A start-up business can be the riskiest and most rewarding undertaking that you’ll experience in your lifetime. But to get things started, you’ll have to go through numerous processes, make big decisions, and evaluate different kinds of business strategies. This is why we’re tackling the steps on how you’ll get things going on “starting up” your very own business!
Where to begin?
As they say, a business is like a game of chess, you need to make calculated moves, lose some and gain some, but these are just necessary stepping stones to getting ahead of your competitors. So what are you going to do? Research. Research. And more research! Know as much as you can on how to play the game right. Know the moves that can let you gain profits, and know the possible drawbacks and how to prevent them. Remember, businesses are a gamble. However, you can always measure your success depending on the strategies you use.
Conduct market research.
If you have a possible business opportunity in mind, a good way to know if it’s going to survive in the market is to do good solid research. So what does this entail? Here are some key points on how you can do thorough market research:
- Analyze your competitors – how do they operate? Take note of their business strategies, take a look at the services they offer, how do they communicate to their target market, etc.
- Observe your competitor’s strengths and weaknesses – This will also help you determine your own edge. What makes your company different from your competitors?
- Gather data that is relevant to your business (population data on age, interests, or relevant behaviors)
- What are today’s trends? And how can you incorporate some of them into your business?
- What are the possible barriers that can hinder you from making your own business?
Another way to do thorough research on your market is to actually approach people through certain mediums. These are:
- Focus groups
- In-depth interviews
Meanwhile, here are other important questions that you need to ask in order to get a good sense of your market.
- Demand: Is there a desire for your product or service?
- Market size: How many people would be interested in your offering?
- Economic indicators: What are the income range and employment rate?
- Location: Where do your customers live and where can your business reach?
- Market saturation: How many similar options are already available to consumers?
- Pricing: What do potential customers pay for these alternatives?
Create your battle strategy
After performing in-depth research on your desired market, it’s time for you to make a solid plan of action. At this stage, your business plan will be your stepping stone on how you can get your business on its feet. A business plan is how you’re going to persuade others to work for you.
Now don’t get too nervous to write your business proposal, there’s no right or wrong way to do this. The important part is that it highlights your business needs. So what exactly are the contents of a business plan? Here’s the breakdown:
- Executive summary – Explain your mission and vision statements. Then, explain what your business does and how it’s going to rock the market. This entails going into details about your company’s leadership team, employees, location, and financial information. It’s also smart if you showcase your plans for company growth in the years to come.
- Company description – Time to let your business shine! This is where you’ll let them know what your company is all about. Who are your consumers? What kind of organization are you running? What market are you serving? And that’s just the icing on the cake. You also need to state some of your business’ competitive advantages. Ultimately, the company description is where you’ll boost your company’s power points.
- Market analysis – When writing about your market analysis, remember to observe your competitor’s strategies and other existing successful strategies in the market. Now, this is the time that you ask yourself, can you do it better?
- Organization and management – Easy, just tell your readers who is going to run the business and what’s the structure going to be. Lay out the structure of the business and make sure to mention who is in charge of what.
- Service or product line – Tell your reader what your business is offering. Share the benefits it holds for your target market, what are the advantages of your product? This is why it’s crucial to have research on this part since you have to explain this in full detail.
- Marketing and sales – How will you attract and retain your customer? This is the part wherein you’ll write about your sales and marketing strategies. Now, the most important part of this is getting into detail about how a sale is going to take place.
- Appendix – Use your appendix to provide supporting documents or other materials that were specially requested. Common items to include are credit histories, resumes, product pictures, letters of reference, licenses, permits, patents, legal documents, and other contracts.
Determine how much funding you’ll need.
There’s a great value to be put up when you’re starting a business even if it’s a start-up. Therefore, when you decide on how much funding you’ll need, you’ll have to think of a way on how you’re going to get your hands on that budget. There are three options for you:
This means you, your friends, or your family will be the ones shelling out money for your business from your own pockets. In return, you get full control of your business financially. Sounds great, right? Now let’s discuss the pitfalls of self-funding.
Ultimately, you will be facing losses on your own. This is why it is important to keep in mind to never spend more than you can afford. A business is a big investment and if you start tapping into some of your future savings, then you’re taking a bit of a risk there. You might want to explore other options when you’re at this point.
Investors can give you funding to start your business in the form of venture capital investments. Venture capital is normally offered in exchange for an ownership share and active role in the company.
Venture capital typically:
- Focuses high-growth companies
- Invests capital in return for equity, rather than debt (it’s not a loan)
- Takes higher risks in exchange for potentially higher returns
- Has a longer investment horizon than traditional financing
If you want to have complete control of your start-up business but don’t have the funds to start, then why not opt for a loan? To increase your chances of securing a loan, you should have a business plan, expense sheet, and financial projections for the next five years. These tools will give you an idea of how much you’ll need to ask for, and will help the bank know they’re making a smart choice by giving you a loan.
Once you have your materials ready, contact banks and credit unions to request a loan. You’ll want to compare offers to get the best possible terms for your loan.
Choose a business location.
When choosing a location, you have to strategically think of where your target market is, if it’s easily accessible to your business partners, or if it suits your personal preferences. Don’t forget to include the costs, benefits, and restrictions of different government agencies.
This is also where you’ll need to register your business, pay your taxes, and get license permits in the place where you chose to build your business.
Cement your business structure.
A business structure will determine your day-to-day workflow which is why it is one of the most significant parts of a business. Ultimately, it will take a whole chunk of your business’ operation. It affects how you pay in taxes, your capability to raise money, the paperwork you’ll be doing, and a lot more. Here’s a quick refresher on the most common business structures you can apply to your start-up business.
- Sole proprietorship – Gives you complete control of the business. This means that your business assets and liabilities are completely yours. Since you are the sole owner of your business, will also be liable for any payment of debts and business obligations.
- Partnership – This is when two people have decided to partner up and run a business together. Partnerships are usually preferred when you still want to test the waters of your business and not commit to a formal setting.
- Limited Liability Company (LLC) – This will give you the advantage of having the best of both worlds since it gives you a corporate and partnership business structure. Ultimately, this kind of structure will give you (the owner) protection from personal responsibility for debts and liabilities.
- Cooperative – To put it plainly, the people who own the business are those who are benefiting from its services. The profits and the earnings are then distributed to the people owning the business.
- Non-profit corporations – These corporations are organized to do charity, religious, literary, or scientific work. Since this kind of organization benefits the public in big ways, nonprofits can receive tax-exempt status, meaning they don’t pay state or federal income taxes on any profits it makes.
Decide on a business name.
Time to brainstorm for a business name because your name can help kickstart your start-up business. Before you start shooting great ideas, here are some of the things you might want to consider before you make a decision.
- Make sure that it’s a name that describes your business and what it does.
- You can make use of related words that describes your business but use them in a creative way. You can mix up the spellings like Tumblr (tumbler), Flickr (Flicker), Reddit (Read It), and a lot more.
- Make sure it’s not too complicated. When thinking of a business name, sometimes people think that the cooler or wittier it sounds, the better. But this is not always the case. The good way to go is to keep it simple.
- Search if your chosen name is already taken. You don’t want your business to have the same name as your competitors, right?
- Think of the future. Don’t just think of a name that is applicable to one of your services. For example, you have a fast-food store. But in the long run, you’ve decided to open a cafe with it. Make sure that your name can also cater to growth.
- Don’t use acronyms just yet. Establish your brand first and when you’ve penetrated your desired market, that’s when you can abbreviate.
In such time that you’ve chosen, don’t forget to register your name. Registering means protecting. There are four ways on how you can do this. There is an entity name, trademark name, DBA name, and domain name.
You have to register your business.
Didn’t we say that your business structure can affect a whole chunk of how your business operates? Well, it also takes part when you are finally registering your business. It seems like a daunting task but hey, we’ve made it this far! If you’ve already chosen your location and business structure registration becomes very straightforward.
In some cases, you don’t actually need to register at all, however, it does come with a cost. Remember that you could miss out on personal liability protection, legal benefits, and tax benefits.
Don’t forget your federal and state tax ID numbers!
We’re almost done. Your federal and state tax ID numbers can act as your Social Security number for your business. Although in some places they don’t require a tax ID. Depending on where you’re living, better double-check on that one.
- Pays employees.
- Operates as a corporation of partnership.
- Files tax returns for employment, excise, or alcohol, tobacco, and firearms
- Withholds taxes on income, other than wages, paid to a non-resident alien
- Works with certain types of organizations.
Apply for licenses and permits.
If your start-up business is regulated by a federal agency, you have to get a permit or a license. Note that fees and requirements will depend on the business you’re running and your business location. Additionally, keep in mind that these permits and licenses do expire over time so always keep track of the due date and when you need to get some papers renewed.
Open a business bank account.
Lastly, open a business bank account. Business bank accounts have some perks that personal bank accounts do not have. In such time that you have already chosen your bank account, it’s an easy flow from there. With a business bank account, you are able to monitor the cash flow of your start-up business. After analyzing your business strategy upon monitoring cashflow, you can modify your start-up business model accordingly. Here are some of the documents you need to open one:
- Employer Identification Number (EIN) (or a Social Security number, if you’re a sole proprietorship)
- Your business’s formation documents
- Ownership agreements
- Business license
That’s the know-hows of start-up businesses. If you are considering to put up your start-up business online, read more here. Go ahead and blow them away with that start-up business of yours!