“The person who knows how will always have a job. But the person who knows why will be his boss.” – Carl C. Wood
Have an amazing product or service that you want to bring to the world? For the entrepreneur at heart, there comes a time and place in which ideas can’t stay stuck within the imagination.
Great minds such as Steve Jobs, Richard Branson, Oprah and Martha Stewart decided with fervor that their lives (or the world for that matter) wouldn’t be complete without giving birth to their brainchildren. These revolutionaries risked everything (especially their security) to bring their ideas to life.
If you are reading this post, I’m guessing that you too are considering taking the first steps to building your very own empire. I hope the following steps will help you get movin’ and groovin’ toward your goals.
How to Start a Business
1. Develop & Write a Business Plan
The first and most logical step is to develop a concise business plan. Define your brand, identify your target market, analyze the marketplace, introduce your prospective team of leaders, outline your projects and services, project company revenues, and set your idea apart from others.
For detailed information on the process of writing a business plan, the U.S. Small Business Administration (SBA) offers a comprehensive rundown.
2. Get a Mentor — or two, or three, or more.
Search for one or more mentors to guide you through the process. Don’t reinvent the wheel! Use the experience of others to guide you. Go through your Rolodex and make a list of people who will help you avoid pitfalls and lead you in the best possible direction.
Genius mentors can include those who own small businesses, tax specialists, business lawyers and patent attorneys, retail buyers, finance gurus and HR managers (to name a few). Keep your eyes and ears open at all times. Knowledge is power!
3. Select a Business Location
What type of property and/or office environment will you need to get started? A growing number of small business owners are beginning with virtual offices to save cash, or even sharing office spaces with other, already established firms.
You can also sport a traditional office or retail space. This should only be done if you can secure the funding. Be very careful about getting into long-term loans. Negotiate the best terms possible.
4. Secure Funding
Once you have figured out how much cash you’ll need to get rolling and have a clear plan, you can reach out for funding. Common sources include angel funders, venture capitalists, strategic investors, banks, the SBA 504 Loan Program, home equity loans, personal savings accounts and even credit cards.
It is an excellent idea to reach out to one of your mentors for advice on funding. The brighter your idea and more feasible your business plan, the higher likelihood that you can gain operating cash from outside sources.
5. Become Legal and Set Up Your DBA
Decide what your corporation is going to look like. Will it be a sole proprietorship, partnership, Limited Liability Company (LLC), corporation, S corporation, non-profit or cooperative? The SBA describes each of these in detail.
It is also essential that you register your business name or DBA (Doing Business As) name if needed.
Going down the sole proprietorship road? In this case, you don’t have to set up a DBA and can simply use your name and Social Security Number.
6. Get Your Tax ID
The next step is to get your Employer Identification Number (EIN) from the IRS. Click here to apply. The process is painless.
7. Secure the Appropriate Business Licenses and Permits
Depending on the type of business you are planning on running, you may need to apply for various licenses and permits. For example, if running a bar, there are specific permits that allow for you to sell liquor. Not all business types require them, but you should do your homework to make sure. Most city finance offices have a department for inquiries.
8. Study and Understand Employer Responsibilities
There are numerous laws and guidelines on how you must compensate and care for your employees (this is where a buddy with HR experience will come in handy). Pay careful attention to all rules and laws – local, state and federal.