Steps to Starting Your Own Business
So, you're thinking about starting your own business? But you feel extremely overwhelmed and do not know where to start?
Do not worry – every business owner has gone through the same experience as you, me included. While it can seem overwhelming at first, if you break the process down step-by-step, it's not as daunting as it sees.
These are some of the basic steps you need to follow when starting your own business:
1. Talk to your accountant about the right business entity for you.
There are quite a few business entities to choose from which can just add to your confusion:
C Corporation S Corporation Limited Liability Company (LLC) Limited Liability Partnership (LLP) Limited Partnership (LP) Sole Proprietorship General Partnership
So which one are you expected to choose for your business? Your accountant will be able to tell you which business entity will best suit your tax needs.
This is a very important step, so do not skip it because you do not want to pay for your accountant's time – the IRS will end up coming back to haunt you in the future!
2. Consult an attorney about your business entity as well.
The entity your accountant chooses for your business may be best for your tax needs, but will it also protect you from any future legal liabilities? Will your family's home and assets be protected from any future laws?
It's very important to discuss this matter with an attorney to make sure you and your assets will be protected from any future legal claims filed against your company. So many people make the mistake of not consulting an attorney because they just do not want to spend the money on one. Then – WHAM! – the business gets sued and they stand to lose everything they worked so hard for. By this time, it's usually way too late for an attorney to help out.
The $ 200 or so you'll pay for your attorney's time will potentially save you thousands of your hard-earned dollars in the future that you'll need to defend a lawsuit. This will prove to be money well invested for you.
3. Choosing a business name.
While this step may elicit a "duh!" comment from some readers, it can actually be more difficult than you might think.
You need to think carefully about the name you choose for your business since you'll be stuck with it for awhile. Try to think of a name that will describe what your business is / does, and one that will stick in people's minds. I recently heard about the non-profit "Cancer Schmancer Movement" (cancerschmancer.org) on the radio, and I can not get that name out of my head ever since!
Try not to pick a name that will be too controversial (offensive, risque, etc.) as it may cost you potential customers and may create legal problems for you in the future.
4. Check your state's records to make sure your business name is not already taken.
There's nothing worse than coming up with a brilliant company name, getting business cards, etc., just to find out that the name is already in use by another company! So how do you avoid this situation? Well, thanks to this wonderful little invention called "The Internet", it's super easy.
Just enter the name of your state and the word "business" into a search engine and you should see links to your state's Secretary of State Department (or similar entity) web site. Typically, you can do an online search on your state's web site to see if the name is available. If it is available, fill out the necessary application to register your company's name. There is usually a fee associated with a business filing.
If you do not feel comfortable doing this step yourself, an attorney can do it for you.
5. Apply for a Federal Employer Identification Number (FEIN):
Once your business is registered with your state, you will need to apply for a Federal Employer Identification Number. What is that, you ask? It's basically like a social security number for your company. This identification number is how the IRS will track taxes for your business, along with any employee issues associated with your business.
You can apply for it at www.irs.gov . There is no fee for this application.
6. Apply for a Sales Tax Exemption Certificate (if applicable):
If you will be collecting state sales tax, you will (more than likely) have to obtain one of these certificates. It will be your responsibility to collect sales tax from your customers and submit those taxes to your state's Department of Revenue.
You can visit www.aicpa.org to find a link to your state's Department of Revenue. There may be a nominal application fee involved.
7. Get your business licensed and insured (if applicable):
Depending on what type of business you are starting, you may need to have the business licensed and insured. Examples would be a landscape maintenance company, plumbing company, electrician, etc.
Check with your state's business department for the necessary requirements and procedures.
8. Have a logo designed.
This is a very important "cog in the wheel" of your company. A logo can make or break your business. A logo should make a memorable impression in a customer's mind and should reflect the feel of your business (serious, fun, creative, etc.). Your logo will be an integral part of the whole marketing process. Your goal should be for people to know your company just by looking at your logo.
Unless you have experience designing logos or in graphic design, do not attempt to design one yourself – hire a professional. You may end up spending up to $ 500, but it will be money well spent.
However, if you do not have the money to hire a pro, there are some great web sites where you can design your logo online using their available artwork and fonts. A really great site is www.logomaker.com . It has a lot of designs available, it's very easy to use, and it's inexpensive. The only downfall is that your logo will not be unique since many people have access to the same designs. However, if you do not plan on taking your business to the national level, this should not be of much concern to you.
In the future, you may want to think about getting your logo trademarked so no one else will be able to use it. Check with your state's business department to get information about trademarking ((TM)) your logo. If you plan on taking your business worldwide, you should register (®) your logo. An attorney can help you with this process.
9. Register a web site domain / design a web site:
Let's face it, nowdays it's a must to have a web site. It's a necessary extension of your business and is a very valuable marketing tool. The web site works for you even when you're off duty. You can fill it with "before" and "after" photos, pricing for your services, showcase your product line, the list of possibilities is almost infinite.
So, how do you get started? The days of hiring a professional are gone. There are many web sites that offer web design templates (usually for a monthly fee or one-time purchase fee) where you can design your own in minutes. You do not need to have any web design experience. Just type in "web templates" into a search engine and see how many entries come up!
A really good site that offers many services related to running a web site is www.GoDaddy.com . You can do a free search to see if your web domain, the address you will be using for your company (Example: http://www.mycompany.com ), is available. If it's not, GoDaddy will suggest some alternate names for you. And, it does not cost much to register your domain name.
You can also build a web site through GoDaddy, and they have a lot of payment options, which is great. And, they can also host your site for you as well. What does "hosting" mean? Well, think of GoDaddy like a landlord of an office building. You pay GoDaddy rent to maintain your "office space" on the Internet.
A common misconception about web sites is "launch it and they will come." This is not true. Search Engine Optimization (SEO) needs to be done in order to direct traffic to your site. SEO requires tagging certain search words to your web site so your site can be found when someone does a search on the Internet. This is quite a time-consuming process and is best left to a professional.
10. Get some business cards made.
This is another very important step. DO NOT, I repeat, DO NOT go to your local office supply store and buy those cheap business cards that you can print from your computer. They look very unprofessional and potential customers / clients will have a difficult time taking you and your business seriously. First impressions are extremely important in the business world.
There are some great web sites out there that provide printing services. One site I like and use often is www.vistaprint.com . The quality is fabulous and you can design everything yourself. However, if you're not the creative type, the staff at VistaPrint.com can design your materials for you for a small fee. Their customer service is nothing short of fabulous.
11. Get a dedicated phone number / fax number.
If you plan on working from home, please do not skip this step (especially if you have kids). There's nothing worse than having a customer call you just to have Little Johnny answer the phone with a "who the hell is this?"
As I previously mentioned, first impressions are extremely important in business. Spend the extra money and get a separate phone line / fax number that is located in your home office. This way, you'll appear professional and you can also close the door to get some privacy and concentrate on what's important – your customer!
And do not try to slide by this step by using your cell phone. You do not want to experience a drop in reception while talking business to your customer. There's nothing more frustrating than hearing someone's voice "cutting out" on the other end!
12. Start the buzz about your company.
There are really two traditional methods of marketing: advertising and public relations. People often get these two confused, so I'll make it simple. You pay for advertising, and public relations is free (for the most part). And, in this day and age, these methods also trickle over into the Internet and mobile phone worlds making it even more confusing.
With advertising, you are paying a company to place your ad in its publication for a certain period of time. Just be very careful of placing ads in the backs of fashion magazines. You likely will not get your return on investment (ROI), and you will pay upwards of $ 10,000 (or more) for a very small ad space. I knew a business woman that spent $ 3,500 for her ad (for one month) and did not even get so much as one phone call. You really need to know which magazine or publication is going to give you the best ROI.
However, a typical consumer knows that ads are paid for, so they tend to pay little attention to them. Just think: Do you read every ad that pops up on the Internet, or in your favorite magazine, or do you skip right over them? Exactly. Just keep this in mind before you plan on spending a lot of your startup capital on advertising.
The public relations (PR) route is typically better "bang for your buck", so to speak. While getting your actual press release into a publication is free, you may have to hire someone to write the "copy" (the actual press release) for you and submit the release to various editors. It is a very time-consuming process, but you can do it yourself. Just be warned that magazine editors change frequently, so you will need to keep your contacts up to date. There are some great "do it yourself PR" books out there, so make sure to check them out first.
The big benefit to PR is that your product / service will show up in the "real" portions of publications (not in the back where the ads are), so the reader tends to take them seriously. The reader will be more apt to use your product or service since the editor or writer has given her "stamp of approval." Getting your product / service into a well-known national magazine can really catapult your business and your profits.
I hope that I've been able to help you out a little (or a lot). Just remember to have fun with your new business. You will experience many ups and downs, but that's all part of the experience. In the end, I believe you will find it all to be very rewarding. Best of luck to you!
NOTE: Every state has its own procedures and regulations, so make sure to check those out before proceeding any of these steps.