As part of developing your business plan, you can validate the concept for a business that you’ve come up with by doing market research. Check out the local area. Is there a market for what you will offer?
At the same time, you will learn how to price your products or services and position them in the marketplace.
The SBA says a good business plan will guide you through each stage of starting a business and managing it. Adding, it is a way for you to think through the key elements of your business. With your plan in hand, you will have a roadmap to structure, run, and grow your new business.
The Business Plan
The SBA recommends for a business plan to have the following:
- Executive summary
- Company description
- Market analysis
- Organization and management
- Service or product line
- Marketing and sales
- Funding request
- Financial projections
Even though there are only nine topics, you don’t have to use all of them and you can expand on each one to address the specific needs of your business.
No matter how many of them you choose, before you get started you will have to research, research, research. The more information you have, the better your plan will be; even if it is a small business plan. Once you have a full understanding of your company, product, competition, and market, you can write and speak about it to anyone.
With all this information on hand, briefly tell your reader what your company is and why it will be successful. Include your mission statement, your product or service, and basic information about your company’s leadership team, employees, and location.
If you plan to ask for financing to start a business, you should also include financial information and high-level growth plans.
Planning your exit strategy when you first start your business is one way to keep you honest when it comes to keeping your goal. While every entrepreneur will have their own end goals when they start a business, consider the following when you are creating your exit strategy.
How long you plan to run or be part of the business along with financial goals? Beyond that, you should also plan on liquidation, compensating investors or creditors and taking care of your employees. The goal is to be ready for when the time comes by continuously adjusting your exit strategy based on the growth of your business.
5. Establish Your Offerings
Whether it is a product or service, when you start a business you want to establish your offerings in the best way possible. And if you start out offering what you do best, it will be much easier to deliver consistently while you grow.
Offering what you do best lets you build a solid marketing message, define your target market, and establish your brand as a leader in the field.
This however doesn’t mean you have to be an expert in any given field. If you don’t have the expertise, you can hire consultants to find the right products, vendors, suppliers, and service providers.
When you do, take the time to think about what you will be offering your customers. You have to be clear on exactly what you are offering and what it will cost you.
The product mix width, depth, length, and consistency your business provides will determine your overall offerings.
- Width – This is the total number of product lines your business will offer to sell.
- Depth – The number of versions offered of each product in the line
- Length – This is the total number of products within your company’s product line.
- Consistency – The close relationship between the different product lines.
Analyzing the Viability
When you choose your offering, make sure to analyze its viability. Is it practical to sell it? Look at the challenges such as support services. Is it fragile (breaks easily)? Does the product have a lifespan (spoil)?
Similarly, take the seasons into consideration. Whether it is food, clothes, or decorations, look into how winter and/or summer and the rest of the year will play a role.
Beyond the items and services you sell, you also have to offer intangibles your customers will appreciate:
- Great customer service – Memorable customer service is one of the biggest differentiators for businesses.
- A guarantee – This is especially important when you first start a business. A quick way your customers will know you is by guaranteeing your work.
- Samples – You may not always be able to offer samples, but if you can by all means do it. It will show the confidence you have in your product.
- Free shipping/return – With eCommerce now part of most businesses, try to offer free or low-cost shipping/return.
Be Honest About Your Offering
Whether you make or buy the products you sell, if it has a shortcoming in a particular use case, let the customer know about it. Let them know it might not be right for them.
This simple act will be enough for them to remember you when they need something you have in the future.
6. Secure a Business Name
Check the name for availability in the Secretary of State database for your state. Make sure to also check the Federal trademark site. Do a simple Google search to see whether your proposed business name is in use. And search for the associated domain name. If the domain name is taken, it’s going to be a lot harder to brand and promote your business.
It’s a good idea to also check for and reserve key social media profiles at this point. Even if you are not ready to start a social media push, at least you have the name available.
Think of any major brand name and you know what they do. That is why they relentlessly protect their name. And when you come up with the name of your business, you should do the same.
Choose the Name
There are many different factors that go into picking a great business name. From the kind of business you do to something completely off the beaten path, the choice is yours. However, you should take some things into consideration.
Try to distinguish yourself from your competition by being distinctive and memorable. If the name can suggest the products and services you provide, it is a plus.
The next thing is to avoid making it too hard to spell. This is especially important today because you don’t want customers getting confused when they try to find your name online.
Last but not least, test the name around and see how people respond to it. From the way it is spelled to how it sounds, all these factors play a big role in how customers respond to a brand.
Check for Availability
With the name in hand, you can start a preliminary search on Google, the Secretary of State database for your state, and the U.S. Patent and Trademark Office (USPTO) site. A no-conflict, free trademark search will let you see if the name is available in all 50 states.
If you don’t find the name, you can go to your local county clerk’s office and file a “Doing Business As” (DBA) or a “Fictitious Business Name” (FBN). The DBA and FBN protect against name theft and it lets people know who actually owns the business.
Depending on the county regulations, you might have to publish the DBA and FBN announcements in the local classified section of the newspaper.
If you are using your own legal name (John Doe) for your business, you don’t have to register a business name.
In addition to the actual business name, make sure to check for the domain name. If it is available, buy it right away. This includes other web address extensions in addition to “.com” such as “.co,” “.net,” “.biz,” “.info” and others.
This also goes for any social media handles. Even if you are not ready to start a social media push, at least have the name available.
Register Your Business Name as a Trademark
When you first start a business, there is no telling how much your business will grow. But even if it doesn’t, registering your business name as a trademark will protect it from any future misunderstanding.
Filing state and federal trademark protection makes it that much easier to defend your name against any potential infringers. Because eCommerce can make even the smallest of business a global enterprise, a trademark offers protection.
Once you apply for a trademark and it is accepted, add the “TM” (trademark) notification in your business communications. When your business name appears in print or website add the “TM” in superscript type. After your trademark application is approved, change the “TM” to a capital R in a circle.
Continue to Protect Your Name
Intellectual theft and copyright infringement are huge global problems. Once you have gone through the process of protecting your brand, you have to stay vigilant.
Keep track of all expiration dates on all registrations. If you don’t renew them, another entrepreneur can use your business name.
7. Pick a Business Structure
What is the right business structure for you? The structure you choose will have a great bearing on taxes, financing, compensation, and insurance. Not to mention the risk and liabilities of your personal assets. Therefore, choosing the right structure is critically important before you start a business.
Another point to remember when choosing your structure is the variations from state to state. Make sure to find out how the different structures are applied in your state to protect yourself from legal and tax liabilities.
Based on your startup business, you need to find out:
- Your financing needs and options.
- How you want to pay taxes.
- The kind of liability protection you need.
- What kind of administrative complexity can you handle?
This is the simplest business structure. The profits and debts of a sole proprietorship company are the responsibility of one person. As such, the owner is personally liable for any debts.
This means creditors can come after your personal property and savings and you are personally liable for any lawsuits brought against the business.
A sole proprietorship is easy to set up, low cost and has an easy exit. When it comes to taxes, all you need to do is to keep track of all the business’ income and expenses. At tax time, just report it on a Schedule C with your personal tax return.
“Doing Business As” (DBA) or a “Fictitious Business Name” (FBN) registration is not technically a legal structure. It allows you to conduct business under a name other than your own.
The DBA or FBN is different from your name as the business owner, or your business’s legal, registered name. A DBA for FBN is a public record showing the people behind a business.
Although a DBA is more common among sole proprietors, LLCs, corporations, and partnerships can all file to get a DBA.
States have different DBA requirements, so make sure you comply.
Limited Liability Company (LLC)
An LLC is a cross structure combining the best features of partnerships and S Corps. It provides owners, called members, with the liability protection of corporations while allowing earnings and losses to pass through to the owners as income on their personal tax returns.
Single or multiple members can be part of an LLC and the profits and losses don’t have to be divided among members equally. A single-member LLC can be taxed as a corporation or an individual using the Schedule C form. A multi-member LLC on the other hand is taxed as a partnership with the K-1 form.
A corporation is an entity that is separate from its owners with its own legal rights. A corporation can sue, be sued, own and sell property, and sell the rights of ownership in the form of stocks. It is independent of its owners.
There are several types of corporations:
- C corporations – Owned by shareholders, they allow an unlimited number of investors and are taxed as separate entities.
- S corporations – Are designed for small businesses to avoid double taxation. It doesn’t file its own taxes and profits are passed through and reported on the personal income tax return of the shareholders.
- An S corporation has employment and profit taxation rules as well as strict ownership laws.
- B corporations – Are for-profit entities structured to make a positive impact on society. They are also known as benefit corporations.
- Closed corporations – These are not publicly traded companies and they benefit from limited liability protection. Compared to publicly traded companies, they have more flexibility.
- Open corporations – Are traded on a public market by allowing anyone to invest in them.
- Nonprofit corporations – Are formed to serve the public good and they have tax exemptions to help with that goal.
A partnership is an unincorporated business owned by multiple people or other businesses. The profits in partnerships are divided among owners and it is reported on their tax returns.
Some of the different types of partnerships are general partnerships, limited partnerships, limited liability partnerships (LLPs), and limited liability limited partnerships (LLLPs).
If your business goes beyond a sole proprietorship, make sure you are fully aware of your liabilities. Find qualified experts to guide you while you are on your way to start a perfect business.
Want to learn more? Take our business structure quiz to learn what kind of business organization is right for you.
8. Get Legal!
The legal requirements of running a business can seem a bit daunting, but with proper planning and the right legal guidance, they don’t have to be. Getting all of the legalese out of the way before you open will ensure restrictions won’t be placed on your business operations.
When it comes to starting a business, there are a number of legal issues you have to address. The industry and state you are in will determine the legal implications of your business. So, get in touch with the proper authorities to find out what they are.
Financial regulations, tax obligations, and employment laws are some of the requirements you will have to address.
Small Business Requirements
1. The first matter you have to address is the business structure of your business. By identifying the structure, you can then tackle the issues of that business model. Whether you choose sole proprietorship or form an LLC, they have their advantages and disadvantages.
2. Choose a name for your business and make sure it is available for you to use legally.
3. Register a fictitious business name or DBA and file for trademark protection.
4. If you have partners (even if they are family members), create a detailed agreement in writing and have all interested parties sign it. There is potential for things to go wrong, but a business agreement lets everyone know where they stand.
5. Check the Secretary of State office for requirements specific to your state along with any regulatory compliances. This includes local, state, and federal regulations.
6. Find out the necessary business licenses and permits for your business type. Operation license, health department permits, occupational or professional licenses, zoning, and land use permits, and sales tax licenses are just some of the requirements.
There are also industries that require additional licenses and permissions from local, state, and federal governments. This can include liquor and firearm licenses, permits from the fire department, environmental licenses and permits, seller’s licenses, and others. These permits and licenses are a must, so make sure you are certified before your open your doors.
7. Get a Federal Tax Identification Number, also referred to as an Employer Identification Number (EIN). This is a number the IRS uses for the transactions of your business.
8. Open a business bank account and start building your business credit. If you show the account has a sufficient cash flow capable of taking on a business loan, your business credit will grow.
With a business bank account, you can simplify your tax preparation and bookkeeping, make incorporation easier, and separate business and personal expenses. At the end of the day, a business bank account makes your business more professional. This will put investors, customers, vendors, and partners more at ease when they do business with you.
9. Classify your workers properly because the tax liabilities are decidedly different. This is especially important in today’s gig economy where independent contractors make up an increasingly larger percentage of the workforce.
10. Buy worker’s compensation insurance. State laws vary, so make sure to check what your state requires.
Another point worth mentioning is the deductions the IRS offers if you work from home. There are home office tax deductions such as $5 per square foot of your home if the workspace is 300-square-feet or less. And you can claim the deduction whether you are a homeowner or renter. The Standard and Simplified options offer different methods of taking a deduction.
These days you can find out virtually everything there is to know about your legal requirement for starting a business online. And you can take care of some of these items yourself. However, there might be issues only an expert can answer.
This is why it is a great idea to consult a professional for advice. A lawyer and an accountant can make sure your legal and financial obligations are covered before opening for business.
Having competent legal counsel and an accountant is invaluable.
9. Set Up a Location – Virtual or In Person
A business location can now be established in the digital or physical world. And while you don’t have to have a physical location if you start out with a digital presence, having a digital presence is extremely important if you start a business with a brick and mortar (in-person) location.
When it comes to a physical location, there is a lot riding on your decision. This is because the location will give your business the best chance to succeed when you start out.
Take your time and research the location thoroughly. This includes visiting the site on different days and times to check out foot and vehicle traffic, parking, lighting, delivery access, handicap access, neighboring businesses, and other requirements your business might need.
The Brick and Mortar Location
It all starts by deciding whether you want to lease or buy your commercial property. There are tax implications for the decision you make, so consult your legal and financial advisors to make the best decision.
If you plan on leasing, go through the agreement thoroughly and make sure you understand it fully before you sign the contract. There are many clauses in lease agreements. If you don’t have the expertise, seek legal advice before you sign. You can avoid expensive mistakes that can cost you and your business.
Choose the Right Space
The location you choose should address some, most, or even all the needs of your business.
- Is the price affordable?
- Is the location known for the products and services you offer and does it complement your business?
- Are there suppliers and distributors for your industry close by?
- Is the area a business hub the city is pushing with future growth opportunities?
- Is there any future development planned in the area or region?
- Does the location have a good reputation?
- Is it secure? What is the crime rate?
- What is the skill base in the area?
The infrastructure of a space is just as important for your business as the location. The communication, electricity, air conditioning, plumbing, parking, and how modular the space is will determine the day-to-day operation of your business.
If your business consumes a lot of power, find out from the landlord about the loads the circuits can handle. A business with sensitive equipment (servers) and perishable items (medication and food) will need generators in the event of a power outage.
Ask how many hours of power/air conditioning are included in the lease in the event of a power outage. If you need more hours, negotiate for more time.
The zoning laws of the city you plan to open your business in will determine if you can open in a particular location.
Is it legally acceptable to do what you plan on doing? If the zoning board doesn’t give you permission, you will have to find another location.
There are many regulations, so make sure to know what you must abide by. As an example, not having enough parking space could be enough to deny you a permit by the city planning and zoning board.
Once you have your space and it is approved for your business, it is time to assemble the necessary furniture, equipment, lighting, signage, and more. You can either lease, lease to buy, or outright buy the equipment.
By the way, they don’t have to be new either. There are many used options available in the marketplace
Consider a Virtual Location
While it is much easier to establish a virtual location, there are many more options when it comes to choosing platforms.
After you create your website and social media channels, you can look into other outposts for your online presence.
You can operate from your website alone or a marketplace such as Amazon, Etsy, Upwork, Fiverr, or many others. Each company has its own rules so find out what they are and read the fine print before you agree to the terms.
10. Plan Your Marketing
The amount of data available in today’s digital ecosystem makes it easier to develop a strong marketing strategy. However, challenges remain. For example, during your marketing planning stage, you will have access to a lot of information. This is the easy part. The hard part is using this information to create a marketing plan for engaging with your customers, competing with your rivals, and at the same time growing your business.
Initially, when you start a business, the marketing will include branding. This includes logo, colors, packaging, store signage, even business cards — though the digital business card is becoming more of a standard. Although they will continue to play a role, once you make up your mind about them, they will stay the same for some time.
When choosing your brand’s logo, fonts, and colors, take the time to identify how they communicate your brand. The psychology of colors plays an important role in brands. Whether it is on your permanent packaging or ads, choose them wisely.
Don’t forget, rebranding is part of a good marketing strategy. Keep track of the colors, fonts, logos, and other media that worked for you because they are all part of learning how to make a business work.
Beyond the branding of your business, the marketing strategy now moves to the research and advertising phase. The research will cover a wide range of information, but it is key to fully optimizing your marketing efforts. And again, this will require asking some good questions and getting honest answers.
You will need to ask questions about your market situation regarding your products or services, the value of your market size, the geographic area you cover, audience (such as demographics, income levels, population, etc.), and competitors in your market.
The answers to these questions will in turn lead you to create a marketing plan capable of addressing these very points for a more targeted reach.
In today’s digital world, your marketing efforts will include websites, social media, blogs, vlogs, SEO, PPC, and additional tools and solutions. These technologies help a startup business owner with limited resources to compete.
You can also use emails, eBooks, case studies, testimonials, white papers, infographics, and newsletters to market the product or service provided by your business or brand.
Don’t know where to start? Try our one-page marketing plan.
11. Establish Operational Readiness
You have a great concept, and by now you have done everything to lay the groundwork for your company. The legal structure, physical location, and regulations have all been handled. Now it’s time to establish operational readiness and start running the company.
The operation of your business is the process in which you buy, build and prepare the products or services you intend to sell. So, establishing operational readiness means sourcing materials, hiring, acquiring equipment, and selling the finished goods. And depending on your business (manufacturer, retailer, or service firm) your needs will differ.
The key is to establish a basic operation process for your company. Whether it is a product or service-based business, it will have to deal with the production process, sales, fulfillment, inventory management, and billing. Even if you buy the product or service you sell, these processes apply.
Pay particular attention to having a sales structure in place. Depending on the type of business and your resources, this might mean hiring one or more salespeople or ensuring that you will have time to sell.
No matter what your business does, it has to produce the end product. A business operations checklist will ensure you meet your production goals. A simple production process looks at the availability of raw materials, equipment, and production quality monitoring.
You can add more steps to address the needs of your production.
Having industry standards to produce your product or deliver your service will ensure high quality. High production standards can give you a competitive edge. An optimized production standard can also improve production, efficiency, and better use of raw materials and inventory.
Once the product is in hand, create a process to deliver quality to your customers. This includes:
- Establishing a process for taking, processing, and delivering the product,
- Designating a person responsible for processing the order,
- Making sure orders are being processed properly to the right customer,
- Gauging the time it takes to deliver the product,
- Having a process to monitor customer satisfaction.
Inventory management is key to ensure production doesn’t stop and you don’t run out of your end product. This demands an inventory control procedure with a designated person to physically take inventory on a regular basis.
At the same time, you should establish a minimum level of inventory and a process to monitor inventory management quality.
Billing and Collection Process
With production and inventory fully developed, the next step is to have a billing and collection process to keep your business running smoothly.
In today’s digital ecosystem, you can implement solutions to monitor all of the above processes under one umbrella. Finding a single platform will help you avoid compatibility issues and bring all of your operations together seamlessly.
Zoho One is an all-inclusive suite of products requiring only one monthly fee for over 40 apps. Every app is available when you need it, but you don’t have to spend the time deploying everything and risk getting distracted from the launch of your business.
It’s easy to go on a buying spree. Everyone wants to sell something to startups. However, this is not the time to be spending. Set up the bare minimum you need at this point to generate sales and keep track of expenses. Get business done. The rest can wait until you actually need it.
The vast majority of small businesses in the United States and in many other countries are single-person businesses. In the U.S., sole proprietorships represent around 23 million people and 73% of the 30+ million small businesses in the country. This means there is a big chance you might be going at it alone.
If you are not, finding the right employees is critical to run and grow your business. Establishing a strong hiring practice for employees with comprehensive checks will protect your business.
When looking for employees, find people who are looking for second chances. They are eager to work and they want to grow. If salary cost is an issue, make use of freelancers and consultants to minimize expenses during your startup phase.
12. Launch Your Business, Promote and Sell!
After all the diligent work, it is time for the big day, the launch and grand opening of your business. This is the culmination of weeks, months, or even years of dreams and effort. You can have a grand opening with a ceremony, an open house, a sale, or something uniquely original related to your business.
There are several ways you can introduce your business to the world and this will greatly depend on whether it is a brick and mortar outlet or online. But before the big day, you have to promote your business.
The promotion of your business has to start the moment you begin your journey. Today this means getting your website and social media channels up with “Coming Soon” listings and progress information. The very process of starting your business can be a promotional tool on a vlog as well as other channels.
The goal is to create brand awareness, customer buzz and establish relationships early.
Continue to update your audience to build interest in your progress. Create an email campaign and include an opt-in with “keep me up to date” prompts.
When you finally have a date for an opening, make sure to put it on your site with additional contact information. This includes business hours, location, phone number, email, chat, and any other point of contact. Go over the information on Google Maps, Yelp, and other listings to make sure there are no mistakes.
When you are ready, you can have a soft or a grand opening. While a soft opening is a great idea for restaurants, you can do it for any business.
A soft opening is an invite-only event designed to create a buzz in the community with a trial run of your operation. This is a good time to support and partner with your favorite charity or neighboring businesses, invite local press, and iron out any kinks before the grand opening.
Post images and videos of the soft opening on your site and social media channels to create more buzz with your followers.
By the time the grand opening rolls around (usually a week after the soft opening), you are ready to run your business. Use any promotion from the soft opening to invite local radio stations and other media for the grand opening.
You can celebrate with entertainment, giveaways, special promotions, and discounted prices.
If you are going to start your business online, you can implement many of the same steps until your launch. The key is to stay engaged with your audience through social media and have promotional events for the big day.
Promote your site with ads on related social media channels along with the pages of vloggers and influencers in your niche. Another way you can attract more people is by offering free membership, free shipping, and discounted items.
Congratulations, you are open for business. Now, get out there and sell some things!
How to Start a Small Business: Are the Steps the Same?
Starting a small business has many of the same steps and processes as starting other types of businesses. The difference is the size, which presents some benefits and challenges to entrepreneurs.
When it comes to the most important aspect of starting a small business, it has to be funding. This might not be the case for everyone. However, for those looking for funding, the process can be more difficult. The good news is the SBA has grants and loans and other lenders also provide many options to give first-time entrepreneurs the opportunity they need.
As far as differences, business structure (DBA, LLC, Corporations, and Partnerships) can be different for small businesses. The legal, tax, insurance, and employment laws and regulatory requirements can also differ greatly when you have fewer workers, income, and property.
Is there a way I can test run the business to see how it does?
Before you start a business, you can always test it to see how it does. This process can be cheap or expensive. A side business is a cost-effective alternative so you can properly gauge the viability of your business.
Before you go ahead full time, you should consider the pros and cons of a side hustle or full time business. This includes everything from the budget, time, skill sets, and much more.
Should I get a business partner?
The right business partner can grow your company beyond your expectations. Conversely, the wrong one can have the opposite effect. The key is identifying what they bring to the table and how they complement your talents.
The reasons you need a partner vary. Whether you need a partner to fund your business or they have a particular set of skills, make sure you think about how to pick a business partner — and make sure you make the right choice.
Should I hire friends and family?
Most people say no, but there are great examples of family-owned businesses with everyone from grandparents to kids working together. The rule to live by is, only consider hiring your family members if they are fully qualified, especially when you first start a business.
When deciding whether to hire a family member, consider this. Don’t jeopardize your small business by hiring someone who is not qualified.
How do I price my products and services?
The quick answer is to look at your competitor’s price, calculate the total cost, and the perceived value. However, it is much more complicated. The key is to fully research the market you are going to serve and provide a competitive price point while staying profitable.
Finding the right product and service pricing strategy is stressful, so get some advice on how to do it right.
Where can I go for help, where are the online resources for starting a new business?
The good news is there is a treasure trove of information available online to help you start a business. The downside is the sheer volume can be overwhelming when it comes to startup statistics.
See our small business resource center for a comprehensive set of resources with information for small businesses. You will find categories from getting funding to business structure, competitive research, advertising, tax compliance and much more.
What is the easiest business to start?
The easiest business to start will require little capital, but more of your time to make it work. And not surprisingly, most of them are in the digital ecosystem. They include:
- Blog publishing
- Graphic and web design
- Online courses and coaching
- Business consulting
- Becoming a virtual assistant
Basically, you can take any skillsets you have and transfer them to a digital format to start your business with greater ease. You can use this skill set to run a business or teach what you already know.
Can I start a business with 1,000 dollars?
The answer is yes, you can start a business with $1,000.
So, what kind of business can you start?
If you want a digital business, you can start a virtual assistant business, design websites, create a blog or vlog, do eCommerce, provide online courses, and more.
In the physical world, you can start events planning, cleaning, errands, or personal chef businesses to name some of your options.
How can I start my own business with no money?
You can start a small business without any money, but you must bring other equity into the equation. This means you have to bring the skill sets you already have along with other resources to start your business without any money. And if you already happen to have a computer and an internet connection, your options are even broader.
In the physical world, you can start a dog walking or pet sitting business without any money. And in the digital world, starting a blog or providing fact-checking and research are as free as they come.
See our free checklist for more on how to start a business with no money.
What are angel investors?
These investors are individuals with high net worth providing funding for startups. In exchange for the investment, they get shares in the company. They are different from venture capitalists because they use their own money to make the investment. And unlike venture capitalists, they enter the business when it is relatively young, while VCs come on the scene when the business is already up and running.
How Much will Your Business Idea Cost?
Want to calculate how much your small business idea will cost? See our startup calculator to get started.
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