Tasks like naming the business and creating a logo are obvious, but what about the less-heralded, equally important steps? Whether it’s planning a small business or crafting a detailed marketing strategy, the workload can quickly pile up. Rather than spinning your wheels and guessing where to start, follow this 10-step entrepreneur’s guide in planning a small business from a lightbulb above your head to a real entity.
1. Refine your idea.
If you’re planning a small business, you likely already have an idea of what you want to sell online, or at least the market you want to enter. Do a quick search for existing companies in your chosen industry. Learn what current brand leaders are doing and figure out how you can do it better. If you think your business can deliver something other companies don’t (or deliver the same thing, only faster and cheaper), or you’ve got a solid idea and are ready to create a business plan.
- Define your “why.”
- Consider franchising.
- Brainstorm your business name.
- Clarify your target customers.
During the ideation phase, you need to iron out the major details. If the idea isn’t something you’re passionate about or if there’s not a market for your creation, it might be time to brainstorm other ideas.
2. Write a business plan.
Once you have your idea in place, you need to ask yourself a few important questions:
- What is the purpose of your business?
- Who are you selling to?
- What are your end goals?
- How will you finance your startup costs?
These questions can be answered in a well-written business plan.
A lot of mistakes are made by new businesses rushing into things without pondering these aspects of the business. You need to find your target customer base. Who is going to buy your product or service? If you can’t find evidence that there’s a demand for your idea, then what would be the point?
What you should do is:
- Conduct market research.
- Consider an exit strategy.
A business plan helps you figure out where your company is going, how it will overcome any potential difficulties, and what you need to sustain it.
3. Assess your finances.
Planning a small business and starting it has a price. So you need to determine how you’re going to cover those costs. Do you have the means to fund your startup, or will you need to borrow money? If you’re planning to leave your current job to focus on your business, do you have money put away to support yourself until you make a profit? It’s best to find out how much your startup costs will be.
Many startups fail because they run out of money before turning a profit. It’s never a bad idea to overestimate the amount of startup capital you need, as it can be a while before the business begins to bring in sustainable revenue.
- Perform a break-even analysis.
- Watch your expenses.
- Consider your funding options.
- Choose the right business bank.
4. Determine your legal business structure.
Before you can register your company, you need to decide what kind of entity it is. Your business structure legally affects everything from how you file your taxes to your liability if something goes wrong.
- Sole proprietorship. If you own the business entirely by yourself and plan to be responsible for all debts and obligations, you can register for a sole proprietorship. Be warned that this route can directly affect your credit.
- Partnership. Alternatively, a business partnership, as its name implies, means that two or more people are held personally liable as business owners. You don’t have to go it alone if you can find a business partner with complimentary skills to your own. It’s usually a good idea to add someone into the mix to help your business flourish.
- Corporation. If you want to separate your liability from your company’s liability, you may want to consider forming one of several types of corporations (e.g., S corporation, C corporation, or B corporation).
- Limited liability company. One of the most common structures for small businesses is the limited liability company (LLC). This hybrid structure has the legal protections of a corporation while allowing for the tax benefits of a partnership.
Ultimately, it is up to you to determine which type of entity is best for your current needs and future business goals. It’s important to learn about the various legal business structures available. If you’re struggling to make up your mind, it’s not a bad idea to discuss the decision with a business or legal advisor.
5. Register with the government and IRS.
You will need to acquire a variety of business licenses before you can legally operate your business. For example, you need to register your business with federal, state, and local governments. There are several documents you must prepare before registering including,
- Articles of incorporation and operating agreements
- Doing business as (DBA)
- Employer identification number (EIN)
- Income tax forms
- Federal, state, and local licenses and permits
6. Purchase an insurance policy.
It might slip your mind as something you’ll “get around to” eventually, but purchasing the right insurance for your business is an important step to take before you officially launch. Dealing with incidents such as property damage, theft or even a customer lawsuit can be costly, and you need to be sure that you’re properly protected.
7. Build your team.
Unless you’re planning to be your only employee, you’re going to need to recruit and hire a great team to get your company off the ground.
8. Choose your vendors.
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.
9. Brand yourself and advertise.
Before you start selling your product or service, you need to build up your brand and get a following of people ready to jump when you open your literal or figurative doors for business.
- Company website. Take your reputation online and build a company website. It is also a great way to interact with current and potential customers.
- Social media. Use social media to spread the word about your new business, perhaps as a promotional tool to offer coupons and discounts to followers once you launch. The best social media platforms to utilize will depend on your target audience.
- CRM. The best CRM software solutions allow you to store customer data to improve how you market to them. A well-thought-out email marketing campaign can do wonders for reaching customers and communicating with your audience. To be successful, you will want to strategically build your email marketing contact list.
- Logo. Create a logo that can help people easily identify your brand, and be consistent in using it across all of your platforms.
Also, keep these digital assets up to date with relevant, interesting content about your business and industry.
10. Grow your business.
Your launch and first sales are only the beginning of your task as an entrepreneur. To make a profit and stay afloat, you always need to be growing your business. It’s going to take time and effort, but you’ll get out of your business what you put into it. Federal, state, and local licenses and permits