15 Steps to Creating Small Business
The American dream involves big houses and big lawns, fast cars, a steady retirement, and to some, being able to call themselves a business owner. Owning a business is no small, or easy feat. In fact, the Small Business Association estimates that only 51% of small businesses last beyond five years, and succumb to bankruptcy and close down within that time frame. Why is this? Is it a competitive job market? Inability to budget? Not knowing one’s own business? The answer is all of the above, and more.
Why Own a Business
Owning a business gives you the potential to not just be your own boss, but hone in and perfect your craft, become a giant or at least successful and financial free business owner, and also pass on your business to the next generation in your family. With all the positives of owning a business, why do many people stress out when imagining taking the first steps to owning a business? It’s probably because knowing where to start is the hardest part. One can daydream about their own business, but without outlining the proper steps to creating a small business, this dream goes nowhere.
The Details Matter
Every aspect and all the steps to creating a small business matter, including the details. These details include the 15 steps below, but in every single one of these, it’s important to do thorough research for your job market, area, loan centers around you, and everything else creating a small business compromises. The reward, after all this research and questioning, is having a solid business strategy to opening up your small business, and with it a steady base to grow your empire.
If you’ve ever seen an episode of Hell’s Kitchen with Gordon Ramsay, heard or even witnessed those failed businesses that don’t make it past five years, they all might have one thing in common: a clueless business owner. Though having your own business is a dream for many, realistically speaking, to make a business work you must have some sort of real-life experience in working in your business. For example, if you’d like to open a restaurant, you should have at least some idea of basic accounting, food budgeting, food preparation, cooking, or serving guests. It’s not necessary to have an entire bachelor’s degree in business administration, as running your own business will teach you how the lessons needed to be learned during the steps to creating a small business. But, without education, it’s important to consider first and foremost what business you’re familiar with, love, and have experience in to make your chances of succeeding all the more better.
2. Market Research
After you’ve thought long and hard about where your experience can best be utilized for your small business, it’s time to do some heavy market research. Without conducting market research, you can be certain your business will fail because you lack the knowledge of what makes other businesses in your field successful. Market research is one of the steps in creating a small business that isn’t to be missed. Conducting surveys about what people like about your product, where they shop, how much they spend, and what they dislike is incredibly important. All this information gives you a better idea of where to start selling your product.
3. Business Strategy
Developing your business strategy is one of these steps in creating a small business that most people don’t take very seriously. On the contrary, a solid business strategy after thorough market research can help you get the specifics down on paper. How many products will you start off with? Where will you sell your products? Will your business need employees? What’s your timeline? If you want an even easier time answering these questions, a great place to start is hiring a business development consultant.
4. Getting a Loan
Loans and banks that give them are a dime a dozen now, and with loans sharks afoot it’s important to do extensive research on the bank that is giving you your business loan, as well as all strings attached. Loan programs vary with each bank, but ideally, you should look into getting a smaller bank to help you with your business loan. Small banks have more personal assistants that can take the time to answer your questions, consider your worries and any additional loans you may need, and really work to make your dream a reality. In addition, when it comes to business loans, having a good credit score might not be enough. Having a solid business strategy, as mentioned above, proving you can make a profit, and being confident in your ability as a business owner all matter to banks giving you your loan.
5. Set up Shop
Setting up your shop is important, as where you set up will have to be filed in all upcoming registration paperwork. If you choose to set-up your business online it’s important to understand the security of the website you are using, foot-traffic, the art of making an appealing website, and having an online platform. Or, perhaps you’d like to buy an office space for sale and have a traditional brick and mortar business. Whether you sell your goods and services online or in-person, decide using your new loan and business plan and strategy what works best for you.
6. Registering your Business
You must register your small business with the appropriate local and government entities. It’s important to check with your local county clerk’s office to get help on where to register and how. For example, you may register as a sole proprietor, LLC, partnership, or as a corporation. The latter needs an “article of incorporation” document, which includes your business name, purpose, corporate structure, stock details, and other information about your business. These are some of the larger steps to creating a small business, and are highly important and need to be done right.
7. Obtaining Tax Information
If you’re like many of the gig-workers in America that rely on self-employment income from apps such as Uber, Doordash, or other gigs, you might already be familiar with tax filing information. As a self-employed individual, you can file taxes by simply using a 1099 form and paying quarterly payments. However, as a business, you must register to obtain an EIN or employer identification number for tax purposes. This number helps if you want to hire someone later on. After obtaining your EIN, you must also file all proper forms for your small business on the state and local levels, and you can utilize the IRS website for more information. Taxes are crucial when beginning the steps to creating a small business, and without properly setting up tax information, you can cost your business thousands in IRS fees and back-taxes later on.
8. Proper Licensing
Besides registering your business and getting tax information settled, you must also utilize proper licensing for your business. This is especially true for things such as food and medicinal cannabis, for instance. But what about having a daycare? Running a clinic? Wine tasting and painting? Whatever your unique business idea is, you can rest assured there is a license that needs to be behind it. Talk to your local clerk’s office again to make sure you follow licensing steps to creating a small business.
9. Legal Help
Hiring the services of a small business administrative lawyer can help you not only during your registration and licensing, but also afterward. If you need an insurance policy taken out for your business, have questions about hiring on new employees, or any other small business advice, a lawyer is essential. Find the best one near you, do research, and write out a list of questions for your consultation.
10. Hiring the Pros
Besides hiring a good lawyer, you’ll need to decide whether to hire employees on for your business. Hiring the best employees doesn’t just involve a stellar interview- you must also be willing to pay for background checks, process I-9 and W-4 forms, ensure your employees have proper licensing if need be, and have been a good judge of character. A payroll service after hiring must then be set-up to avoid hiccups later on. Finally, consider also hiring IT specialists, graphic designers, web designers, and any other roles that you need when starting your business from the ground up.
One of the more fun steps to creating a small business is advertising. Putting your business out there, making a brand name, creating a logo and font to attract the audience, and being open for business is a thrilling experience. Keep in mind, however, that there is so much more to advertising than simple billboards and flyers. The aforementioned market research can help you decide not only what products to sell, but to who, and where these people view advertisements. Is it social media? Radio? Television? Whatever the case may be, advertising is one of the most essential steps to creating a small business, and without being dedicated or serious about it, your business will invite the sound of crickets.
12. Customer Service
Once you begin selling products, having great customer service will carry your business far. The lack of good customer service, whether you’re a loan radio repairman or have your own customer service team, can easily turn away old customers and stop new customers from visiting. Don’t let the stress of having a new business damage or blunt your reputation, and ensure you have a great point of sale systems to make transactions easier, great products, and most importantly, a great and friendly attitude towards your customers.
13. Set-up your Online Network
Utilizing an in-house network, cloud network, or a combination of the two is essential when running your business. Not only is your business security at risk if you lack a secure network, but your business tends to run a lot slower and be prone to mistakes without one. This is especially true if you run an online business, and need your customer’s information to be secure within your network. In addition to having help setting up a good network, consider unified communication to make it easier to talk amongst your employees within your business.
14. Growing your Business
One of the final steps to creating a small business is knowing how to grow your business. Believe it or not, this must always be your goal when developing your business. Without having a solid long-term plan, or even an exit strategy, you’ll be left not knowing what to do when the competition starts to get tough. Knowing how the competition for your service or product will challenge your business, how you will continue to grow your business either online or within your community, and a host of other growing ideas are all important to have every single day you run your business. Consider mapping out long-term strategies with your business partners, and talking amongst your customers and even your employees about where you see your business going.
15. Budget Profits
Congratulations! Once your business is profitable, one, if not the final, steps to creating a small business is funneling your profits into your business and creating a self-sustaining business model. Having a great accountant on-board, making lists and researching where your business needs help the most, and overall having the discipline to use your profits to funnel into your business makes a company that will last for many years.
Reap the Rewards
As we mentioned, owning a business is tough, but extremely rewarding once your business is self-sustaining and profitable. Whether you’re running your own real estate law firm, or simply selling pretzels in a pretzel cart, your business shouldn’t just be a job- it should be a part of your life. Treating it as such will increase your motivation, enthusiasm, and your rewards after all your hard work.