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If you’ve ever thought about starting your own business, you’re not alone. Over 60% of adults would like to go into business for themselves. However, starting (and growing!) your own business requires a serious investment of time and money, and the sheer amount of steps you have to undertake prevents a lot of people from even trying.
The good news is that while starting a small business requires a lot of effort, it’s far from impossible. This guide will help you start your own small business, get financing for your business idea and even help you grow your business without getting overwhelmed.
If you read the bios of business owners who started small, like Bill Gates, Whitney Wolfe, Steve Jobs or Sara Blakely, you might get the impression that the only things you need to start building a business are a spare garage and a dream. While that might work in some extremely rare cases, the reality is that you’ll more than likely need to take a few additional steps before you put your small business idea into practice.
The first thing you should do once you have a business idea you like is to jump online and do some research on it. Look at what other companies are in your chosen industry field and figure out who the brand leaders are. Research what they’re doing, then determine if your business idea can do something better than they can.
In addition to researching your potential competition, you’ll also want to do some research on your customers. Ask yourself who will want to buy what you’re selling, as well as why they would want to buy your goods or services. Doing this can not only help you solidify the value you’ll bring to your customers—it will also help you communicate that value effectively.
Once you’ve researched the feasibility of your business idea, you’ll have to think about what type of legal entity you want your business to be. This is a very important decision, since it will affect almost every financial aspect of your small business, from your personal liability to how much you’ll pay in taxes.
Almost every business requires a financial investment to start, so you’ll have to figure out where you’ll get the money to fund your business. Before you do that, though, you’ll need to think about how much money you’ll need in advance. Consider what you’ll need to spend on additional expenses, as well as what you can expect to spend until your new business starts to make a profit.
Once you know how much you’ll need to get your business going, you can start to figure out how you’ll fund it. There are several ways to go about this, from getting a business loan from a bank or credit union to putting away money from your current job.
Here’s where things get real. You’ll need to register your business with the IRS, as well as the government. While the forms and information you’ll need to fill them out are different for each type of business structure, the one thing almost every business will need is an Employer Identification Number, or EIN, from the IRS.
An EIN won’t just come in handy when you’re filing your taxes with the IRS. It’s also something you’ll need for your business finances. Many financial institutions will require an EIN in order for you open a business account, take out a business loan or even apply for a business credit card.
A space dedicated for your business is a must if you want your new venture to succeed. You have a lot of options, from a home office to a co-working space to retail frontage, depending on what your business is. To make sure your business space will work for you, ask yourself the following questions:
In the 21st century, every business needs a website to give prospective customers information about who they are, what they do and why you should consider their services. While you should seriously consider investing in a content writer and graphic designer for your website to have the maximum impact, you should know there are a lot of do-it-yourself web platforms available, such as Wordpress, Squarespace and Wix.
Admittedly, thinking about how to leave your business isn’t something you want to think about when you’re starting your venture. However, you’re going to leave your business eventually, whether it’s due to your business failing, you selling your business or simply closing down your business and retiring. Choosing to leave a business can be stressful at the best of times, so the more you plan what happens to your business now, the more likely you’ll be able to make the best decisions when you decide to leave.
To start planning your exit strategy, think about:
You’ll also want to think about several scenarios, such as how you’ll want to exit if you retire, how to exit if such as how you’ll want to exit if you retire, how to exit if your business is failing or how to exit if you sell your business.
If you’re having trouble with any of the above steps, you should know that the United States Small Business Administration has Small Business Development Centers across the United States. These centers offer small business owners assistance in almost every aspect of raising and growing their business, from developing your business plan to figuring out how to market yourself.
Once you’ve taken the steps to get your small business set up, it’s time to write your business plan. This may seem like overkill, especially after you’ve done your research, but a good business plan can be the difference between success or failure for a small business. When you write it, you’re forced to think through all the different aspects of your business, and you’re also giving yourself a clear roadmap for the future.
A good business plan should include the following:
Of course, once you’ve researched your business idea, there’s just one small issue—figuring out how to fund your small business. Here are some of the most popular ways.
One challenge a lot of small business owners encounter, especially when they’re getting started, is how to manage their finances. Fortunately, small business finances aren’t too different from personal finances. The biggest challenge is to keep your company’s finances separate.
Your first step should be to open a business account. Every business needs one, no matter how small they are. A business account makes tracking expenses easier, gives you some more credibility with customers and can even protect you from liability if you have a limited liability corporation. It’s worth pointing out that there are different types of business accounts--business checking accounts and business savings accounts. You use them in you use personal checking and savings accounts.
Opening a business account requires a bit more documentation than a personal checking or savings account. In addition to a valid government issued ID, like a driver’s license, as well as an Employer Identification Number and legal documentation that will show a bank or credit union when your company was formed.
In addition to a business account, you may also want to get a business credit card. This is another good way to separate your business expenses from your personal expenses, but it can be misused the same way any credit card can. If you get a business credit card, set strict limits on when you can use it and when you shouldn’t.
When you’re just starting out with a small business, your main focus is to keep your business alive and starting to turn a profit. Once you get past that hurdle, though, you’ll have a different problem to worry about—how to successfully grow your business.
While larger companies might end up growing through strategies like a business acquisition, you’re more than likely going to grow your small business through the following strategies:
Get Customer Feedback. Find out what is and isn’t working for your customers, as well as what they want to see more of. Make sure customers feel comfortable giving you feedback.
Focus on Customer Service. Make sure your customers know you value them. If a customer has a problem, listen to them and try to make it right.
Take Advantage of Free Marketing. Social media let you reach out to hundreds of people, if not thousands, about sales and events. You can also reach out to unsatisfied clients to maximize your customer service.
Nurture Your Employees. In the wake of the Great Resignation, employers throughout the country have discovered the peril of treating their workers like replaceable cogs. If nothing else, make sure you manage employees so they have a sense of purpose and make sure they know you appreciate them.
Network. Many small business owners are stuck in the “do it yourself” mindset and neglect the benefits of reaching out to other people. Networking can help you find new investors, employees, partners and even customers.
Be Open to Partnerships. Business partnerships can let you combine your resources in a way that benefits both companies. Strategies like co-branding can let you maximize your marketing dollar and greatly expand your reach.
Growing your business has a lot of benefits, but it also comes with challenges you’ll need to meet if you want to grow your business successfully.
Growing too soon—Nothing exposes the flaws in your business the way rapid growth does. Make sure your business is running smoothly and that any issues with your product are resolved before growing.
Losing your focus—Many businesses end up adding new services and products while they grow at the expense of their core focus. Make sure you keep your original mission in mind while you grow and make sure to keep listening to your customers to make sure they’re on board with any new features you add.
Not delegating responsibility—Many small business owners are used to running the business themselves. In order to grow your business successfully, you’ll have to learn how to manage employees and trust them with important tasks. Depending on your business, you may even have to learn how to manage remote employees.
Not building long-term demand—Sales and marketing can help ramp up demand, but without a strong buyer market it’s a short-term solution. Make sure you have long-term demand before ramping up your sales and marketing activities
Engaging in a price war—If you’re competing with other businesses, you might be tempted to lower your prices to attract draw away customers. The problem is that lower prices always come at some cost, either to your profit margin or to the quality of your business. Instead, focus on the quality of what you’re selling, as well as your customer service to show customers the value in what you provide.
Not scaling resources with growth—Whether you’re growing or scaling a business, you’ll want to make sure you and your team have the capacity to handle the growth. This is important, since if your team doesn’t have the resources they need, they’ll not only be less effective, but also prone to burnout.
There are a lot of benefits to running your own business, but there are a lot of challenges, too. You’re responsible for your business’s success, and you’ll also have to deal with the economy at large, whether it’s a K-shaped economy, a V-shaped economy or even a W-shaped economy.
Fortunately, there’s a lot of assistance for small business owners. At First Alliance Credit Union, for instance, you can set up a business checking account and a business savings account. You can also take out a business loan to give you the funding you need, and even get a business credit card with a very competitive interest rate.
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