Starting a business is an exciting undertaking that can set you up for a lifetime of success and fulfilment.
While many entrepreneurs rush through the initial steps so they can get their business going, it is important to remember that the foundation of a business will determine its long-term health, reputation, and sustainability.
All businesses are different and require some unique nips and tucks. However, don’t miss out on covering these 8 crucial areas:
1. Set the Right Foundation
Set up a solid foundation and your business will have infinite room to grow and flourish.
Did you know that many (if not most) small business failures are a result of skipping or rushing through this step?
Here are 3 steps you can take in order to start your biz the right way:
- Validate Your Idea – To start a business, you need an idea. This means that you have found a problem that you know how to solve, and people are willing to pay you for that solution. If you want a business that makes money then it is crucial to have both of these components. You can determine the validity of your idea by surveying your general client population. Do people light up at the thought of what your business has to offer? Are people curious about investment opportunities? Are you improving upon something else that people are already paying for but unsatisfied with? Do your formal and informal research to make sure your idea is something you can stand up for and take to the bank.
- Play Your Strengths – There is something about you that makes your business unique. Whether it is something large or something very small, there is something you will be able to offer your clients and customers that no one else can. It is time to shamelessly set yourself apart from the masses and emphasize your individual strengths. What is going to set your business apart from its competitors, and how are you going to maintain that promise for the life of your business? Plan this through and be prepared to give a 15-20 second elevator speech that emphasizes why your business is special. Hint: Your business is special because of something YOU possess, not a freebie or other marketing tool.
- Define Your Ideal Client/Customer – Once you have a great idea and a unique spin on the situation, it is time to figure out exactly who your customers are. Be very picky when determining your ideal clients and customers. Narrow it down to a specific age range, geographic location, income bracket, and other demographics. Remember, this is your ideal, not your overall reach. Narrowing the description of your ideal clients and customers will help keep you focused as you move forward. It will not limit your ability to market broadly and bring in business outside your ideal.
2. Write a Business Plan
Once you have done the research and soul searching behind the concept of your business, it is time to make a plan to make your business succeed.
Depending on your industry, you may choose to create a very formal business plan that follows a pre-established structure and format.
- If you will be searching for investors to finance your business, especially as a start-up, then you should take the time to create a business plan that is visually appealing and easy to follow.
- If you are financing your business on your own then your business plan can be more informal.
Either way, your business plan should cover all the important areas of your business in writing. Something about writing it all down allows you to really solidify your plan so that you can work out the kinks and glitches early on.
Start with everything you did in the first step by explaining what your business is, what makes it unique, and how it will make money.
Then, break down the components of your business and explain what you have to offer, how you plan to build, and how you plan to stay financially afloat.
While some business plans are based on concept and theory, most are focused on financial planning to make sure you can keep your business on track.
3. Brand Your Business
Branding is important.
In the startup phase, you should definitely have the following branding in place:
- A Strong Name – Your business should have a name that reflects its unique qualities and sets it apart from its competitors.
- Logo – You should have a visual logo for your business that portrays the overall character and personality of the business. Ideally you hire a professional to take care of this for you, as your logo is the single most important visual in your business.
- A Clear Positioning. Think what your business wants to stand for in the soul and in the mind of the consumers. This is your Equity, that you’ll build over time via each interaction with your targeted marked. Make sure that your product or service has a clear and distinctive positioning in the market. What are your points of differentiation versus your competition? What are the points of parity? What is a short, punchy slogan that captures the essence of your brand? What are the key messages of your brand?
Each of these things should appear uniformly on all business documents and marketing materials so that the image you present to the world is unified and consistent at all times.
4. Determine the Legal Structure of Your Business
This is where things start to get technical. There are many different types of businesses out there, and you need to pick which one you want to be the official designation of your business: sole proprietorship, partnership, limited liability company (LLC), corporation, S-corporation, nonprofit or cooperative, etc.
Each of these designations comes with different rules, regulations, requirements, and restrictions.
To determine which structure is right for you, we suggest you consult with both a small business attorney and a small business accountant.
- An attorney can help you determine which categories your business legally fits under so that you can narrow your options. They can also help you figure out who would be liable if someone sued your business based on how you are structured.
- Then, an accountant can talk with you about tax consequences and potential benefits of structuring your business a certain way.
Together, they can help you determine which designation will allow you to meet your goals and which may have financial incentives that you do not already know about.
5. Register your business name with your state government. (“Doing Business As” – DBA)
Once you determine the legal and financial structure of your business, it is time to make it official.
The first thing you should do is incorporate your business with your state. If you are launching a multi-state business then you should register your business in the state that will serve as the prime headquarters.
You can get instructions on how to register your business from the Secretary of State.
To make sure your business is fully and properly registered, follow these steps:
- State Incorporation – Contact the Secretary of State in your principal place of business. You will need to create and complete your Articles of Incorporation and pay a (generally small) fee to register your business. This process is generally pretty fast (1-4 months). Once you are registered, you will receive a certificate of incorporation with your official business name. Keep this certificate carefully because you will need it to establish bank accounts and other official business activities.
- DBA Designations – DBA stands for “Doing Business As.” These are fictitious names that you register to do business under. For example, the name of your company may be “John and Jane Doe Designs, Inc.” While that is your official names, you may want to be known as simply, “J&J Designs.” This shorter name would be your fictitious name and should be registered separately as a DBA.
- Federal Incorporation – Once your business is established within your state and you are ready to do business, you will need to do one more level of registration with the federal government. This is primary used for tax purposes so that you are established with the IRS. Depending on the business structure you choose, federal registration may take up to a year to fully process. We strongly suggest you consult with your small business attorney and certified accountant to make sure you take all the necessary steps when registering your business with the IRS.
Registering a business can be tricky because of all the technicalities involved. The process often intimidates entrepreneurs because of how tedious it can be to do all the paperwork.
This step is very important, though, because your business must be properly incorporated in order to operate legally. Don’t be afraid to ask for help when you need it.
6. Obtain Business Licenses and Permits
Depending on your industry, you will need certain licenses and permits to operate. While not exhaustive, here is a list of the most common types of permits for small businesses:
- Physical Location – You may need a permit and/or license to operate your physical office, even if it is a home office.
- Fire Permit – Local fire departments may require an annual inspection for fire safety and compliance.
- Health & Safety – Different entities may need to do inspections and issue permits for any business that requires manual labor of its employees. You may also need special permits if your business plans to store and/or work with restricted or hazardous substances and materials.
- Food & Drink – If you are serving and/or selling food and drinks, then you will need to secure certain permits and licenses specific to food safety.
- Animals – Businesses involving animals may need special permits and licenses.
- Healthcare – Hospitals, clinics, and other healthcare facilities require certain licenses and permits before you can start seeing clients and patients.
To begin the process of securing the necessary licenses and permits, you should contact your local city hall and ask what they require for you to begin operating your business.
If your business falls under a professional industry then you should also contact the national board that governs that profession to see what they require for you to legally operate your business.
7. Finance Your Business
Chances are that you have already begun the process of financing your business by this point.
The registration and startup process will show that you need a solid financial plan to cover all the fees and expenses that go along with running a business.
Before you start operating in full swing, you should evaluate your financing plan and be sure that you have what you need to get a solid start.
Financing a business may include any number of the following:
- Loans – If you are financing your startup with small business loans then make sure you understand where the money is coming from and how it will be spent. You should also make sure you have a plan for paying back the loan as efficiently as possible to keep your business out of debt.
- Crowdfunding – If you are selling a certain product or tangible service, then crowdfunding is an excellent way to pre-sell your inventory in exchange for startup cash. This works particularly well for businesses that are relying on trends and fad items to launch.
- Investors – If you have been seeking investors in your business, make sure you keep them in the loop throughout the startup process so that they feel included and involved. Keep seeking more investors to diversify your income sources.
- Donors – For non-profit organizations and cooperatives, fundraising campaigns should be ongoing through the startup phase to help secure funding.
- Grants and Awards – There are several programs out there that provide funding for new startup businesses, especially if your business venture is new and innovative. Look for these funding opportunities as soon as possible. Because these are only available for startups, you will only qualify for them once during the beginning phases of your business.
8. Market Your Business
Once your business is established and operational, it’s time to start operating!
If you are like most entrepreneurs then chances are that you know your industry well enough to start offering products and services right away.
In order to keep your business afloat long-term, though, you will need a steady influx of clients and customers. To make this happen, you should start marketing your business as soon as possible.
The most important thing to remember when marketing is that it may take approximately 3-6 months before you see the results of your efforts.
Do not be intimidated when you do not see immediate results from your marketing efforts. Remember that a business is a long-term investment and endeavor, and what you do today is setting you up for long-term success.
The role of marketing is to create demand, so that you can sell your service or product to your prospects.
You’ll take action in order to take your prospects through the following stages:
You can read more about the consumer decision journey in this excellent McKinsey article.
If marketing is a new concept for you then you may wish to consult with a marketing expert or a business coach to learn how you can bring income into your business through effective marketing.
Remember: Every business is different. Certain industries require you to take steps in the startup process that others do not. This general list will take you through the most common and necessary steps to get your business established and ready to operate.
Consulting with professionals (lawyers, accountants, coaches, etc.) and researching the requirements of your specific industry are crucial components of establishing your foundation. Once your foundation is set, you will be ready to soar into growing and developing your business.
Additional Resources: Here are a few TED talks packed with tips and inspiration for the entrepreneurs who hustle to take their business to the next level: