Starting a business is a common dream that doesn’t commonly survive—with 28 million small businesses in the United States alone, only half of them make it past the five-year mark. One of the most common reasons for this scary statistic is being underprepared. A figure-it-out-as-you-go mentality is not the way to go, because if you’re business is going to succeed you need a strong foundation from the beginning. We’ve condensed the process of turning your dream into reality into ten steps.
#1: Research
This one may seem obvious, but there’s some very specific research you should be doing before you do anything else to start your business. If you want to start a business, then you probably already have the business idea—you’ve most likely been daydreaming about it for a while now. But it’s time to turn that daydream into reality with a serious validation process. You’ll have to ask some tough questions about your idea and about yourself to know if you and your idea have the legs to stand on. Is there a need for your idea? Who needs your products/services? Are there other companies offering the same things? What’s the competition like? How will your business integrate into the market? All of these questions will help you better understand your idea and how it will perform. You can also go further into the research process with focus groups, public polls, small-scale trial and error, etc.
#2: Have a Plan
The extent of your plan will depend entirely on the type of business you want, and where your financing is coming from. If you’ll be using financial support from an investor you’ll need a traditional business plan—this one will be long and thorough, so you can show your investor concrete ideas and financial projections. It’s what investors and banks will look at to validate your idea. If you’re going it alone, you’ll just need a simple, one-page plan. This is mostly for you to have your goals and methods of achieving them in writing. Whatever your plan is, it’s what will take your business from start-up to establishment and eventually to growth.
#3: Finances
Starting your business doesn’t have to require a ton of money, but it will involve some initial investment costs. You’ll also have to consider all of the ongoing expenses you’ll need to cover before you can turn a profit. You should make a spreadsheet that estimates the one-time startup costs for your business—this means everything you’ll need before opening day. This includes licenses, equipment, insurance, branding, inventory, etc. Then you’ll want to estimate what you’ll need to keep your business running for at least 12 months. That includes rent, marketing and advertising, supplies, employee salaries, etc. Those combined numbers is the initial investment you’ll need to get started. Research different funding options and see what works best for you.
#4: Your Business Structure
There are a lot of different kinds of business structures to choose from, and whatever you choose will impact your name, liability, how you file taxes, etc. Do your research and figure out what works best for you! It could be a sole proprietorship, a partnership, a limited liability company (LLC), or a corporation. You may choose one and change your mind later as your business grows. If you’re unsure, it may be worth investing in a consultation from an attorney or CPA.
#5: Register Your Business Name
Your name plays a role in everything about your business, so make sure you pick a good one and that you think of all the potential implications of it. After you have some good ideas, you’ll need to check to see if they’re already trademarked or in use. If it isn’t, you can register it! The registration process will vary depending on the type of business structure you’ve chosen. Don’t forget about domain names, social media handles, etc. when you pick a name. You want it to be easy to find!
#6: Licenses and Permits
A huge amount of paperwork goes into starting a business, and you need to make sure you do it all. There are a variety of small business licenses and permits that may apply, depending on your business type. You’ll need to research your particular business model and obtain the appropriate licenses and permits.
#7: Accounting
The way you choose to handle your accounting is extremely important. This aspect of your business includes creating and managing a budget, setting rates and prices, conducting business with others, and filing your taxes. You can handle all of this yourself or you can hire an accountant to do it for you. Both are doable, but if you choose to do it yourself, make sure you put plenty of research into choosing the right accounting software.
#8: Location, Location, Location
You’ll need a space for all your paying customers! Think about the specific needs of your business when choosing a space. Do you want a shared or private office space? If you want a retail location, what do you want to be near? How big do you want the front counter in your restaurant? Think about the equipment you’ll need and how you’ll organize it, and make sure your business can function efficiently in the space. Look into buying and renting your space, and choose whatever works best for you.
#9: Equip Your Team!
If you’re hiring employees, now’s the time to start the process. Take time to outline what positions you’ll need and what responsibilities will come with each position. Have an interview process in mind and a list of what you’re looking for in each potential candidate. If you’re outsourcing, work with an attorney to get your independent contractor agreement in place. If you’re going it alone, you’ll still need a strong support team with you! This can be a mentor, small business coach, pastor, or just supportive friends and family. Whoever they are, they’ll be your go-to resource for advice, motivation, and encouragement if things get rough.
#10: Make Your Business Known
Once you’ve started your business, you’ll need to attract clients and customers. Research different marketing plans and pick one that works for you! Work on your social media accounts and your business’ website, with the goal of making you as easy to find as possible. Make sure people have easy access to hours of operations, mission statements, and services. And remember that success doesn’t happen overnight! You’ll be constantly working toward a better business, so turn towards your support team when you’re feeling discouraged, and just keep going.
For more business advice and opportunities to network with other entrepreneurs, join the Entrepreneur’s Organization of Birmingham today!