Starting a small business is a dream for many people. Entrepreneurs are everywhere, and they all think that they can build a successful business. But small business owners need more than a dream to start the perfect small business. It takes knowledge and hard work.
Have the Right Business Idea
When starting your own business, you might want to consider monetizing what you love. But beyond your interest, you need to decide if your new startup can generate revenue. Small business owners generally develop the right business idea by combining what interests them and potential customers.
When choosing the kind of business that has a profit potential, determine if it will be a brick-and-mortar or an online business.
The next step will be to analyze your circumstances and decide if this will be a full-time career or a side hustle. E-commerce is the kind of business that can start part-time and then merge into a full-time endeavor.
Once you have the right business idea, decide on a business name. Small business owners often try to use something catchy, but be sure your business name lets people exactly what type of business you have. You don't want to confuse potential customers.
Conduct Market Research into Potential Customers
You have your business idea and business name, but will potential customers want what you have to offer? This is where market research comes into play. Small business owners must know what the customer base will be for their startup.
Start with primary market research. Survey your potential customers and ask them what they want from your type of business. If this isn't possible, there is secondary market research.
The Small Business Administration (SBA) has market research and competitive analysis resources available. It will let you compile data and study it to help you determine if you have the kind of business that your target demographic wants. It's not as helpful as primary market research, but it will aid you in making decisions.
When starting your own business, you might want to consider monetizing what you love.
Conduct Market Research into Competition
It goes beyond knowing what potential customers want. A startup must also be aware of potential competition. If you are interested in venture capital, one of the first questions investors have is what the competition is made up of.
Every startup needs to conduct an analysis of strengths, weaknesses, opportunities and threats. This is referred to as SWOT. You must know your competitors. If your business idea is already in the market, determine how you can make your idea better.
By conducting a SWOT, you can take your business idea and make it more marketable. This leads to more income.
Develop a Written Business Plan
A successful business must have a solid, written business plan. In the early stages, it's the roadmap that helps determine the steps needed. Then, as a business matures, it will act as the small business owner's blueprint in conducting business. The SBA offers help when it comes to writing a business plan.
The first part of a business plan is the executive summary. And although it is the first part of the plan, it is the last part written. It's a summary of the entire plan and gives an overview of the new business and its goals. In some circumstances, it is the only part that potential investors read.
The next part is the company description. This goes into detail about what your company will offer. It also lets the reader know why your business idea is the best.
The organization and business structure of the company is also in the business plan. Explaining how your company will be set up is critical. This is where you will present your management structure and the key people. Your mission and goals should also be stated.
Since business owners need market analysis, this next section will give the potential investors an overview of how the startup is positioned against competitors. The market analysis should also show the growth rate and potential market size.
Products and services are outlined in another section. Explain the details of what you have to offer potential consumers. This section will go into what your product or service costs. You will also explain where the product will come from.
A marketing plan is vital for the health of your small business. And in this section, you’ll outline how much money you’ll invest in marketing.
Finally, the heart of the business plan is the financial plan. You'll want long-term financial projections and a budget. This will include an income statement and a cash flow statement.
Choose a Business Structure
A small business must have a business structure. You’ll need to decide how you want to set up your new company. Some entrepreneurs will go for incorporation. While others who are doing an online business will only need a sole proprietorship.
Your choices for your own business include a C corporation, Limited Liability Company (LLC) and sole proprietorship. Talk to a business accountant or lawyer to determine the best avenue for you.
Set Up New Business
Setting up the business is the less glamorous part of starting your own business, but it must be done right.
Make sure you have the proper accounting software to run your business. Bookkeeping isn't exciting, but it's essential for the welfare of your small business.
Once you have your business name, you'll want to set up a business bank account and credit card. Don't mix the company business with your personal funds. That can turn into an accounting and tax nightmare.
Some FAQs regarding a new business evolve around the IRS. A new business needs a tax ID number with the IRS. Make sure you choose your legal structure and have it in place before you set your small business up with the IRS. Your company will need the tax ID number to pay your federal tax.
Research any special licenses or certifications your small business will need to conduct business. Then, ensure you have all of these in place before opening the doors.
Setting up the business is the less glamorous part of starting your own business, but it is vital that it is done right.
Staffing a Successful Business
Determine your business model when it comes to staffing. For example, will you have employees, or will you use contract workers? You'll need an employee identification number (EIN) with the IRS if you have employees. That way, you'll be able to pay payroll taxes like Social Security. With contract workers, you will not have to pay payroll taxes. But you will need to issue a 1099 Form to the freelancers.
Finance New Business
Depending on the nature of your business, there will be startup costs with your small business. If you are starting an online business, the costs may be lower than a brick-and-mortar business. You may want to apply for a small business loan or look into other avenues of financing.
Lenders will look back to the financial section of your business plan when deciding on small business loans. In addition, they will want to see how quickly you can generate a positive cash flow.
Although going to a traditional financial institution is a viable option for a loan, there are other alternatives. For example, small business owners can often find venture capital from angel investors. But these are usually investments in multimillion-dollar businesses.
A new way to attract investment dollars is by using crowdfunding like GoFundMe. This gives you many small investments that can provide your small business with a boost.
Marketing Strategy to Build New Business
Make sure you have a marketing strategy. In the early stages, you may not have the budget to go all out with a marketing and advertising campaign. But you can take to social media and promote your new business.
Building a website is essential and should be one of the first tasks you check off your list when starting a small business. It will go well and help your social media campaign.
Anne attended University of Akron and went on to have a career in television sales. Working as a commercial property and casualty insurance agent for nine years allowed her to learn about different businesses' needs. She has also owned an advertising agency where she created marketing capaigns for various clients. Anne has written for several publications. She currently resides in Charleston, SC.