Americans are feeling more entrepreneurial than they have in years. As our country recovers from The Great Recession of 2008, more and more Americans have felt comfortable taking the dive into small business ownership. The 2016 Kaufmann Index shows that after five years of consecutive losses in new small business ownership, the rate for 2016 is finally starting to trend up—and that’s great news for the American economy overall.
If you’re thinking of starting a small business either online or on Main Street, here’s what you need to know to build it from the very beginning.
1. Write a Business Plan
You have a great idea and a target customer in mind…but what now? The first step on your road to being your own boss should be to write a business plan. Taking the time to write a business plan might seem daunting, but it will help you to focus your efforts and your business to best serve your customer base. You can start with a very basic document that outlines your business’s mission, vision, goals, and any marketing efforts. You will also need to know if your great idea is financially viable. Sharpening your pencil to really understand your income and expense projections is critical, particularly if you will need to acquire financing for the business. Taking the time to commit your business plan to paper allows you to hone your message and clarify your goals.
2. Do Your Homework
Before entering the marketplace, you should have a good understanding of both your target market and your competition. This will require you to do some research before you get started.
If you have a concept in mind, take a look at other businesses selling what you sell—either in person or online. What makes them successful? Who are they selling to? Will you be competing with them to earn customers? What do you like about their products and their brand? These are all important questions to answer before you get started, especially if you intend to enter into a space that might be crowded, like coffee shops, bakeries, or restaurants.
3. Scout It Out
Whether you’re planning to sell online or in a brick-and-mortar location, you need to know how your customers are going to find you and what you can do to bring them to your products.
- If you’re selling online on your own website, make sure you understand the basics of Search Engine Optimization (SEO) and e-commerce before you start building your brand. If customers can’t find you on Google, they can’t buy your products.
- If you intend to sell on a website like Etsy, Shopify, or ArtFire, get acquainted with their site and the best practices for selling there. Many sites have their own rules and communities of members just like you trying to find customers, so you need to find the best way to rise to the top of search results.
- If you plan to have a brick-and-mortar storefront, it can be challenging to determine where you should locate. If you think you’ve found a great place, make sure you’re going to get the kind of foot traffic you need to be successful. Park or sit outside the location during a few hours when you would expect your business to be open. Are people walking down the street? Are they visiting other local businesses? Is your business on the route of a typical commuter and does the location offer a convenient place to park? These are all great things to consider as you make your decision.
4. Name It
A mentor once told me that you should plan every aspect of your business like one day you’re going to be huge. This is great advice, especially when it comes to naming your business.
You might have come up with the best name for your business but if another person or entity has already trademarked that name, you’ve put your new business at risk of trademark infringement. Take a minute to Google the name you chose and see what comes up. If one or more businesses are already using that name, you might want to re-think your strategy. If a search shows that no one is using the name you like, you should also search the U.S. Patent and Trademark Office’s Online Trademark Database and see if the name you love has been trademarked by another company. If it has been, you may want to consider going in a different direction, especially if you and the trademark holder sell similar products. If the trademark is not in use, you’re good to go—and you might want to consider taking the time to file for your own trademark to make sure the name stays with you.
5. Brand It
Branding is something that many of us take for granted but having a recognizable and attractive brand can set you apart from your competition. Some small business owners choose to hire a designer for their branding needs, while others go the DIY route. Regardless of the path you choose, make sure that you have your target customer in mind while designing your brand. What would your typical customer like to see? What kinds of colors and images appeal to them?
6. Take a Survey
We’ve all gotten so wrapped up in an idea that it’s hard to see our plans clearly and without our own biases. Small businesses are very personal for many people, so make sure you’re going to serve your customers as well as you can by getting input on your ideas from trusted sources—family, friends, or even an informal focus group of your potential customers. Tell them about your business name, concept, and branding and see what they say—they might open your eyes to things you might not have considered or potential problems you might not have seen. The more open you are to constructive criticism, the more opportunities you have to be successful.
7. Handle the Paperwork
The nitty-gritty paperwork that comes with owning a business can seem overwhelming and many small businesses start off operating in a gray area where they aren’t operating within the letter of the law. To avoid this, make sure your business is registered with the Internal Revenue Service (IRS) by applying for an Employer Identification Number (EIN). This can be done easily here.
You’ll need to determine what type of business structure you hope to operate under (sole proprietorship, limited liability company, regular C corporation, or non-profit). The legal implications in the event of a lawsuit or other legal matter differ greatly, so make sure you know what each choice means for you.
Next, register your business with your state and, if necessary, local governments. Registration varies by state, so your state’s Department of Commerce, Small Business Resource Center, and State Economic Development Corporation are good places to start looking for information. Depending on the type of business you plan to start, you may require additional permits or licenses from your state. The above entities can also help you determine what you need to do.
8. Consider Insurance
Protecting yourself, your new business, and your assets is important and business insurance is something you should consider. While it’s easy to plan for the best, it’s smart to plan for the worst—and having insurance will allow you to breathe a bit easier in the event of something catastrophic happening. Insurance options differ greatly depending on the type and size of your business, but make sure you take the time to find a policy that covers you and your business for all those “what if…” situations.
9. Fund It
You may need just a little funding for your business or you might need a lot. Whatever your needs are, there are many options to choose from when considering where your funding might come from.
The government offers a number of grant and loan programs specifically designed for small businesses which can be useful when you’re starting out. Other options include approaching Angel Investors, venture capitalists, or other individuals who typically invest in new businesses. Keep in mind, though, that often you’ll trade startup capital for part of your business’s ownership, which you may not want to do right away (or ever). You can also look into the option of crowdfunding your business. Whether you do this by asking friends, family, and people in your immediate network, or decide to ask online via IndieGoGo, Kickstarter, or another service, you’ll likely need to offer some sort of benefit or perk to those who have invested.
Approaching investors, banks, or even your friends might be stressful but if you need funding, never underestimate your ability to hustle on behalf of your business!
10. Network It
Spreading the word about your business is one of your new full-time jobs as a small business owner but you don’t have to do it all alone. There are lots of organizations designed to connect small business owners with resources in their community or online. Resources like The American Business Women’s Association (ABWA), The National Association of Women Business Owners (NAWBO), and WomanOwned can provide a network of like-minded people with goals and struggles similar to your own. You can also check out your local Chamber of Commerce for resources related to your specific community.
Starting a business is a huge undertaking but with a great idea and some careful planning, you can alleviate some of the stress associated with building something new from scratch. Doing your research early and treating your business seriously from day one will put you in a better position for long-term success.