“They just don’t build them like they used to…”
Constructing a business is a lot like constructing a house. Without a strong foundation you are sure to run into costly problems that could have been avoided. If you’ve ever spent time watching HGTV (and honestly…who hasn’t?) you know that craftsmanship, design, and materials all add up to a lasting structure.
Your small business is no different. Read on for the ten steps you must take when starting your small business to lay the groundwork for longevity.
What are the steps for starting a small business?
There’s a lot to consider when starting a new business. Some decisions can be as subjective as picking paint colors for your dream home! Am I ready to start? Is my idea good? What color scheme should I use for my business logo?
Some decisions, however, are more fundamental and practical. Is there demand for my product? Do I have the capital? Where do I get a business license?
Only you can decide when it comes to the subjective stuff. But on the practical side, there are ten concrete, objective steps for getting your concrete poured, and a structurally sound framework built. We all love picking paint colors and furniture...but that fun stuff? Only comes after you’ve laid a rock solid foundation for your small business.
Step 1: Conduct market research
Is there a need for your idea in the market? What’s the competition like? Your idea may be great. But you’ll need key information (demand, demographics, trends) to make your business thrive. Market research can help give you an edge, reduce risk, and understand the obstacles.
Step 2: Create a business plan
Any good architect knows you need blueprints. A business plan maps out how to structure, run, and grow your business. This document will also be crucial for securing loans or investors. It’s one of the first items you’ll need whether you decide on a traditional or a lean start-up plan.
Step 3: Do you have funding?
You’ve established that your business isn’t a “money pit” in your business plan. Now it’s time to talk moolah. After all, you’ll need to pay for your small business until it pays for itself. Like tile, hardwood, or carpet—there are plenty of options. Loans, investors, or self-funding are three common places to start. But be mindful. Different approaches have specific requirements and can affect your business structure.
Step 4: Pick a location
Does your business exist online? Or is it a brick and mortar on main street? This choice can affect what kind of permits and licenses you will need, what activities or types of business you can carry out, taxes, and even certain incentives.
Step 5: What is your business structure?
Structuring your business will take some vision. Stately manor or a cute bungalow? Sole proprietor or S Corp? These structures have far-reaching impacts on your business. When choosing a structure, think about taxes, personal liability, and what kind of paperwork you’ll need to complete.
Step 6: Name your business
To quote Shakespeare, “what’s in a name?” Turns out a lot when it comes to your business! You’ll need to pick a name that catches people’s attention while complimenting the goods or services you provide. Once you’ve come up with the perfect name, you’ll want to register it.
Step 7: Register your business
You’ve got your name, your structure, and your business plan. Now you can register your business! Be sure to find out whether you need to register with federal or state agencies (or both). Sometimes it’s as easy as simply registering your business name.
Step 8: Obtain your tax IDs
Like a social security number but for businesses, your tax ID number is thrilling proof you exist! If you want to be legit, you need an employer identification number (EIN). This lets you do all the fun stuff like pay taxes and register for permits. You may also need a state tax ID depending on your state’s laws for income and employment taxes.
Step 9: Licenses and registration, please
Just because you can drive a Mack truck doesn’t mean you’re allowed to. That’s where licenses and permits come in. You’ll need these important documents to avoid stepping on governmental toes. How do you know what’s required? Check with the agency that correlates to your business’s activity.
Step 10: Open a business bank account
You’re going to need a place to keep all the money you’ll be raking in when your business skyrockets. A business bank account helps to keep things professional. It offers organization and separation of business and personal finances to avoid commingling. It can also allow you to open a line of credit in the event of emergencies or big purchases.
Step Zero? Consult an accountant!
Obviously you’re going to need an amazing accountant to maintain your business’ financial health. In our very objective opinion, having someone in your corner with financial expertise from the get-go is one of the smartest moves you can make. If you’re looking for an accountant who fits this description…we know where you can find one.
Ready to get started?
It seems like a lot of work off the bat. I mean, you haven’t even had your first client yet! But giving your business “good bones'' is a fundamental step you cannot afford to skip. Starting this process off right will free up time and funds in the long run for future “renovations.”
Know Your Numbers is here to help you get construction underway. Reach out today to break ground on a business that could last a lifetime.
What’s the most exciting part of creating your small business? Leave them in the comments below.