- Elon Musk, Investor & Entrepreneur
Everything that is involved in starting a business can seem overwhelming to anyone, even if you have done it all before. But with a little planning and organization, it is highly achievable! In this article, we’ll go over key steps to starting a business and how to make your way through each.
WHAT TYPE OF BUSINESS WILL YOU START?
This question is actually dual-edged. What type of business will you be doing, and what legal business structure type will you select?
Choose a type of business that you will be passionate about. Do you have a hobby or skill that you excel at that you want to make a profession out of? Maybe you are a professional in a service oriented field and have been working toward gaining enough experience to branch out on your own.
No matter what type of business you choose to open, or the industry to which that business belongs, make sure you do your research and make it make business sense as well as personal sense for you as well.
The other edge to this is the legal business structure you will choose to operate under. You’ll need to consider what type of structure will be most beneficial for your business. Part of this consideration includes taxation, so it might be advisable to get an opinion from a tax professional about the benefits each type of structure could offer a business like yours.
There are typically three main types when it comes to legal business structure. These three types are:
- Limited Liability Company – Better known as an LLC, this type of business structure refers to owners as members, and can be a single member or multi member organization. There is legal filing at the state level that needs to be done to be recognized officially as a limited liability company. The biggest benefit of this business structure is that the individual members (owners) are separated from the business. If the business is being sued, or has financial debts, the members’ personal assets and property cannot be taken for the business’s issues.
- Sole proprietorship – This type of business structure includes either a single individual as an owner, or could also be a husband/wife team. The only thing you have to do to start a sole proprietorship is start doing business.
- Corporation – This type of business structure is much more formal than the previous two, and has many more rules and regulations to follow in order to stay in compliance with corporate laws. They do have their plus sides as well.
CONDUCT MARKET RESEARCH
While conducting market research can seem like a tedious task, it’s important to do so. When doing your market research you will want to have in mind your typical customer and gather information about that customer in your area. You’ll also want to look at competing businesses that are already established in your area and see where you can insert your own business to fill a void. What can you offer that typical customer you are seeking that will give your business an advantage over the others?
CREATE AN OFFICIAL BUSINESS PLAN
Even if you are not seeking funding sources for startup, every business needs a business plan. Creating an official business plan will help you organize your thoughts when it comes to the purpose of the business as whole, your core values and mission statement, financial projections and setting long term and short term goals.
If you are seeking funding, in addition to the things mentioned in the previous paragraph, your plan should include detailed financial info and sales projections that will give investors an idea of how long they will be waiting until they start to see a return on their investment.
CHOOSE YOUR LOCATION
One of the most important decisions you’ll make for your business is where it will be located. Are you a brick and mortar business or will you conduct your business solely online? Maybe you’ll be a mix of the two. It’s possible for a small business to even operate from a home office, or you might plan to lease or purchase space or property. Whatever it is that fits the needs of your business, you’ll need to cement this.
Be aware of the legal and tax ramifications of whatever location you decide on. If you are going to be renting or purchasing space, take into consideration the effect the cost will have on your business both now and in the future.
APPLY FOR REQUIRED LICENSES AND PERMITS
You’ll of course need to make sure you are legal in all aspects of your business. This includes applying for any necessary licenses or permits needed to conduct business as you have laid out in your business plan. The need for licenses and permits will vary greatly depending on what industry your business belongs to. Most of these permits will likely be at the state or local level, so be sure to visit your state and local government sites to inquire about what you might need to stay legal.
Starting a business can include a long list of tasks, but they are manageable if you stay organized! Figure out what type of business you want to start, and what the right legal business structure (sole proprietorship, corporation, or limited liability company) will fit that business’s needs. Do not skip the all important market research. Create your business plan, even if you are not seeking funding or investors. Decide on a location while taking into consideration cost and tax and legal issues with each option. And do not forget to apply for all the licenses and permits you will need to legally operate your business.
These steps will get you well on your way to starting and running a successful new business.
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Thought leaders & celebrities share their tactics for success on the Lisnic podcast by Lisa Teh & Nick Bell