If you’re considering starting a business, there’s likely one major question running through your head: Where do I start?
You’re not alone. When your to-do list is seemingly endless, it can be hard to prioritize tasks. When you begin to feel this way, it’s important to take a step back and narrow your focus to your most critical deliverables.
Here are a few worthy of your consideration.
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Understand your Target Customers
No matter how great your products or services are, you are unlikely to experience much success as a business owner if you don’t understand your customer base.
Understanding who your customers are and their needs can be accomplished through a series of tests. To start, you need to figure out how they acquire information about new businesses and the products and services they offer. Try using several marketing channels initially, including social media advertising, paid search, and even strategically placed fliers in your community, to find which resonates. Test out different messages, as well, to see if they affect sales.
You also need to determine what payment methods they prefer. You should consider factors such as whether customers prefer to pay with cash vs. card or online vs. in-person. Once you’ve accounted for their different preferences, research POS systems for small businesses to find the right-fit solution for your business.
Account for Startup Costs in your Initial Budget
If left unaccounted for, the startup costs for a small business owner can cause a bit of sticker shock.
Studies have found the average total cost of starting a business is about $30,000. Some of the costs associated with starting a new business include:
- Office Space
- Equipment and Supplies
- Marketing and Advertising
- Utilities
- Inventory
One area worth examining more closely is technology spending, which can include setting up wifi systems and providing ongoing support. Rather than hiring contractors to perform individual tasks, it’s wise to seek an IT solutions provider. When choosing your IT Solution provider, consider what services your business needs. This could cloud computing services and disaster recovery to protect your company from cyber threats such as ransomware through ongoing cybersecurity support.
Choose the Legal Structure of Your Business
The structure of your business dictates how much you pay in taxes annually, how you can finance your business, and whether you are personally liable for your business’s debts and obligations.
The three most common business structures in the United States are:
- Sole Proprietorships: You are in complete control of your business. No separate legal entity is created for the business, so you are personally responsible for paying back all business debts—even if it goes out of business.
- Limited Partnerships and Limited Liability Partnerships: Partnerships are an arrangement in which two more people own a business. In a limited partnership, one partner is personally liable for the business, while others are not. The partner with unlimited liability must also pay self-employment taxes. In a limited liability partnership, every partner has limited liability.
- Limited Liability Corporation (LLC): With an LLC, your personal assets will not be taken if your business fails. You can also pass profits and losses into your personal income. You do, however, still need to pay self-employment taxes.
Sole proprietorships and partnerships are a good fit if you are testing out a business idea or are not planning to take on much debt. LLCs are otherwise the correct choice due to the tax advantages and protection of your personal assets. Make Sure you have all Applicable Business Licenses.
No small business can afford to get penalized for lacking the required permits. Make sure you have all of yours in order before setting up shop.
Licensing requirements exist at the local, state, and federal levels. They also vary depending on the type of business you operate. For example, if your business manufactures or sells alcohol, you will likely need permits from the Alcohol and Tobacco Trade and Tax Bureau and any local and state-level liquor control agencies.
The good news is that many state government websites offer permit wizards that allow you to see the various licensing requirements for your business. You can typically find on the webpage your state’s government dedicates to small businesses. Here’s an example from California’s Small Business Advocate website.
Seek out Mentorship
While there is a seemingly endless amount of advice out there about how to run a small business, there is no substitute for insight from those with experience operating their own.
Conduct research into small business owner groups within your community. Chambers of commerce are often a great place to start. By attending chambers of commerce functions, you can network with other entrepreneurs in your community and begin to gather best practices from them. They can also help you identify industry-specific and affinity-based business organizations, including those for women-owned and minority-owned businesses.
Get Started Today
While the uncertainty of starting a new business can be intimidating, there’s a lesson worth remembering: You don’t need to be perfect. Don’t be afraid to make mistakes and learn from them. Consider every day a new opportunity to experiment and improve at your craft.
