The Complete Guide to Starting a New Business
Starting a business is an exciting time but can also be stressful and very involved with paperwork galore.
According to the Small Business Association, more than 627,000 new businesses open their doors each year. Unfortunately, the same report found that around 595,000 businesses close every year, too, meaning that getting off to the right start can be crucial.
In this post, we’re going to guide you through the initial steps you need to follow to start a business.
Get a Business License
Before you do anything else, you’ll want to get a business license.
Most business licenses protect your personal assets, which means that if someone tries to sue your business, there can be a layer or protection so that it may be harder (or impossible) for them to go after you, though this isn’t ironclad.
There are several different types of business licenses. The most common for small businesses is an LLC (which stands for “limited liability company”) which is versatile and can scale well with your business.
Different types of business licenses host different pros and cons, and can affect how you’re taxed. It’s best to speak to a qualified CPA with experience in small businesses so they can help you decide what would be best in the long-term. You can find a CPA through the database here.
Research Industry and Local Licenses You May Need
In addition to a standard business license, you’re going to need to check and see if there are any other licenses that you may need. This includes checking state and federal guidelines to look for licensing that either your industry or location requires.
Restaurants, for example, need liquor licenses, and real estate agents need a license in order to practice in their field. You might also need a building permit, a zoning permit, and so much more. And in some states, these licensing requirements may vary wildly, so you want to double-check everything.
If you’re unsure of what you need, you can consult a business lawyer about what you need to do to get things up and running, and they can often help you start the process. You can also learn more here.
Keep in mind that it often costs money to apply for licenses, and many need to be renewed. Factor this into your budgeting upfront.
Check Insurance Requirements
We’re not done with the exhausting paperwork just yet.
You’ll want to look into insurance options for your business, too. Depending on your industry, there will be some types of insurance that you’re required to obtain.
If you meet the criteria for them, you are required to have worker’s compensation insurance, unemployment insurance, and disability insurance. Those who have company cars are also required to carry commercial auto insurance.
On top of this, there are a number of options to consider, including insurance on the building you’re working in and liability insurance.
If you’re not sure where to get started, speak to a business lawyer. They can help you assess what you need legally, what you should consider to protect your business, and what you can skip out on right now.
Assess Your Finances & Secure Funding
Businesses cost money. There’s no getting around that.
Even just a basic business license typically costs between $100-300 to start depending on your state. On top of all the licenses and permits you’ll need to get started, you’ll also have to consider costs like finding a building to rent, hiring staff, and acquiring equipment and inventory.
Even businesses like online marketing agencies that operate remotely will still have some overhead, including invoicing software, campaign management tools, and marketing.
Assess your financial standing before you get started. You may be able to scrape by without securing additional funding, especially if you’re starting your business small in the beginning.
Research early on, looking at how much startup capital you’ll realistically need, and anticipate that you won’t even break even the first six months or so. Then you can start to look at different funding options. You can review some of your options here.
Think About Your Business Model & USP
What exactly is it that you want your business to be? How do you want to operate, and what do you want to make you different?
Let’s look at an example. Maybe I want to be a clothing retailer, but I know it’s an inflated industry. I decide to source beautiful, sustainable-made and ethically-created high-quality clothing and sell it online. But I want to shake things up, and I’ll offer a subscription service to push add-ons like scarves and bracelets which can push product pricing up.
Think about this carefully. This is a small section in a blog post for a large task, but think about what makes you different and how you want to operate. You won’t want to do anything else without tackling this first.
Get Your Inventory & Equipment Lined Up
Are you selling physical goods? Get your inventory lined up before you open your doors, even if that just means connecting with drop shippers.
Are you offering a service that requires equipment or software? This includes things like cleaning supplies or equipment or getting invoicing software ready so that you can process payments as soon as customers purchase.
Set Up Your Website & Contact Information to Launch
One of the last steps you may need to make is getting your website and client-facing parts of your business up and running.
Every business needs a website. You can look into affordable, easy-to-build platforms like Wix, and consider Shopify if you’re selling physical goods. You’ll also want to have a Google My Business profile so people can find you and see information about your business like your hours or phone number.
Also, consider the process your visitors will experience when they attempt to get in touch with you. Make your phone number easy to find and clickable. Have a plan for answering your phones quickly and as close to 24/7 as possible. Consider providing leads with multiple ways to contact you such as email, live chat, or a contact form as long as you have a way to answer them all.
Once your site is ready, give it a solid once-over and have a few friends test their experience as well. And when you’re ready, have it go live. Start marketing, and get ready for the ride of your life.
There’s a lot of incredible things that business ownership can offer you, including unlimited earning potential, the flexibility of doing things your way, and the option to create something great that impacts others. These are some really powerful reasons to take the plunge and start your own business. With a little (or a lot) of paperwork and planning upfront, you’ll be well on your way.