Starting a business requires many steps, and it certainly doesn’t happen overnight. As an entrepreneur, you must be willing to dedicate most of your time to the process.
“The first thing to do when contemplating starting a business is to understand the commitment required,” said Todd Rhoad, managing director of BT Consulting and partner with Peachtree Recovery Services Inc.
To make sure you’ve covered all your bases before opening your doors, Business News Daily asked experts for their best advice on starting a business.
1. Do your research.
You want to make sure you understand the industry you’ll be involved in so you can dominate. No matter how unique you might think your business idea is, you should be aware of competitors, said Ian Wright, founder of British Business Energy.
“Just because you have a brilliant idea does not mean other people haven’t also had the same idea,” said Wright. “If you can’t offer something better and/or cheaper than your competitors, you might want to rethink starting a business in that area.”
You should also consider your target demographic, which will be the driving force in each decision you make. You can’t earn a profit without your consumers, so make them your priority.
“It is crucial to make sure you are delivering what your customer wants, not what you want,” said Sonia F. Lakhany, attorney at Lakhany Law. “This will give you insight into your customer’s buying decision and save you lots of experimenting down the road.”
2. Take care of the legal aspects.
One of the first steps you should take in starting your business is choosing its legal structure, said business attorney Mason Cole of Cole Sadkin LLC. According to Cole, the most common structure is a limited liability company (LLC) because of its flexibility and the protection it provides owners from personal liability.
“It will dictate the taxes, paperwork, liability of the owner(s) [and] other legal aspects, as well as whether or not the company can have employees,” he said.
Additionally, you should acquire proper registration from the government to open your business.
“This means the entrepreneur will need to create the articles of incorporation, obtain an employer identification number and apply for necessary licenses, which will vary by state and industry,” Cole added.
3. Map your finances.
Starting a business requires money that you likely won’t have right away, which is why it’s encouraged to seek capital.
“Most entrepreneurs start a business with a very limited amount of capital, which is a large hurdle to many,” said Cole. “However, there are plenty of options available to a budding business owner. The first and most common place to seek capital is with friends and family. If that is not enough, expand the search to angel investors and venture capitalists. Should these options not provide the amount needed, then apply for business loans through banks and small business associations.”
You don’t want to start your business with poor credit. Make sure your score is as high as possible, considering it won’t be once you open your company.
“You will probably get into a lot of debt starting out,” said Marc Prosser, small business expert and co-founder of Fit Small Business. “So, you’ll have to be able to finance [your personal life] through your own savings. If your credit score isn’t so great, you’ll [only] be able to borrow less money at higher interest rates. If you want to start a business, increase your credit score so you have a [greater] ability to borrow as much as you need.”
Travis Sickle, certified financial planner of Sickle Hunter Financial Advisors, advised entrepreneurs to be organized with taxes and fees. There are multiple payments you’ll need to make, and you don’t want to file late for any.
“You have to figure out how much your payroll is going to be in order to make your tax payments timely,” said Sickle. “The timing can vary depending on your payroll. You also have to figure out other business taxes, such as city, county and state.”
4. Hire help.
Starting a business should not be an independent journey, no matter how tempting. Hiring help along your journey will set you up for success. Ben Walker, founder and CEO of Transcription Outsourcing, said that the No. 1 piece of advice he’d give business owners is to have a coach or mentor.
Another smart hire is an accountant. It’s nearly impossible for one person to handle every aspect of a company, and above all, your finances should not be put at risk.
“I had a full-time job as I considered starting my own business in 2009, but I did a lot of groundwork before I started, and bringing on an accountant was an important step,” said Sarah Burningham, president and founder of Little Bird Publicity. “It helped me understand what I needed to do to make this work from a profit standpoint, [as well as] the ins and outs of state, federal and local taxes.”
It’s important to have assistance on the legal side of the business especially, ensuring you are protected and going about the process the right way.
“We often make the assumption that legal counsel is for when we get ourselves into trouble, but preventative and proactive legal preparation can be the very best way to set your business on the path to long-term success,” said Katy Blevins, co-founder and CEO of Modern Femme. “When you call on legal counsel after you’ve run into a problem, it’s often too late or could critically impact your business in both the short and long term. Investing in their insight at the start of your business can pay a huge return later on by keeping you out of trouble before you even get into it.”