10 Need to Steps to Start Your Small Business
There are more than 28 million small businesses in the United States of America, that’s 99.7% of US businesses. Only about two thirds of small businesses with employees survive the first two years, and about half survive the first five years. Following these steps can help set the foundation for your business to be successful.
1) Do Your Research
Make sure you have identified your business idea, and that it balances well with reality. Does your idea have the potential to succeed? Validating your idea is the first process in starting a small business. For your business to succeed it must solve a problem, fulfill a need or offer something the market wants. This can be done by researching, focus groups and by trial and error. Some questions to ask yourself when thinking of starting a business are:
-What needs are anticipated for your products or services?
-Who will need it?
-Are there any other companies offering similar products or services now?
-What is the competition like?
-How will your business fit into the market?
-Also, make sure to ask yourself some questions before you take the plunge into being a small business owner, such as: Does my business have a need in the community? Will my business benefit my targeted customers? Do I need investors, employees, and office space? These are just a few questions to think about before you dive into your business.
2) Make a Plan
You need a plan to make your business a reality! A business plan is the blueprint for your business. From the start-up phase to establishment and eventually business growth. This is a must have for all new businesses. There are different types of business plans, and knowing which one best suits you is essential. The traditional business plan is essential if you will be seeking guidance from a financial advisor or investor. This is generally a long and formal process, with common sections that investors and the bank will look at, when they validate your idea. The simple one page business plan is great if you are not seeking financial support. This can give you clarity on what you want to achieve and how you plan to do it. You can also create a working business plan and improve it over time. Having a written business plan is always better than not having one.
3) Plan Your Finances
Starting a small business doesn’t have to require a large amount of money, but you will need some initial money for investment and ongoing expenses before you start turning a profit. What can help is putting a spreadsheet together. Examples of what you will need initial investment monies for are: licenses, permits, equipment, legal fees, insurance, branding, marketing, inventory, trademarking, grand opening, leases, etc. And you’ll also what to have, or try to have, 12 months of expense money to cover costs for; rent, utilities, employees, taxes, marketing, your own salary, etc. All of these numbers combined are what you will want for your initial business investment. There are a number of ways to fund your small business, some examples are: financing, small business loans, small business grants, angel investors, crowdfunding, etc. You can also get your business off the ground by bootstrapping, which is using as little capital as possible to start your business. The goal here is to work through the different options and create a plan for setting up the capital you’ll need to get your new business off the ground and running.
4) Choose a Business Structure
There are different types of structures when starting a business.
-Limited Liability Company (LLC)
The entity you choose for your business, will impact many factors such as: business name, liability and how you file your taxes. You can choose an initial business structure, and then re-evaluate and change as your business grows. Depending on how complex your business is, consulting with an attorney or a CPA may be the way to go to make sure you have chosen the correct structure for your business needs.
5) Pick and Register Your Business Name
Your business name needs to be a good one, it plays a role in every aspect of your business. Once you have chosen a business name, you’ll need to check to see if it has been trademarked or currently in use. Then you can register the name! In the State of Montana, you can verify that your business name is available before registering your business. You can even reserve a business name to ensure that it remains available for your use while you are compiling paperwork or seeking assistance from a CPA or Attorney. When you register your business, no matter the business structure, you also register your business name. In other states if you have a sole proprietorship you must register the business name with the state or county clerk. Corporations, LLC’s, or limited partnerships will typically be able to register their business name after all the paperwork is done. And don’t forget to register your domain as well!
6) Get Licenses and Permits
Paperwork is and always will be a part of the process of starting a business. There are a variety of small business licenses and permits, you’ll need to research which licenses and permits apply to your business during the start up process.
7) Choose Your Accounting System
This is necessary in order to create and manage your budget, setting your rates and prices, conducting business with others and filing your taxes. You can set the system up yourself (quickbooks, etc) or hire an accountant to take away some of the guesswork when it comes to exactly how much you need to pay out, and bring in revenue and profit. This can help when you can set a monthly monetary goal.
8) Set Up Your Business Location
Setting up your place of business is important for the operation of your business. Whether it's a home office, shared or private office, or a retail location, the location needs to be able to work for your business, and be able to have the equipment needed on a daily basis to keep you running. Also, you need to think about what makes more sense for your business. Should you buy or lease your space? Is it going to be more beneficial to buy? Or with the market is leasing a better option for the time being? Depending on if clients come to your location, do you need to invest in an office space or can you work remotely? These are all things to consider before investing in buying or leasing long-term office spaces. Plus, there are great options now like co-working spaces where you can rent spaces on a temporary basis, or even just meeting rooms if you do have big client meetings.
9) Get Your Team Ready
If you’ll be hiring team members for your business, now is the time to start the process. Outline the positions you need to get filled, and the responsibilities of each position. If you will be outsourcing with independent contractors, then work with an attorney to get your independent contractor agreement in place, and get started on your search for employees.
Another special note for the State of Montana, all independent contractors are required to obtain an ICEC, or an Independent Contractor Exemption Certificate. This will protect you from workers comp claims, and unemployment payment claims for temporary workers who work on a contract basis as well. If you are hiring a business for contract work, ensure that that business has workers comp insurance and complies with making unemployment insurance payments.
If you do plan on hiring employees, this is also a great time to create an Employee Handbook. This sets the standard for work, acceptable and unacceptable behavior and benefits offered to your employees. An Employee Handbook serves as a great reference point if any conflicts arise between employees or between employees and the business.
Also having a support system in place is a great idea, especially if you are a true solopreneur. This includes, family, a small business coach, a mentor and more. They are there to serve as a go to resource for advice, motivation and reassurance when the road gets bumpy.
10) Promote Your Business
This is key! Write a unique selling proposition (USP) and create a marketing plan. Explore many ideas, and find the strategies that will work for you and your business. Remember success doesn’t happen overnight, use your plan to stay consistent. This will increase the chances of your business becoming successful. Hard work pays off, if you put the work in. And remember, during the start-up years, a lot of revenue your business brings in will be put right back into the business for marketing, creating new service, and reaching more clients so your business can continue to grow.
For local support, also feel free to reach out to your SBA, Small Business Association to make connections, learn new skills, and develop your business strategy even further.
Good luck in your ventures, we can’t wait to see what your future holds!