You may have a brilliant idea for a new business but don’t know where to start when it comes to getting your idea off the ground. When starting a new business, it is all about the hustle. Starting your own business takes a lot of work, and there are so many steps that you may be wondering where to start.
According to FreshBooks, 15 million Americans are full-time, self-employed – they are entrepreneurs! While starting a business can seem scary and daunting — millions of people have done it successfully. It just takes effort to get started – which is what our goal is here – to help you get ready for launch!
Below are the first three essential steps to starting a successful business:
- Research Your Business Category and Explain it
CBInsights states that the number one reason why businesses fail is there’s no market need. For someone who is just starting, complete extensive market research to determine if your product or service is needed in the community or online market. You should ask yourself who will benefit from my business and how it meets their needs as a first step.
Once you have all the market research completed, you need to explain it in the form of a business plan. Having a finalized business plan will help you in the future when you are applying for business loans or when you are setting up your advertising or marketing targets.
2. Assess Your Finances and Tax Plan
According to the Federal Reserve Banks, 59 percent of entrepreneurs apply for a loan to expand their business. When you are starting your business, you need to assess your finances and how much money it will take to get your business up and running. Most companies are funded with the owner’s capital, and loans are in the owner’s name, so you need to determine how much debt or personal liability you are willing to take on.
When you build your business’s financial outlook, you should also determine what type of tax structure would be right for your business. You might have to seek outside help to weigh all the pros and cons of each type of business structure for your tax requirements. Are you going to be a Sole proprietor, a Partnership, or a Limited Liability Company?
During this time, you may want to perform a break-even analysis. A break-even analysis is how much money you would have to make in your business to break-even and start earning a profit. It is the minimum amount of sales or services that your business must complete to avoid losing money. Your break-even should be attainable, and you should have a realistic viewpoint of this because you conducted your market research.
3. Get Your Legal Requirements Organized
Your city, county, or state may require you to register your business. Most states require companies to register the business name. The company’s name may be your legal name, a ‘doing business as’ name, or another name you choose for your company. In some cases, the state may require you to file for necessary documents in person, but you could visit your local county clerk’s office for more information about your area.
The federal government may also require you to get an Employer Identification Number (EIN) from the IRS. An EIN is especially crucial if you have employees and filing business taxes. Keep in mind as you grow your business, you will have to set money aside for any taxes due.
There are many other steps to starting and running a successful business, but the above steps will get you started in the right direction. Subscribe to our newsletter to get more business tips!