Starting a small business is simple, right? You have a great idea or a special skill you think can earn you cash. Then, you just start making your product or selling your services. What could be easier?
Well, unfortunately, it doesn't quite work like that. Just because you make the tastiest brownies at the potluck doesn't mean you're ready to open an industrial-grade bakery. There are a few steps to consider in between.
But don't get discouraged. You can still turn your best skill or your favorite hobby into a thriving business. You just need to prepare properly and understand the necessary administrative steps.
Don't get discouraged. You can still turn your best skill or your favorite hobby into a thriving business.
Preparing to Become an Entrepreneur
Remember: creating a small business means you have to master a few skills at once. Want to open a dynamite barbeque restaurant? Of course, it helps to have a killer sauce recipe and a knack for cooking perfect ribs. But that's just the start.
You also need to tackle the organizational aspects of the venture. You have to handle money, deal with regulations, become an effective manager, and learn a collection of other secondary skills in order to make your dream a success. This requires patience, research, and planning.
Here are a few best practices to keep in mind as you look to setup your small business:
Think Like a Businessperson
You've decided to open your BBQ food truck. Fine, but don't think about it from the point of view of a chef. You're running a business. Consider the venture from the perspective of a businessperson.
Learn as Much as Possible
Before you launch your business, learn as much as you can. You want to have a detailed plan in place before you make any major commitment. Research your prospective market, your likely competitors, and the general skills you’ll need as an entrepreneur.
Protect Your Resources
In the beginning, all you risk is your time. Get as much information as you can during that phase. You don't want to rush into any costly mistakes.
Getting Ready to Start Your Small Business
Once you've outlined the broad strokes of your new business, you're ready to get down to the nitty gritty. Time to turn your dream into a reality. Here are a few steps to follow:
1. Make a Business Plan: Detail what your business will look like. What will you sell? How will you make your products? How will you market it? What's your growth plan?
2. Understand Legal Structures: As a business owner, you'll have to deal with government bodies. There are taxes and regulations to worry about. That means creating a formal structure for your company. (Don't worry: we'll get more into this in a bit.)
3. Think About Financing: Your startup will need equipment and supplies. How will you pay for this? Make an initial budget and figure out how you'll raise the necessary cash.
4. Submit Necessary Documentation: Time to file all that necessary paperwork. This will create the legal framework for your company.
5. Open a Small Business Bank Account: You're almost ready to get started. Now you just need the basic financial structure to receive payment and to manage your expenses. That starts with a business bank account.
Launching Your Business
We're going to go into some additional depth on those last two points: filing the paperwork and opening a bank account. In many ways, these are the real "rubber hitting the road" steps of founding your startup.
Filing the Paperwork
Submitting the paperwork to create a legal structure formally organizes your business. You've got a few choices here. You have to pick among different legal designations, like an LLC or a corporation.
Once you have these basics, it's time to fill out the actual paperwork. Along with the documents to formally create your business, there are some additional items to consider. You’ll want to create a tax ID (unless you are going to operate as a sole proprietorship). You also need to apply for any licenses or permits you might need.
Open a Business Bank Account
Once you've created your small business as a legal entity, you are ready for the last step. You need to prepare for the basic tasks of any businesses: receiving and spending money.
Your company will operate in a cycle of revenue and expenses. Money coming in and money going out. A bank account acts as the hub of that cycle. Having a business bank account simplifies accounting, provides a professional presentation for your company, and allows you to separate your business funds from your personal finances.
Having a business bank account simplifies accounting, provides a professional presentation for your company, and allows you to separate your business funds from your personal finances.
It’s also crucial to pick the right bank. Every bank offers slightly different products. Find the one that gives you the most value.
Consider options like a digital bank account. These high-tech versions of the traditional bank account can speed the process of launching your business. They provide a simple and easy way to create your bank account, allowing you to jumpstart your operations.
Running Your Small Business
Setting up your small business or startup is the first step to achieving your dreams. Sure, you’ll have to suffer through some bureaucratic chores. No one likes filling out forms or googling legal classifications.
But it’s all worth it when you have your dream business going. From the initial research to opening your small business account, you’re getting ready for a grand adventure. Now you can do what you want to do with your life and be your own boss.