When it comes to starting a running a business, there are several essential steps you need to take to make a new business official. We are going to cover six of those today! I will demystify the steps to starting your business off on the right foot, avoid costly mistakes, and make sure you have the best possible chances of success. This isn’t the glamorous side of business, but it is extremely important in order to do business legally, ethically, and present a professional image to your ideal client.
Why Listen to My Business Tips?
Some of you may be wondering why I am qualified to give out business tips. Well, the answer is simple I have experience doing it! I’ve worked on business logistics for over a decade, and become very skilled in partnering and networking with other movers and shakers.
I attribute most of this success to my psychology and therapy background which I chose to implement in a business setting. I have served as an upper level executive and founded two start-ups. I lead of team of amazing people doing life changing work each and every day. Currently, I serve as the Executive Director of a successful social service agency, and I run this business blog you are reading! I aim to provide support and value to new business owners especially in the online space.
Everywhere online you see information about all these six and seven figure businesses trying to sell you products or services to meet an income goal or gain skills or abilities. What no one tells you is starting a new business among giants is no easy feat! What I have learned is that despite other bigger businesses out there is this…there is only one you and the key is highlighting how you are different and give your business a personal touch that just can’t be replicated by anyone else!
All these experiences have led to tremendous personal growth and I’ve learned how to do all the essentials in the correct order! I made a few mistakes along the way, and the reason I am sharing this information with readers is to give them a chance to bypass the learning curve and get down to business. Most of these tips apply to any type of start up, but I will share a few tips that are essential for those looking to start a business in the online space.
The Six Essential Business Tips We’ll Cover
- Validating your business idea and generating a business plan
- Ways to fund your business venture
- Determining your business structure and establishing it
- Tackling record keeping and accounting for tax purposes
- Need to know tips if you plan to hire employees
- How to handle your marketing and networking to build a brand that brings in revenue
Before we launch into the tips…
I thought it was appropriate to share a bit more of about my experience. I have found that overall new business owners dive in without being taught the basics of business, and what it takes to be successful. This leads to a lot of start-ups failing within the first three years.
Believe me…when I started my first business I fell flat on my face. I wasn’t able to grow the business, and had no idea what I was doing. I didn’t believe in myself or what I had to offer others. This lack of confidence and basic knowledge on marketing and positioning led to the failure of that business. It felt so yucky to fail and it deflated my confidence in my skills and abilities.
I wanted to make up for this failure so I doubled down and learned all the skills I lacked. It took a few years and many successful projects under my belt before I started to believe in myself again. By this time, I had spent several years doubting my ability start another successful business. I had to learn from my previous mistakes, but I was grappling with the fear of failure. I was afraid of putting it all on the line again only to end up with another embarrassing failure.
What changed my perspective seemed so insignificant at the time but made the biggest difference. I found several mentors and began to adopt their strategies. I listened when they preached about mindset and it led to a realization. I had the tools all along, but I had the wrong mindset. That seemed silly since I have advanced college degrees that revolve around psychology! I had to start practicing what I preached in order to overcome my fears and take another leap of faith.
Right now, I am more confident and happy than I have ever been, and that wouldn’t have been possible without my previous failures. The whole point of me sharing this experience with you is to let you know, I’ve totally been in your shoes. Even if you have zero reservations about your new business venture, it is still awesome when you get information you need that really makes a difference. I want to be that voice that I so desperately needed when I started my first business. Hopefully, these tips give you the jump start needed to get your business off the ground. Let’s dive in!
1. Validating an Idea and Creating a Business Plan
Before you start a new business, make sure people will be buying what you are selling!! That may seem obvious, but validating your idea does take some work and some serious research. Look at your top competitors, how can you fill in the gaps? What can you do differently that adds value or improves upon the product or service? These are all extremely important questions to answer before you launch. Identify WHO your ideal customer/client is and where you can find them.
After you have identified your client/customer, you NEED a business plan. This is often a seemingly arduous task, but it is an important one. This is especially true if you plan to seek funding for your idea or bring investors in on your project. No one will sign up to loan or invest in a business without a solid business plan. You can find a free business plan template here. Once you've completed your business plan, move on to secure the funds needed to start the business.
2. Funding Sources
Have you identified the capital you will need to get started? Do you know what your operating expenses will be? This will look very different if you are a brick and mortar business selling inventory versus an online company selling digital products or services. Is your idea attainable? Can you secure the funding you need? When looking at ways to fund your business, there are a myriad of options. You can self-fund of course which often works well for online businesses not holding inventory.
If you need a bit more than you can come up with in cash, seek or apply for financing at a bank. If you seek to get a business loan, your business plan must be SOLID and detailed. If this isn't an option for you perhaps taking out a personal loan might be. If you take out a personal loan, understand the risks to your credit and your personal liability should the business fail.
Maybe you are seeking an investor. If you go this route, the business plan will again be super important. You can find investors in many different places. They may be people you know, people you network with, or perhaps from a network of investors who fund business loans or provide seed money for start-ups.
In certain business realms it is possible to apply for grants to fund your new business if it fills a particular need. In some cases, individuals who don't have access to traditional funding sources will look to their 401K or selling items of value to raise the funds. This should be a last resort!! If you are seeking to develop a physical product, crowdfunding may also be a great option. This basically involves pre-selling your product idea to gain the funds to manufacture the product and get it to the marketplace.
3. Determine a Business Structure and Establish it
Many new entrepreneurs just start their businesses by accident and the thought of organizing the business structure comes later. However, there are so many benefits to approaching this process right from the start. It offers both personal protection and establishes your business as an entity outside yourself.
Small solo entrepreneurs do have an option to remain what is termed a sole proprietorship. This means that your business and its reputation are directly tied to you personally and you file your business income on your personal taxes. This can be a little risky if the business takes on debt, so do you. If the business fails, you are personally liable. If the business gets sued, you are personally responsible for the outcome. That is why many businesses choose to formalize their business structure and make it an entity on its own.
Common options that formalize your business as an entity include a Limited Liability Company (LLC) or a Corporation. If you decide to form a single member LLC, you can treat it as a pass through entity and file the income through your personal tax return while still having separation between you and the business. Businesses with multi-member LLCs file a separate return for the LLC. An LLC offers more flexibility in operations than a corporation.
Corporations establish an entity that is separate and distinct from the owners and run by a board of directors. Owners generally are referred to as shareholders and own a percentage of the business. Corporations are better for larger businesses. They require more record keeping responsibilities than an LLC.
Special tip: If you do a Google search for starting an LLC or a Corporation you will find a lot of paid ads and websites offering to prepare the paperwork for you for an additional fee. I want to share a secret with you...this can be done for free! Don't pay extra unless you truly don't want to spend 30 minutes filing out the forms yourself. You can do this by visiting your state's website and filing orders of incorporation or articles or organization for LLCs.
There is a fee assigned by each state to file these documents, so why add to the cost unnecessarily? Typically, the forms are self-explanatory and have detailed instructions. You need to go into the process understanding what you are naming your business and making sure that "DBA" or "doing business as" is available for use. Usually it takes about a week for the paperwork to be processed and for your business entity to be established! Don't forget that business structures have annual reporting requirements!
4. Tackling Record Keeping and Taxes
First off, go to the IRS website and get yourself a Federal Employer Identification Number often referred to as a FEIN or EIN. This number is used to identify your business for tax purposes, and you will use it for tax filing. Again, you do not need to pay a service for this and in this case, obtaining an EIN is completely free!
After you sort out your EIN, make sure you are separating business and personal expenses. You can easily obtain a separate bank account for your business expenditures. The cleaner your record keeping, the better off you will be when tax season rolls around. If you keep track of all your expenses and receipts as you go, it will be much less work when tax season arrives.
I recommend using an app or program to easily upload and record your expenses. I use Wave Accounting which is entirely free and very convenient to use. If you have a single member LLC you might very well be able to handle your own tax returns, but if you have a complicated tax situation or you are not familiar with filing taxes, make sure to seek the help of a tax professional. Always make sure you have documentation to support your tax filings and avoid any negative consequences in the event of a tax audit.
5. Tips for Being an Employer
If you plan on having employees or others performing work for your company let's dive into some tips about being an employer. There are two types of ways you can obtain talent that works for your business.
You can choose to hire independent contractors. These individuals are not considered "employees" and receive a 1099 from your business for any payments for work performed. If you hire an independent contractor, be aware that there are specific rules that must be followed. The contractor must have control over how they perform their work and there needs to be separation between the company and the contractor. The contractor is responsible for their own taxes on the income they make while performing work for you. Often contracts are involved between the two parties to formalize the agreement and terms.
If you choose to hire your own employees as an employer, make sure you are educated on your responsibilities to pay employment taxes. You also have responsibilities to have an employee handbook or policies in place for employment. You need to make sure you use ethical hiring standards, obey laws in your state that relate to employers.
Human resources is often needed to ensure you have the appropriate paperwork, handle employment issues effectively and lawfully. If you are considering hiring employees, it is highly recommended that you attend some conferences, seminars, and work with an employment law attorney to get your structures and systems for effectively handling employees in place prior to your first hire.
If you need help right away and don't have time for all the set-up, you can consider looking for help from a temp agency who employs individuals that get placed with businesses who need a labor force and perform the job duties needed. Alternatively, you can hire a Professional Employment Organization or PEO which basically consists of passing on the legalities of being an employer to another entity who “employs” the people you hire, handles the paperwork, payroll, benefits,etc. This is a costly option, but it can be a good short-term solution for rapidly growing employers.
6. How to Handle your Marketing and Networking
Now that you have a new business, others need to know you exist. This involves marketing and networking. How you accomplish this may vary depending on the type of business you have started and whether it is a physical location, online storefront, or a completely digital business.
One thing that is pretty important regardless of business type is having an online presence. Most consumers these days look for a legitimate website or online presence before they trust a business. If you have not yet to started a website you can get started quickly with Bluehost.
You should also have social media accounts on platforms where your ideal customer/client hangs out. If you want to automate social media look at services such as Buffer, Tailwind, Hootsuite, or CoSchedule. Seek out communities of like-minded individuals via Facebook groups, masterminds, or local meet-ups. Keeping connected and networking with others will keep you on top of your game, keep ideas fresh, and learn from others in business. Don't be afraid to collaborate with other business owners, and enter into joint projects or ventures. This will help you access a new audience or customer base as well as the opportunity to learn from the experiences you gain in the process.
My hope is that all of these business tips were helpful and that I have provided some actionable advice. If you found any of these tips helpful, and you have read this post to the end drop a comment. We love to hear from our readers. Also take a moment to download a free Business Management Checklist that provides a list of key items and considerations when starting your new business.
Disclaimer: None of the information in this post constitutes legal advice. This post may contain affiliate links for products/services I love and use.
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