Starting a business requires having a thorough plan in place, a process that takes a lot of time and research. But before you start your business, there are a number of questions and considerations you need to address. These are more than just passing thoughts, as they require lots of attention before you can even think about opening your doors. Here are nine aspects, along with a few resources, that you need to research before starting your business.
1. Select Your Type of Business, and Consider Its Effects on Your Taxes and Liability
There are many types of business entities, and you need to choose the one that’s most appropriate for your industry and tax circumstances. A sole proprietorship is the best and simplest option if you are the only business owner. By setting yourself up as a sole proprietor, you are essentially just registering your business for tax and legal purposes, and you will also keep all the profits after taxes but are held liable for all losses and damages. Another option is setting your company up as a limited liability company (LLC), meaning you are held less liable for damages and losses than a sole proprietor. When starting up with a partner, a general partnership is a basic entity, whereas a limited partnership allows for a “silent” or non-managerial partner to limit his or her liability. Another option is a corporation, in which your company becomes a separate legal entity from you as a business owner, which would be ideal if you have a partner or multiple investors. Corporations limit shareholder liability, but they also bring about more taxes. Depending on your industry and jurisdiction, all of these options may not be available, and in some cases, you may have even more options to choose from (e.g. limited liability partnerships, professional corporations, S corporations, etc.). To learn more about this process, the different types of business entities and their tax implications, visit the Small Business Administration or the Internal Revenue Service.
2. Ask Yourself “Who Is My Competition?”
The answer to this question is critical. It’s important to know who your competition is, how they conduct business and what you can learn from their successes and mistakes as a company. Besides word-of-mouth and background knowledge, there are many different ways to research your competition. Beyond a general Google search and social networks, you will perhaps want to attend some conferences or check with your suppliers. A great resource to start with is Inc.com’s article on competitive research.
3. Understand Your Target Audience
There are literally thousands of ways to reach your target audience. Depending on your demographic, some may want to be reached via Facebook, some may react to Google advertisements, and some may really just need a face-to-face interaction. Understanding your target audience is the key to successful marketing; without it, your products will be tough to sell. Who is your product or service targeting, and what unique benefits does it provide? Once you understand that, test different forms of marketing to see exactly what your target audience responds to. For example, if your target is older consumers, traditional advertising is probably your best bet, but for a younger market, you’ll need to get creative and use new media (i.e. YouTube spots, social media posts, etc.). By using a variety of market-research tools from Google, you can get started on defining and marketing to your target audience.
4. Choose Your Company’s Name
You likely already have a great name in mind. But before you launch your business, make sure someone else doesn’t already have that name trademarked; it’s also a good idea to make sure your preferred name is available for a website domain. Use the USPTO site to find out if your business name is protected by trademark, and WHOis.net is a great resource to find out if your domain name is already taken. Your name is your business’ identity, so make sure it’s right for your brand and represents it properly. It should also be easy to understand and remember for consumers, or at least have them thinking about your business name in a unique way.
5. Brand Your New Business
Getting your brand name out in the market is a necessity to starting and maintaining a successful business. Many media outlets are now online, but strong conventional methods still remain. Attend conventions, give away products at fairs or just start building business relationships to help grow your business. As mentioned above, the most important step in marketing your brand is to understand your target market. After figuring that out, your best practices for marketing, whether online or offline, should begin to reveal themselves.
6. Develop Your Overall Web Presence
In today’s market, building a web presence is almost mandatory for successful businesses. Some niche businesses may succeed without it, but the first step for many new ventures should be to set up a website. Do some research on what type of website is best for your business, and hire a web developer if you need to. Once that is established, build your social presence, maybe create a blog, and explore other online avenues. See what works for your competitors, and try to find ways to improve upon their methods. For the majority of businesses, after launching a site, a good first step is to set up multiple social media accounts; after all, it’s where the majority of consumers are, so it only makes sense for you to be there too. Once you’ve conducted your demographic research, establish yourself on the appropriate social media channels, and from there, create marketing collateral that you think will be most likely to reach and engage your target consumers.
7. Prepare a Business Plan
In order to raise capital, you’ll need a business plan written out to show to investors. Your business plan is a roadmap to success. It demonstrates how your business plans on generating revenue, and it outlines what makes your team and its offerings unique and worth an investor’s time and money. How you write your business plan will vary according to your industry, so, again, research your competitors and use their plans to shape yours. For further help with creating a business plan, refer to the Small Business Administration site.
8. Find Sources of Funding
Unless you just won the lottery, you most likely don’t have the out-of-pocket funds to launch your business. Research whether to take out a loan, get certain investors to buy equity, or look into what business grants are available for your business. The SBA has many resources to help you find the best funding options for your company.
9. Licensing and Legal Documentation
There are certain legal documentations and licenses you will need to obtain in order to lawfully run your business. After the initial documentation of registering your business, you’ll also need to consider industry- and/or location-specific licenses. For example, if you are a restaurant that will be serving alcohol, you will need a liquor license. For help with finding your business’ license requirements, a good place to start is the SBA’s licensing portal.
As you’ll soon find out, this is just the tip of the iceberg when it comes to starting your own business. Luckily, there are many resources out there to help you in your endeavors. Not surprisingly, the best place to get started is the Small Business Administration.