“I’m a big fan of small business ownership. I think it’s the backbone of American innovation.
But to be successful, you first have to have the courage to go for it.”
– Bill Rancic, American entrepreneur
Whether you’re currently climbing the corporate ladder or planning kick-start your career as an entrepreneur, we’ve all dreamed of being in charge. Before you ditch your day job, make sure you haven’t missed any of these crucial steps to starting your small business.
Base Your Business in Reality
You need to draft a business plan to work through some key points regarding your new endeavor.
Before you can have a successful business, you must decide on its product or service. You must know what you are going to offer your customers or clients. More importantly, you must be able to show them why they should get it from you.
- Then, there’s the question of leadership. You have to decide if this business is one that you can run as a sole-proprietorship or if you will have business partners. Depending on your type of business, you may need to hire employees.Will you be involved in the day-to-day workings of the business, or will you hire supervisors to manage your staff?
- Once your idea has begun to transition into a professional business plan, you will have a better idea of what you will need for an initial investment.
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Plan Your Financing
Once you’ve made an outline for running your business, you will need to figure out how to fund it.
After the initial investment, it may take some time to generate profit. It is imperative that you ensure a return on your initial investment.
Remember that you will constantly need to put money back into the business. If you’ve hired employees, you will be paying their salaries as well as your own. Your overhead costs will also include rent if you do not own the property.
- Whether you own the property or not, there will be monthly costs for utilities and supplies.
Overtime, you’ll want to improve your product or service: This requires more investments for things like product testing, better resources, and new locations. If you want to investment in your work force, you may be covering costs for business travel when you send employees to conferences or training workshops.
After getting an idea of how much funding your small business will need, you can begin to look into financing options.
A good first step: is to meet with financial institutions regarding small business loans. You will need to come prepared for this meeting with your personal credit score and, if you have one, your business credit score.
- Lenders want to see how well you’ve previously handled debt before they will commit to giving you any of their money. Each lender has different requirements, so make sure that you’ve researched the institutions before meeting with them.
- You don’t want to apply for loans that will be denied, as this will negatively impact your credit scores. You will also need to bring documentation such as tax returns, licenses, and operating histories.
- The stronger your business plan is, the better your chances of getting a loan will be. You may also be expected to provide collateral.
Depending on your industry, your small business may qualify for small business grants. Like a loan, a small business grant could give you the money that you need to start out. Unlike a loan, a grant does not need to be repaid and thus will not put you into debt.
- Government agencies provide grants at the federal, state, and regional levels. More established business often have a philanthropic outreach component to aid small businesses in their industries.
- Members of specific communities—such as women, veterans, and minorities—may have even more options for grant funding.
- If you have good connections with other business professionals, you may want to consider funding from angel investors. Angel investors are also known as private or seed investors.
- These are individuals, rather than institutions, who provide capital or funding for new small businesses, usually in exchange for partial ownership in the company or shares.
Crowdfunding is another increasingly popular option for small businesses. Crowdfunding platforms afford you the unique opportunity to raise funding for your business while raising visibility for your brand via social networking.
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Register Your Business Name
Your brand can be as important as the product or service itself. Make sure that your business name is a good one.
It should make sense with your product or service, be relatable to your target demographic, and be unique enough to not get confused with anything else.
At this stage: you need to decide on the structure of your business. If you are a sole proprietor using your own name, you much declare that. Your business may be suited for a different business structure, such as a corporation or an LLC (Limited Liability Corporation).
- If you use one of these models, you will need to register your business name as a “Doing Business As.”
Before you get too far into your business plan: check to be sure that your business name is not already in use.
- You’ve worked hard to get this far, so it is crucial that neither your small business name nor any of your products or services carry any risk of copyright, trademark or patent infringement. You can use this online tool from the U.S. Patent and Trademark Office, just to make sure. It’s a good idea to check variations of your business name, while you’re at it.
If you don’t register your name or trademark: you lose any rights to it. That means that someone who notices that you haven’t taken the steps to protect your business could sweep in and take credit for all of your hard work—not to mention all of your profits and customer base!
Licensing and Permits
There may also be legal consequences for operating a business without proper registration. Bars and restaurants need certain certifications for selling alcohol and food handling.
You may need to pass building inspections if you have a brick-and-mortar location. Always check with your state, local, and regional governments regarding licensing and permits for your business.
Pick the Right Location
One thing can make or break your business: location, location, location!
You wouldn’t want to open your dream pizza joint next door to three others. A candy store might not do well in the middle of an area that’s better know for nightlife. Be mindful of your demographic when picking your perfect space.
You also need to consider things such as size of the building and how much it will cost. Remember, you can always expand. Don’t overextend into a space too large right away, or you may not be able to cover the overhead costs for the space. However, a space too small will hinder your performance. This one is all about balance.
Ready Your Team
Once you’ve got everything else in place, the last step is to get your crew together.
At this stage, you will need to identify what types of employees you will need, how many, and what you can afford to pay them. You will need to post job openings and interview candidates. This is another make or break point for your small business. You will have to interview each candidate, explain the position, and evaluate how well each person would perform the duties of the job. Make sure that you’re hiring the best people to make your business flourish.
While you may not go into all of the job perks in the initial interview, you may want to go ahead and think of what types of incentives that you want to offer your employees. You might reward top performers with bonuses or luxury travel accommodations.
Have a Web and Social Media Presence
In today’s digital age, your best marketing will be done through the web and social media.
People will look to your website or Facebook for hours and locations. You may do business directly on your website, selling products and services online. Product photos from your webstore can be featured on your Instagram.
- Social media check-ins will drive traffic to your website as well as customers to your doorstep. You have to get the word out about your business and the digital world is where that is best done.
Once you’ve got your business up and running, you will quickly become busy with meetings, conferences, events, and workshops. You’ll have enough going on without having to plan how you’ll get there!
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Written By: Amber M. Smith