Starting a business is exciting, exhausting, thrilling, stressful, and always, always an involved process.
According to the Small Business Association, more than 627,000 new businesses open their doors (metaphorical or otherwise) every year. Unfortunately, the same report found that around 595,000 businesses close each year, too, meaning that getting off to the right start can be crucial.
In this post, we’re going to walk you through the initial steps you need to follow when starting a business.
Get a Business License
Before you start doing anything, you’ll want to get a business license in order.
Most business licenses protect your personal assets, which means that if someone tries to sue your business, there can be a layer of protection so that it may be harder (or impossible) for them to go after your car, your home, or your personal bank account, though this isn’t ironclad.
There are different types of business licenses. The most common one for small businesses is an LLC (which stands for “limited liability company”) which is versatile and can scale well with your business.
Different types of business licenses host different pros and cons, and can even affect how you’re taxed. It’s best to speak to a qualified CPA with experience in small businesses so they can help you decide what would be best long-term. You can find a CPA through the database here.
Obtain any Industry and Local Licenses You May Need
In addition to a standard business license, you’re going to need to check and see if there are any other licenses that you may need. This includes checking state and federal guidelines to look for licensing that either your industry or location requires.
Restaurants, for example, need liquor licenses, and real estate agents need a license in order to practice in their field. You might also need a building permit, a zoning permit, and so much more. And in some states, these licensing requirements may vary wildly, so you want to double-check everything.
If you’re unsure of what you need, you can consult a business lawyer about what you need to do to get things up and running, and they can often help you start the process. You can also learn more here.
Keep in mind that it often costs to apply for these licenses, and many need to be renewed. Factor this into your budgeting upfront.
Check Insurance Requirements
We’re not done with the exhausting paperwork just yet.
You’ll want to look into insurance options for your business, too. Depending on your industry, there will be some types of insurance that you’re required to obtain.
If you meet the criteria for them, you are required to have worker’s compensation insurance, unemployment insurance, and disability insurance. Those who have company cars are also required to carry commercial auto insurance.
On top of this, there are a number of options to consider, including insurance on the building you’re working in and liability insurance.
If you’re not sure where to get started, speak to a business lawyer. They can help you assess what you need legally, what you should consider to protect your business, and what you can skip out on right now.
Assess Your Finances & Secure Funding
Businesses cost money. There’s no getting around that.
Even just a basic business license typically costs between $100-300 to start depending on your state. On top of all the licenses and permits you’ll need to get started, you’ll also have to consider costs like finding a building to rent, hiring staff, and acquiring equipment and inventory.
Even businesses like online marketing agencies that operate remotely will still have some overhead, including invoicing software, campaign management tools, and their own marketing they need to run. You’ve got a site, and a business phone number, and business cards, and the list goes on.
Assess your financial standing before you get started. You may be able to scrape by without securing additional funding, especially if you’re starting your business as a side get in the beginning. This may work for a freelance graphic designer, however, but not someone who wants to jumpstart a salon or a gym or a paper supply company.
Research early on, looking at how much startup capital you’ll realistically need, and anticipate that you won’t even break even the first six months or so. Then you can start to look at different funding options. You can review some of your options here.
Think About Your Business Model
What exactly is it that you want your business to be? How do you want to operate, and what do you want to make you different?
Let’s look at an example. Maybe I want to be a clothing retailer, but I know it’s an inflated industry. I decide to source beautiful, sustainable-made and ethically-created high-quality clothing and sell it online. But I want to shake things up, and I’ll offer a subscription service to push add-ons like scarves and bracelets which can push product pricing up.
Service businesses can think about niching down, for example, or deciding to prioritize one-off projects as opposed to retainers or vice versa. A copywriter might focus on B2B clients that they’ll acquire through cold calling, or they might decide to try to join up with agencies and take on their overflow.
Think about this carefully. This is a small section in a blog post for a big task, but think about what makes you different and how you want to operate. You won’t want to do anything else without tackling this first.
Get Your Inventory & Equipment Lined Up
Are you selling physical goods? Get your inventory lined up before you open your doors, even if that just means connecting with drop shippers.
And even if you’re not, look at the equipment and software you’ll need. This includes things like getting invoicing software ready so that you can process payments as soon as customers purchase, and a virtual phone system (which are more cost-effective and portable!) up and running so you can take calls straight away.
Have everything ready to go, and know how to use it.
Set Up Your Site & Contact Information to Launch
One of the last steps you may need to make is getting your site and client-facing parts of your business up and running.
Every business needs a website. You’ll also want to have a business phone number (trust us, don’t use yours for work/life balance and safety reasons) and a Google My Business profile.
You can look into affordable, easy-to-build platforms like Wix, and consider Shopify if you’re selling physical goods. Get an email associated with your site, and set up a virtual business phone number so that you convert your own personal phone into a business hotspot, too.
Once your site is ready, give it a solid once-over and have a few friends do the same. And when you’re ready, have it go live. Start marketing, and get ready for the ride of your life.
There’s a lot of incredible things that business ownership can offer you, including outstanding earning potential, fulfillment in doing things your way, and the option to create something great that impacts others. These are some really powerful reasons to take the plunge and start your own business. With a little (or a lot) of paperwork and planning upfront, you’ll be well on your way.