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Start your week with information and advice on starting your business! This column runs on Mondays every other week.
Want to know the secret to successfully starting a small business? The secret is—there is no magic formula. Starting a business is about thinking big, keeping it simple and thinking on the fly. Your startup will undoubtedly change your life: sleep becomes a luxury, and you can bid adieu to a five-day work week. But there are some things you can do to ease your path to business ownership.
1. Have a plan. There’s a lot of debate these days over whether a full-on business plan is even necessary. Even if you think creating one isn’t necessary, you will need more than some ideas jotted on the back-of-the-napkin. What’s your business model, how will you make money, and how long will it take to break even? These are some of the essentials you must think through when starting a small business. If you’re trying to get startup financing, whether debt or equity, a traditional business plan is a must; however, writing that plan is a lot easier than it used to be.
2. Do your market research. It’s easy to get so excited about your new business idea that you want to start yesterday, but first, do a reality check by conducting market research. Who will buy what you sell (grandparents, urban teens, corporate executives)? How will you market to them (direct mail, social media, cold calls)? How many competitors are out there already, and how will you differentiate your business from the pack? Online searches, industry associations, government data like Census information and online survey tools are just a few ways to get the market data you need when.
3. Estimate your costs of starting a small business. How much will it cost to get your business off the ground? Realistic numbers are essential for getting financing. Lenders and investors also want to see you have skin in the game, so create a startup fund by tapping your own assets, then hitting up friends or family who might help be willing to help finance you.
4. Make it legal. Yeah, it sounds boring, but the legal stuff matters. Choosing the right legal structure while starting a small business (corporation or LLC? Sole proprietorship or partnership?) affects everything from how much you’ll pay in taxes to what happens if someone sues your company. You’ll also want to trademark your business name and create contracts to protect your business.
5. Choose a location. If starting a small business from home is realistic for you, that’s a great way to save money. If not, look into co-working spaces, which are cheaper and more flexible than traditional office space–plus you’ll probably be surrounded by other high-energy startup entrepreneurs you can bounce ideas off of. If you’re in a specialized industry like high-tech or restaurants, investigate startup business incubators that provide not only space and equipment, but also expert assistance.
6. Hire help. A common pitfall for startup entrepreneurs is trying to do it all themselves. Keep your sanity (and minimize all-nighters) by putting a team in place. Since full-time or part-time employees come with a lot of red tape, including complex labor laws and benefits requirements, consider using a staffing or temp agency that handles the red tape for you, or outsourcing to independent contractors and freelancers.
7. Create a support team. The prospect of starting a small business is exhilarating, but it’s also exhausting and lonely at times. Develop a support system outside your friends, family and employees you can turn to for encouragement—whether it’s a group of fellow business owners, a mentor or an informal board of advisors.