to see what business is like for them as well. All these factors will play a role in the success of your business.
DETERMINE YOUR BUSINESS STRUCTURE
Following Scott’s advice on doing your research, the SBA website is a great tool to use. It lists the business structure as a key component to a successful business. This will affect how much you pay in taxes and will provide guidance for filing the necessary paperwork.
The structure you choose will determine how your business is identified within your jurisdiction.
The two most common structures are:
- Sole proprietorship: This designation gives you complete control over your business and applies if you don’t register as any other kind of business. As a sole proprietor your assets and liabilities are combined—personal and business. There is no legal distinction between you as the owner, and your business.
- Partnerships: In a partnership, two or more people own the business together. Partnerships can be labeled a limited partnership (LP) or a limited liability partnership (LLP). These structures are appropriate for businesses with multiple owners or startup businesses testing the waters before making the business official.
- A limited partnership (LP) consists of one person with unlimited liability. If there are other partners, the others will have limited liability as well as limited control of the business. Profits are processed through the personal tax returns of the person who holds unlimited liability, and that person will be required to pay self-employment taxes.
- The limited liability partnership (LLP) gives limited liability to all owners. This structure protects each partner from debts associated with the partnership. All owners are not accountable for the actions of one.
CHOOSE YOUR BUSINESS LOCATION
After determining the structure that is most beneficial to you, the next thing to think about is where consumers are going to access the product or service you provide. Let’s look at two options available to you:
- There is no need to rent or buy a physical building. This will help save money.
- Everything yourself and the shopper needs is right at your fingertips.
- You can operate your business from wherever you are.
- There is no need to be at a store to open for customers.
Brick and Mortar:
- You get instant feedback on your product/service from your customers.
- You can explore multiple payment options and see what works best for you.
- You won’t have to worry about the extra cost of shipping items.
- Consumers get to fully enjoy products and services in person.
These are two types of locations and the third would be a combination of both for maximum customer satisfaction. Depending on what direction you are looking to take your business, your location will be one of the important steps in getting your products and services out there.
REGISTER YOUR BUSINESS
First things first—you will need to figure out if you need to register your business. Registration will depend on the structure and the name of your business. After you have created a name for the business, register it with the IRS and your state and local agencies. Your registration with the IRS will provide you with an Employer Identification Number (EIN) which will be crucial when filing taxes. If you aren’t planning to get an EIN, you can use your Social Security number if you are operating the business as yourself or as a sole proprietorship.
FUND YOUR BUSINESS
Among all the things to consider, you need to think about funding. You do have a few funding options available to you depending on the risks you are willing to take.
- Self-funding: This allows you to tap into the resources you already have for financial support. This can range from using savings, getting support from family and friends and even tapping into your 401(k) if you find that you need to. Keep in mind that your 401(k) benefits you later in life, so this option would work best as a last resort. With self-funding you get, without a doubt, full control over the business and the risk is only on you. This is where budgeting and a separate plan for finances would come in handy. You will also want to run any ideas of taking from your retirement funds with the plan administrator for more advice.
- Investors: Getting an investor for the business would mean that you have a partner for the business. Investors will help to get your business off the ground, this means that they can take active role in the business. You can ask someone you know to invest in your business or find someone reputable and willing to help a small business. (Milk Money or Angel Investors in Vermont for example).
- Small business loan: When applying for a business loan, you want to have your business plan as well as your financial plan available. Some financial institutions might require you to get an SBA loan guarantee due to the risks associated with being a new business owner. With the loan guarantee, if you were to default on the loan, the lender could recover 50-80 percent of the balance owed. This reduces the risk the financial institution takes and makes them more likely to approve the loan.
MARKET YOUR BUSINESS TO ENSURE A PROFIT
No matter what the nature of your business is, advertisement is key. Now that you have gone over what you it takes to start the business it is time to get the word out.
Here are some ideas to get you started:
- List your business on google.
- Create social media accounts and post regularly.
- Create a presence in your community.
- Have a grand opening.
- Throw a community family event where people get to sample products and services.
- Get on your community’s social media page and give information about the business.
- Offer coupons or free sample products if you can.
- Use the local newspaper.
- Be available to answer questions
WHAT A SUCCESSFUL BUSINESS WILL LOOK LIKE
Your overall goal is to not just be a business owner, but a successful one. In the end you want to establish a business that you are proud to call your own. Success means something different to each individual business owner. However, one thing most agree on is that the business should be profitable to both owner and consumer.
Your business’s success is 100% on you as the owner. Everything you put in will determine the outcome as well as the sustainability of the business.
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The views and opinions expressed in this blog are those of the authors and do not necessarily reflect those of VSECU.