6 Key Steps to Starting a Business
Updated: Oct 20, 2022
By Contributing Author: Lisa Walker. Lisa created JobDreamTeam.com as a passion project to reach a wider audience and share information that will help her readers find, land, and succeed in their dream job."
Most new businesses fail within five years of operation. The reason? Most owners overlook the not-so-fun parts of starting a business. This article will help you learn the ropes and get a feel for what you're getting yourself into.
1. Legal Structure
When contemplating steps to start a new business, start deciding which legal structure your business will use.
There are four basic structures:
Sole Proprietorship
Partnership
Limited Liability Company
Corporation.
Most small businesses start with a sole proprietorship or partnership, as they're easy to set up and have few compliance requirements. With a limited liability company, you can shield yourself if your business goes bankrupt. If you're thinking of taking on investors, you may want to register as a corporation.
An LLC offers personal liability protection like a corporation but is not as complex or expensive to set up. It provides significant savings for the owners. It allows for pass-through taxation, as the income and losses are passed through to the owners and taxed at their rates. An LLC also gives your business a professional image and can help attract investors.
2. Accounting and Payroll
You're liable for all the taxes on your company. Otherwise, you could land yourself in trouble with the IRS, resulting in fines and liens against your business. Setting aside the right amount of your business income can be daunting, but it could save your business. Taking on payroll yourself helps you to understand all the ins and outs of the process. It helps build a strong foundation of trust and respect between you and your employees.
3. Cost Analysis and Financing
You can get an idea of your startup costs from the SBA, which provides a sample cost worksheet. But costs can rise and fall due to a variety of factors, including energy bill increases, unexpected repairs, and material prices. You'll also need to account for annual license fees and compliance costs like transportation.
If you're planning to launch a startup that requires significant investment, you'll need to find outside funding. Luckily, there are numerous programs designed to help entrepreneurs seeking funding.
4. Products and Marketing
Your product should solve a real problem or fill a specific need, and it should be scalable to meet demand. You'll need a platform to sell your product, like a website or pop-up shop. Occasionally, the investment needed to market your business is greater than the money you'll need to create your product or service. Always spend your budget on the marketing techniques that give you the highest return on investment.
5. Sharpen Your Business Skills
Strong business skills will help you understand the inner workings of businesses. Consider getting a college degree in business to sharpen your skills. Gaining the knowledge and ability to run a successful business will help you make your dream a reality.
6. Start Your Business
By putting in hard work and perseverance, your business could be the next big thing. Choose a business structure, find funding, create a plan for accounting and payroll, market your products and services, and sharpen your business skills if necessary.
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