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Starting Your Own Business: The Essentials for New Entrepreneurs


Once you have an idea, starting a business can be very exciting, but also daunting. It is important to map everything out before you start to avoid potential pitfalls down the road. Here is a guide to set up your new business for financial success.

Know Your Market

It is crucial to conduct research on the demographic you are targeting with your business. You should survey these people to determine if your product or service is something that can be of use. Make sure to question your actual target market. Many times, asking family and friends can lead to a falsely optimistic view of the targeted market. 

Before you invest funds in your idea, you should consider doing a SWOT analysis. This stands for Strengths, Weaknesses, Opportunities, and Threats. Analyzing each of these aspects as if your business were to launch today can help you improve in the long run. Below are some examples to ask yourself in each category:

Strengths

  • What makes our business unique from the competition?

  • What traits/knowledge does our team bring to the table?

Weaknesses

  • What is slowing us down? (labor, technology, etc.)

  • What skills do we lack?

Opportunities

  • Can we market our product/service differently based on a current market need?

  • Can we expand our current services/products to include more?

Threats

  • Are we too similar to our competitors?

  • Are we dependent on a supplier?

Know Your Competitor

Researching your competitors can help in more than one way. You can research your competition to determine how to price your products. Many times, new business owners either under price or over price their products. Knowing what rate your competitors use can allow you to integrate your product to the market at a successful price point.

It is also possible to think of new ideas for your business model once you have seen how much overlap you share with your competitors. If you want your business to stand out, show the gap between your product/service and your competition’s. This can be difficult as you may have to go in a slightly different route for your business plan than you wanted, but it is necessary for the most success. 

Create a Sturdy Business Plan

Whether you need investors or are financing your business by yourself, having a business plan to use as a roadmap for establishing your new business can make the process smoother. A business plan gives anyone analyzing your business, the understanding of your foundation and how you intend to develop your business. Forbes has a great guide for entrepreneurs to create a business plan.

Determine How You Want to Structure Your Business for Taxes

Unfortunately, taxes determine the structure of every business. You should consider the different types of structures and how they each affect your operations.

  • Sole Proprietorship - This type of business structure is available to solo business owners. It means that the company and the owner are considered the same. You would be responsible for all legal and tax issues.
  • LLC - This structure can be owned by one or more people. This limits your personal liability for legal and tax issues, unlike the sole proprietorship.
  • LLP - This structure is similar to an LLC but requires a partnership. It is usually used for services from licensed professionals such as accountants.
  • Corporation - Like an LLC, a Corporation is able to limit your liability as a business owner. There are two types of tax corporations: C-Corps and S-Corps. C-Corps are usually for larger companies while S-Corps are for smaller companies.

Register Your Business

Now it is time to officially register your business. Try to think of a name for your business that you feel confident that you will like long-term. You will have a business name, but oftentimes, businesses use a DBA (Doing Business As). This means that the name that the public recognizes may not be the same as what the business legally filed. Some states may require you to file your DBA.

Unless you are a Sole Proprietorship, you will need to collect a sizable amount of tax documents at the time of registering your business. You will need to select a registered agent to accept legal documents for your business. You will also need to apply for an Employer Identification Number (EIN). This is an easy process you can submit to the IRS.

Figure out Your Finances

The first thing you need to do is open up a business checking account. You should never mix personal and business expenses. Having a separate checking account helps with this distinction. You should pay business expenses and receive income through this account. 

If you have a complicated business model, it is recommended that you hire a bookkeeper. This especially helps if you sell a product. You will need help with balancing your ledger with your inventory. Accounting software can also help with this. QuickBooks is a great resource for small businesses to stay on top of all of their tax requirements.

Funding Your Business

Once you figure out how much it costs your business to run, you need to figure out how to startup your business. Many people fund their own businesses from their savings accounts, personal credit cards, or from friends and family. This is a risky way to fund your business as it might leave you in trouble in your personal life if your business were to go south. There are other external options you can explore to fund your business such as small business loans or grants.

Getting Your Business Online

Now that you have figured out most of your business, it is time to create a website to properly showcase your products/services. Having a website is very important as it will get your business leads if marketed correctly. If you have no experience with website strategy, we suggest outsourcing to a web designer rather than making your own weak website. You will want to optimize your website so it will show up in search engines (SEO). A professional-made website will be able to put you in a good spot for this.

Registering your website on local listings can make a huge difference. Prioritize setting up listings for Google and Yelp. Make sure to add proper information in all of the fields. A good bio and pictures of your business and team can go a long way. 

Social Media is also a great way to market your business. You should think about your audience and the platforms they mainly use to determine your marketing strategy. For example, if you have a younger target audience like Gen Z or Millennials, Instagram will be the best platform you can use. You do not need to have every social media platform to market your business. Being consistent and patient is the best mindset to have at the end of the day.

Creating a new business takes a good amount of tedious work but can lead to rewarding results. Using this guide can help you start in the right direction for your business. For more questions, contact us today!