The Small Business Administration estimates that there are more than 28 million small businesses in the United States. With more businesses launching every year, it’s important to not just come up with a great idea, but also know how to execute that business idea.
If you want to start a small business, here are eight steps to get you ready for your first client.
Come Up with a Viable Idea
Every great business started with a great idea. If you want to launch a successful business, think about problems. The best business ideas are ones that solve some consumer problem.
For instance, when smartphones were created, consumers had a problem with their screens breaking every time they would drop the phone. Therefore, screen protectors became a viable business idea.
Coming up with a great business idea is more than just solving a problem. You also need to consider whether there is an actual market for your business. A study by CB Insights discovered that 42% of startups failed because they lacked a market fit.
After you come up with an idea, consider whether there is a large enough market of people that would be willing to pay for your solution. If the answer is yes, start looking at whether you could easily deliver your solution to that market and whether there are alternatives that diminish the value of your idea.
If your idea survives those tests, it has the potential to be a viable business.
Write a Business Plan
Entrepreneurs that fail to plan, Are planning to fail.
A business plan is a documented execution strategy that describes not only the intentions of your business but the formula by which it will grow. Writing a business plan may seem like a trivial process, but it’s one of the most important steps in starting a business. A recent study found that entrepreneurs that wrote a formal plan were 16% more likely to reach viability than a similar entrepreneur who didn’t create a plan.
A carefully-crafted business plan will help you attract important partners and can be an influential piece in acquiring funding.
When developing a business plan, it’s important to realize that it is not a stagnant document. The best business plans are ones that are revisited often and frequently updated to align with new business objectives and industry trends.
Plan Your Finances and Budget
Knowing how you intend to finance your small business and outlining emergency financing options are important considerations for new business owners. Most small businesses can get started with little capital — and many entrepreneurs prefer to bootstrap with their own financing in the early stages.
However, because cash flow is one of the main reasons small businesses fail, you may want to secure extra capital earlier than later, especially if your business starts growing rapidly.
Before you start looking at a business loan or contacting angel investors, you need a budget that outlines initial and recurring expenses. Map out the mandatory expenditures that are required to operate your business such as entity formation expenses, permits and licenses, insurance, inventory, lease expense, equipment, payroll, etc.
Also, create a budget for optional expenses that you anticipate needing such as marketing, advertising, sales promotions, trade shows, and other strategy-related expenses that don’t directly relate to business operations. While these expenses are important to your business, they can be lessened or eliminated if money becomes tight.
Creating a budget with your mandatory and expected expenses can provide a conservative number to use for your funding efforts.
With regards to actually raising capital for your business, there is no shortage of options for small businesses.
Some common ways for entrepreneurs to fund their small business include:
- Small business loans or grants
There is no right or wrong way to fund your business growth, and they are not mutually exclusive. The important note about funding is to make sure you know exactly how much money you need, and that you manage your finances appropriately once you start operating your business.
If you need help preparing a budget for your business venture or want more information about your financing options, contact the Tampa Accounting Firm, Rivero, Gordimer & Company.
Decide on the Structure
All businesses need a legal structure. The business entity you choose will impact owners’ liability, tax requirements, annual filing documents, and your ability to raise funds among other things.
There are several options for your business structure, but the most common for small businesses are:
- Limited Liability Company (LLC)
- Sole Proprietorship
- Corporation (C Corp or S Corp)
There are pros and cons to each entity — but, the important considerations relate to how you want earnings taxed and how much personal liability you want to accept on behalf of your business.
Deciding on the right business structure should not be done hastily. If you need help deciding on a business structure for your small business, contact a local CPA for advice.
Find and Set Up a Location
Your business location will depend on the type of business you intend to launch. If it’s a retail store, are you renting a unit inside a larger facility or do you want an independent store? If it’s an online business, do you need an office or can your team work remotely in home offices?
These are all important questions to consider as you decide on the perfect location for your business.
If your small business relies on in-store purchases, then you should look for a physical location that has a lot of relevant foot traffic, with plenty of parking, and without a lot of competition. You may not be able to find a location that checks off all the boxes, but you should keep those attributes in mind while looking.
When you find a location, you’ll then need to purchase all the equipment, supplies, furniture, and inventory needed to launch your business.
Create Your Brand
By now, you’ve validated your business idea, created an execution plan, decided on funding, and picked your location and structure. You’re almost ready for your first client — but, nobody even knows who you are or what you do.
That’s where branding comes into play. New businesses live or die by their ability to build and maintain a positive brand in the industry within which they operate.
A small business branding starter guide includes:
- Pick your brand name, design a logo, and finalize your brand’s style guide
- Purchase a great domain name, and build a user-friendly website
- Set up and optimize your business listings on Google My Business, Facebook, Yelp, and other important social sites
- Contact local business directors like the Chamber of Commerce and other sites to list your business
- Install appropriate analytics on your channels to measure activity
Build Your Team
In all likelihood, you’ll need to hire employees before you launch your small business. Many entrepreneurs try to take on too many roles early on in their organization, which can cause quality control issues and is generally just a poor use of human resources.
The best business owners are the ones who understand that running a successful company means focusing on personal competencies and finding ways to delegate other tasks and areas to people with expertise in that field.
For instance, if you’re a personal trainer who has a lot of experience dealing with exercise science and nutrition, you’re probably not familiar with web design or digital marketing. Rather than trying to teach yourself how to design a website or create a drip email campaign, it may be a better use of your resources to outsource those responsibilities and focus on keeping your customers satisfied and improving your other business areas.
The hiring process for a new business can be difficult. Do you want to hire employees to work in your physical location? Would you rather outsource tasks to independent contractors and freelancers?
To help you build your team, take the time to outline the job descriptions and responsibilities for each role. Think about the KPIs that you want to use to measure the effectiveness of that position. The more time you spend before you start the hiring process, the less work you’ll need to do cleaning out the unqualified applicants.
Launch Your Small Business
Congratulations — You’re now ready to launch your small business! The work that you’ve put into the launch is just the beginning. You will need to continue to put time into planning, budgeting, marketing, and hiring among many other areas.
The first few months of your business are incredibly important. Take time to talk to your clients and collect feedback. Ask your satisfied customers to leave reviews online. The information and response you receive should dictate how you plan your strategies moving forward. You may find that you need to make improvements to your quality, pivot your offerings, or reevaluate your target audience.
If you are launching a new business and want to talk with a local business advisor, contact Rivero, Gordimer & Company today!