Everyone dreams of being their own boss, but not everyone has what it takes to start a small business. However, starting a lucrative small business, even a side hustle, has never been easier. Whether you have grandiose plans or just want to make a modest income, the steps to setting up any small business are essentially the same.
Did you know that there are 28 million small businesses in the United States? Twenty-two million of those businesses are operated by individuals, without employees. With the right research and planning, you can be one of the successful small-business owners. To get started, you need to understand what is involved and how to lay a solid foundation for growth and success.
1. Research: Before you enter any business venture, you need to do your homework. Depending on the type of business you want to start, you need to understand the market potential and obstacles. Perform a SWOT analysis—strengths, weaknesses, opportunities, and threats—to understand what stands in the way of success. You may determine that it is easier to open a franchise than start your own business from scratch.
2. Create a business plan: Every successful business needs a strategic plan. A business plan will help you focus by clarifying the purpose of your business; who your customers are; what the end goal is; and, most important, what it will cost to get started. The business plan should build on your research to take advantage of identified market opportunities. Your business plan should be thorough, but it doesn’t have to be lengthy. In fact, many business coaches encourage writing a one-page business plan. As you launch your business, the business plan will help you stay on track and show you where you need to adjust.
3. Secure funding: After you have a plan, consider how much capital you need to get started. When it comes to funding, you have multiple options. You can use your savings to self-fund your small business if you have a small operating overhead and few startup costs. If you need seed capital, you could try finding investors or crowdfunding. Many small businesses have been started using credit cards, but your best strategy may be a small business loan.
4. Pick a business structure: Depending on the nature of your business, you will need to choose how you want to structure it as a legal entity. Do you want to incorporate, structure it as a limited partnership (LP) or limited liability company (LLC), or operate as a sole proprietorship? The legal structure of the company matters for a number of reasons, such as liability and taxes.
5. Choose a business name: In addition to a business structure, you have to choose a name for your business. Choose something that is memorable but that won’t limit expansion in the future. Also be sure you can register a web domain for your business name. Remember, your business name becomes your brand and will be the legal name you use for your company moving forward.
6. Register your business: To make it official, you need to register your company with the government. If you are a corporation, you need to file articles of incorporation. If you are a sole proprietorship, you should file a ‘doing business as’ (DBA) name. Be sure to register your company name to protect it. If you are going to hire staff, you also will need an employer identification number (EIN). There also are going to be specific state and federal tax requirements, including a tax ID number. Also be sure to apply for your business license and any necessary permits.
7. Open a business bank account: Of course, you need a bank account to run your business. Once you have an EIN, you can talk to your local bank or credit union about opening a business account. We recommend you talk to your local credit union about your business banking needs. Chances are you will find lower fees and better services, since credit unions tend to focus on supporting area businesses. The financial advisor at your credit union also can help with other services, such as a business credit card, savings, payroll account, and more.
8. Build your business: Now you are ready to grow. Start promoting your brand and bringing in new customers. You included a marketing strategy in your business plan, right? Find the right location and build the right team. You do have to spend money to make money, and as a startup, you want to spend on the right things. If you need help, you can always talk to your credit union about a small loan or help getting the resources you need to build your business.
These are just some of the basic steps required when launching a successful small business. The most important thing to remember is that you don’t have to do it alone. You can get help from your credit union, the Small Business Administration, and others who can offer expert advice and show you how to build your own successful small business.For those of you in Vancouver, take advantage of free mentoring services through SCORE. You can also meet with one of our local SBDC financial advisors for free your first time—if you like the financial plan they’ve crafted for you, opt in to pay for that plan moving forward.