If you’re planning to start a small business this year, you may not realize everything you need to do to hit the ground running. Needless to say, it takes more than just putting an “open for business” sign in your front window. Here are some tips to follow for starting your own small business:
- Do the research. Many prospective business owners forget to perform due diligence on what may be the single most important question they need to consider: Is the business viable? If the business serves a local clientele, it’s important to do market research to determine whether your area can support one – or another – business of your type. Opening a bakery or yoga studio right next to three others of the same kind, for example, might require more risk than you’ll want to take. If the business serves a regional, national or international clientele, it’s important to do market research to determine business trends that might affect the success of your new business.
- Structure your business. Certain decisions you make later will depend on how you structure your business now. Should you incorporate? If so, will it be as a full corporation, partnership or individual? C-corp or S-corp? If you’re a sole proprietor, should you become an LLC in order to separate your personal assets from those of your business? How you structure your business will impact the way you pay taxes, the kinds of legal agreements you enter into and whether or not you’re sharing business risk with others.
- Write a business plan. You can start a small business without a business plan, but then how will you know if you’re going in the right direction? How will you assess the success of your business year in and year out? A business plan helps you develop your vision and goals, and outlines how you might go about realizing them. It lays the groundwork for the financial decisions you’ll need to make that determine your success. If you have partners, a business plan helps you and your partners all get on the same page, an essential component for growing the business purposefully while avoiding conflicts.
- Location, location, location. It’s been said that the three most important factors in starting a business are where you establish it. This is especially true for a retail business, the success of which relies on local appeal and foot traffic. But even if you don’t start a retail business, you’ll want to locate your business in a place that can accommodate your operations, is affordable and makes the most sense for your business plan. Whether you designate a room in your house as your office, rent commercial space or buy your own building, you’ll want to think long and hard about where you need to be.
- Secure funding. More than likely, you’ll need cash to get up and running. Whether you tap your personal savings, the generosity of family and friends, or the resources of a bank or other financial institution, you’ll need to work on securing the funding you require. A Small Business Administration (SBA) loan can be an ideal fit for many small businesses.
- Make it official. To become a fully certified small business, you’ll likely need to get federal and state tax IDs. These will help you when opening bank accounts and credit cards for your business. You’ll also want to make sure you have any licenses or permits required for operating your business.