Patrick McKenna, a co-founder and partner at Comeback Capital, has some great tips for success when you are just starting out in your career or starting your own business.
People consider starting their own business for a variety of reasons. Setting up your own business allows you to work for yourself rather than someone else, gives you some flexibility with your work schedule or allows you to express your creativity in the product or service you offer. Though starting your own business requires dedication and commitment, the rewards may be well worth the effort. In this article, we discuss how to get your business started.
What do you need to start your own business?
To start a business, you need an idea, a business plan, money to fund the initial costs and a willingness to work hard to make your business a success. A small business may be eligible for certain types of bank and government loans to help you get started. Some businesses work well with a home-based office and others require retail or office space along with other employees. As you plan and carry out your business idea, you will need to be organized, motivated and prepared for unexpected costs and circumstances along the way.
What do you need to start your own business?
To start a business, you need an idea, a business plan, money to fund the initial costs and a willingness to work hard to make your business a success. A small business may be eligible for certain types of bank and government loans to help you get started. Some businesses work well with a home-based office and others require retail or office space along with other employees. As you plan and carry out your business idea, you will need to be organized, motivated and prepared for unexpected costs and circumstances along the way.
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How to start your own business
From the forming of the idea to the first day you open, starting a business requires some thoughtful planning. Here are some ideas on how to get your business started:
- Conduct research
- Consider the pros and cons
- Decide on a business type
- Choose a name
- Write a business plan
- Set up a bank account
- Determine your start-up capital
- File the necessary paperwork
- Establish bookkeeping practices
1. Conduct research
Once you have an idea for a new business, it is worthwhile to answer some fundamental questions about the business potential. Find out what kind of competitors you have in the field, who might be your client or customer, if the service or product you want to provide has the potential for longevity and what future growth might look like for your business idea. This kind of research will help you determine if your idea could use some modification or narrowing of its focus to help you stand out from a competitor.
2. Consider the pros and cons
After analyzing the market for your idea, ask yourself what kind of time and emotional energy you want to invest in the company, and consider the strength of your entrepreneurial drive. If, for example, you would like to become a wedding photographer, the most significant contribution to the business will come from you and your talents. Though you may hire support staff for billing or scheduling, the face of the company will be you and your photo work. It can help bolster your enthusiasm moving forward to be realistic about what a new company will demand of you personally.
Most owners who grow successful businesses are self-motivated and willing to make some personal sacrifices. Setting short- and long-term goals can help focus your energy and help you see recognizable achievements.
3. Decide on a business type
There are many types of businesses you can start. An online store where you ship products from online orders will require different kinds of overhead, inventory and space than a retail shop where customers visit during regular business hours. Your business idea may be primarily conducted from a home office or require a leased office space where clients visit and other employees work with you. Your market research can help you determine the best way to run the type of business you want to start.
4. Choose a name
Branding your company indicates the start of something official. Your name might be a single word or an image that reflects your personality, or you can describe the services you provide clearly in the name. It may be helpful to check for web addresses that are available to help you narrow down from a list of possibilities. Experts suggest that your name should be easy to pronounce, spell and remember.
5. Write a business plan
The level of detail that your business plan should contain usually depends on where you are getting your start-up funding. An investment firm or a small business loan provider will likely want to see a more comprehensive plan. A typical business plan will start by answering the questions you have asked during all your research about the market, the potential customers or clients and the solution your business offers. Even if no one else reads it, this can be a valuable document for your own goals and aspirations.
A more comprehensive plan may include each of these ideas separated into their own detailed sections and may also include a marketing strategy, a vision for what the employee and management structure will look like and the projected financial capital needed for operating expenses and future growth. Supporting documents like graphs and spreadsheets can help you make your case for investment.
6. Set up a bank account
From the very beginning, it is important to keep your business and personal finances separate so you do not have to go back and sort it out for accounting purposes later. A business account allows you to pay your landlord, vendors, suppliers, consultants and employees in an easily-trackable way. Whatever source of funding your business takes on should be deposited into the company account from the start.
7. Determine your start-up capital
Once you have an account for the start-up funding, figure out how much it will cost to offer your first service or welcome your first customer. Different businesses will require varying amounts of start-up income. A home-based business like website design might require just enough capital for a computer, an internet connection and software. A retail location selling baby goods could require an initial lease payment, the purchase of enough inventory to initially fill up the store, set-up of utilities and advertising, along with payroll if you intend to hire employees.
It is important to be thorough and realistic about all these costs to determine if your start-up vision is possible or if you might consider initially scaling back some of your plans while looking forward to future growth. You might start building up a client base while you still receive income from another job, for example. Whether your funding sources are from a personal investment, a bank or government loan or an investment firm, the figures you come up with should accurately reflect your business’ potential.
8. File the necessary paperwork
Each municipality will have different requirements for starting a business. To start, you may file for an employer identification number from the federal government for accounting and identification purposes. Then you should investigate whether you need to apply for a business license, any kind of special permits for the work you plan to do or certifications such as food safety and handling for catering or restaurant work. Being proactive in your compliance with laws and regulations can help improve your standing with governing bodies and members of the community.
9. Establish bookkeeping practices
Start vigilant recordkeeping from the first check you write and the first payment you receive. Decide if you want to be your own bookkeeper by using spreadsheets or accounting software or if you intend to hire an accountant to help you. Being financially organized and accurate from the beginning could save you from complications and even expensive fees and penalties in the future.
