Starting your own business is one of the simultaneously thrilling yet challenging projects you could possibly embark upon and if you are now in the position whereby you feel as if you are ready to make your business dreams a reality, then you have definitely come to the right place.
Preparation is obviously of optimum importance before you begin and so, with this in mind, here for your information is a detailed and comprehensive guide to starting your own business from scratch.
5 Tips For Starting Your Own Business
1. Concentrate On Your Initial Idea
The very first thing to do when having decided to commit your time, energy and not a small amount of start-up money to launching your own business is to concentrate on refining and finalizing your original concept and idea.
Part of expanding your initial idea is to engage in thorough and proper research into existing companies, some of which will potentially be a rival and official competitor to your own company and learn about what those businesses are doing right (and indeed wrong).
Additionally, your business, whether it is centered around the provision of products, services or both, should have a USP (unique selling proposition), so your company has a solid idea at its foundation.
2. Work on Your Business Plan
It may well be that you have been preparing and planning your business and working on your business plan for months, maybe even years, but it is absolutely essential to still consult with professionals, as well as your proverbial nearest and dearest, before you launch your new company.
One way to ensure that you have enough experience and crucially, industry knowledge, is to embark upon an educational program or degree and if you choose to study such a degree online, you will be able to fit and mold your studies around your current professional and personal roles and responsibilities.
If you already have an impressive resume and have significant undergraduate and even postgraduate educational qualifications, then a fantastic and incredibly beneficial route to take whilst you are streamlining your business idea and plan is to embark upon a reputable dba online program.
3. Review Your Finances
If you are in the fortunate position of having a substantial amount of money saved which is specifically geared towards launching and initially sustaining your new business, or else have already secured financial backing, then you still need to focus your efforts on reviewing your general financial situation.
Conversely, however, if you have what you consider to be an absolutely winning business proposal, then you need to seriously assess your finances and discuss your business proposal with your partner and/or children too.
The best way to accurately assess your financial situation ahead of your new business launch is to conduct an extensive break-even analysis. Essentially, a break-even analysis is an absolutely mandatory component of starting your own business which will help you to determine whether or not your company idea and service or product you intend to provide will be viable and ultimately profitable.
The break-even analysis formula is as follows:
Fixed Costs divided by (Average Price minus Variable Costs) equals the Break-Even Point
There is a myriad of reasons why you should absolutely conduct a break-even analysis, including the following:
- How to Price Your Service or Product?
- How to Best Analyze Your Information & Data?
- How to Determine the Overall Profitability?
4. Work Out the Legal Structure of Your New Business
The next incredibly important step in starting your new business, ahead of registering your company, is to define and determine the type of entity your new business is.
Not only will determining your business structure in terms of legality strengthen your understanding of your rights moving forward, but it will also affect your personal liabilities should something untoward happen, but will also determine business tax.
In the US, there are essentially four different types of businesses, all of which work under a different legal business structure, as follows:
1. LLC
An LLC (limited liability company), is one of the most popular legal structures especially for smaller businesses and is somewhat of a hybrid business structure.
2. Corporation
If you are intent on entirely separating your company’s liability from your personal liability, the best way is to form your business around one of the three main types of corporations, which include C corporations, S corporations and B corporations.
3. Partnership
A legal business partnership, as the name implies, essentially means that one or more people will be responsible for the company alongside yourself and results in shared personal liability.
4. Sole Proprietorship
If you are somewhat of a proverbial lone wolf and you want to own and run your new company entirely by yourself, this is called sole proprietorship. If you do decide to choose this particular legal business model, then you should be aware that should a financial issue occur, then your personal credit will be directly affected.
5. Register Your Business
Finally, once you have followed each of the previous steps discussed in-depth above, then it is time for you to officially register a business and part of this required you to own a variety of different business licenses, required for the legal operation of your company.
There are three key licenses required for you to launch a new business in the United States, which consist of the following:
- State, Local & Federal business permits and licenses which are obviously entirely dependent on the location of your company and in which state you reside.
- EIN, or Employer Identification Numbers, are another key licensing requirement which you may well be eligible for ahead of starting your company. However, if you have chosen a sole proprietorship in terms of legal business structure, then this will not apply.
- Income Tax is incredibly important and if you neglect to pay your taxes on your new business, you will certainly be targeted and forced to pay excessive amounts in fines and additional costs.