Turning your idea into a business is no easy feat no matter how much you plan—and I’ve done it twice! Fortunately, there are a few ways to make the process less stressful and less chaotic. Here are 10 things every startup entrepreneur should know and do.
1. Fine-tune your idea and your target market. Brainstorm your idea with trusted friends, family and advisors. What solution does your product or service provide? Research the market and come up with a detailed target audience and then run it by experts in the industry. SCORE, a free government agency, has thousands of volunteers with expertise in all kinds of businesses waiting to meet with you in person or online. Make an appointment with a SCORE mentor to get feedback on your idea before you launch.
2. Write a business plan. You can start a business without a business plan, but I wouldn’t recommend it. A business plan forces you to think about every step and goal of your business. Traditional business plans contain an executive summary, a detailed company description, market analysis, organization and management outline (including your legal structure), marketing and sales, and financial projections.
3. Determine your business structure. While most startups begin as a sole proprietorship or partnership because they involve less fees and paperwork, forming a C corporation, S corporation or limited liability company (LLC) offers better protection for your personal assets, makes it easier to raise capital, and offers significant tax advantages, especially with the new tax reform regulations.
4. Conquer the paperwork. Start by contacting the IRS to obtain a tax ID number or Employer Identification Number (EIN). This number goes on all your tax forms, invoices and more, so you’ll want to do this right away. Next, contact your local business development office to obtain a business license and any other licenses and permits needed to start your business. Then be sure to get trademark protection for your business name and logo.
5. Calculate startup costs. Besides the costs of inventory, equipment, leasing fees, marketing, licenses and permits, professional fees and something left over to pay yourself, there are some startup costs you may not have thought of. Be sure to include web hosting fees, incorporation fees, business insurance, health insurance for key team members and employer taxes (if you plan on hiring right away).
6. Secure financing. Most business startups are funded by personal savings, but if you need more than your savings to get going, other sources of funding include bank loans, crowdfunding and small business grants. If you do ask family and friends to invest or lend money, treat them as you would an outside investor or lender and draw up official contracts for repayment. Check out SBA funding programs to see if you qualify with any of their approved lenders.
7. Choose a location. If you’ve decided to start your business from home, make sure you check local zoning regulations before you launch. If possible, create a separate office space in your home to help you stay focused. Determine the percentage of your home that’s used for business so you can write off a portion of utilities and mortgage payment.
8. Launch a website. Before you even ask: Yes, you need a website. Today, when a consumer hears about a business, the first thing they do is look them up online. If your business isn’t there, your potential customer will move on to a business that is. To save a lot of time and frustration, your best bet is to outsource the design and development of your website to a professional. You can start with a basic brochure-type site, but you’ll soon learn your customers will expect much more than just an address and phone number for your business. Look at competing websites for ideas on what your website needs.
By following the steps above, you’ll not only make the startup process less stressful, but also greatly boost your chances of success.