Starting your own business is a big step in your life and it’s important to take into account all the different factors that will make your business a success. Once you have done your research and you’ve answered the tough question: “Should I start my own business?” then it’s time to see your idea come to fruition.
This blog post will give you the run down on the basic things you need to consider and do to launch your business. It’ll also give you a series of resources that you can use to learn more about getting your business off the ground.
Should I start my business on my own or with a partner?
There is no right or wrong answer regarding going solo or starting a business with a partner. Most successful businesses start with good communication between partners, managers, employees and customers. If you have someone you trust who brings complementary skills that can give your business a more solid foundation, then you should definitely consider bringing them on as partners. That being said, it’s important to make sure everything is written down and communicated early on to avoid issues down the line.
You should be aligned in terms of values, what does the company stand for, why do you want to build this business? It’s also critical to understand the commitment that each person can put into the business and how the compensation will work in terms of equity and cash. Every person will have different needs and different responsibilities and you must take into account every aspect of your relationship, including things like how long can each one of you go without a salary or what happens if either of you gets an amazing job opportunity. Also, play out the different scenarios. If things go terribly, how do you handle issues? If things go great, do you both want to re-invest the money to grow the business or do you want to take the money home? Assess what would happen if at some point someone offers to buy your business? Would both of you be aligned in selling or not selling?
Finally, if the partner is also a family member (a spouse, brother or sister in law, etc.) make sure to talk about how you’ll separate business from personal life, and be extremely detailed and specific to avoid having any issues down the line that could harm your existing relationship.
All of the things discussed above must be written down in a founders agreement and it’s important to talk through all of these issues, specially thinking ahead of what will happen when things don’t go as well as planned. If you can find someone you can trust, who wants to build this business with you, then you should go ahead and take on the partnership.
Incorporate and get your permits
The process requires selecting a business name. We recommend choosing something that’s easy to write (especially over the phone), memorable and that doesn’t have any potential for trademark issues down the line. In addition to this, you should check whether the domain you want is available, you can use a tool like whois.com to find that out.
The other two pieces of information required are business purpose and corporate life span, which can be set as indefinite. The forms usually require the personal information of the incorporators including name and addresses as well as the physical location for the business. Typically small businesses incorporate as Sole Proprietors, Limited Liability Companies (LLCs), C-Corps and S-Corps.
The easiest structure to setup is a sole proprietor, but in this scenario the business owner is fully responsible for the company’s assets and liabilities, which exposes you to losses if things don’t work out. For many small businesses, incorporating as an S-Corp is the best option. Even though it’s more expensive and difficult to setup it actually offers most of the advantages for business owners while keeping the risk and liability within the corporation. If you want to learn more, you can seek help from your local Small Business Association (SBA).
After you incorporate, you will need to get permits and licenses. For this you will need to follow both federal as well as state rules. We suggest using a free tool like the SBA’s Business Licenses and Permits Tool to find exactly what you need to get to legally operate your business.
With this, you’ll be ready to start your business. We recommend looking at the business law section of the SBA site to make sure you understand the regulation around employment, labor, contracts, etc.
Financial planning & accounting
In order to ensure the long term sustainability of your business, you must make sure that you have accounted for the different scenarios of the future and how much cash you will need available to make your monthly payroll, bills, etc. Score.org offers a great free financial projections template which you can download and fill with your business information.
Always account for cashflow issues which can kill your business! How much do you need to spend to build up your inventory and how long will it take for you to sell it? During this time your cash will be frozen, but you will still need to pay your rent, make payroll and pay your taxes! Remember that you can also negotiate with suppliers to get small credit lines that can help you with these issues. Finally, in your plan, consider small business loans from local SBICs and banks that can help you finance your growth once you’ve got your business going.
Once you have figured out your finances, you will want to open a bank account. Most local bank branches will offer special accounts for SMBs. Make sure to shop around and find the bank that offers the best deal for you, they usually have different benefits that they can give you, so get smart and compare before deciding.
You will also need to set up your accounting. Look for a local accounting firm (CPA) on Google or Yelp and have them help you setup accounting software like Intuit’s Quickbooks to keep your books in order. Once this is setup, you can easily learn how to input your expenses and income and even link your bank accounts to keep everything in place.
One of the most important aspects of setting up your business for success is marketing. You must develop the right marketing plan for your business which takes into account your business’ growth stage, your budget, how much time you can put into marketing, etc.
Using a company like ThriveHive can help you get started with best practices, setting up your online presence including a marketing optimized website that can convert visitors into leads. Once you’re set up with the basics, you will want to learn how to get customers using different marketing activities that work in your industry.
We have many blog posts that explain how to market your business, but a good framework is thinking about:
- Reaching People
- Engaging with People
- Converting these engaged people into leads
We hope this article helped you cover the basics of getting your business started. Now that you’re ready to build your business and start creating value for your community, don’t hesitate to reach out for a free demo of ThriveHive with one of our marketing experts to see how we can help.
Image credit: Raymond Bryson