5 Simple Steps to Build a Business
According to the Small Business Administration, nearly 627,000 new businesses open every single year. If you’re one of the many people considering building a business, you may be a bit overwhelmed. It’s tough even to begin to know where to start, but it’s easier than you think to get your ideas off the ground and into reality.
Step 1: Set the Foundation
You probably already have a pretty clear idea of what you want to do, but what you may not know is what that industry looks like.
Spend some time researching and understanding the companies within your industry. Get to know what those leading brands are doing to attract customers.
To be truly successful, you’ll need to find a unique angle to help set your business apart, and that may mean some research. Many business coaches will tell you that you must start with why you plan to launch this business, as it will help you focus on meeting your customers’ needs first.
As you begin to plan, don’t forget to brainstorm a good name for your company and nail down your target audience. That step will help better clarify the mission of your company. When it’s all said and done, your business needs to fill a void in the space which is a clear way to ensure you don’t need to compete on price.
Step 2: Build Your Business Plan
After you have a clear understanding of what you want to do, how you’ll do it better than any other company out there, and to whom you plan to market your company, it’s essential to create a business plan.
Business plans do several things for your company. They can help steer you in the right direction as you begin to grow. More than that, though, they can help you get the funding you need. Whether you’re looking for a bank loan or investors, a business plan is often key to showing that your company is the right investment choice.
Within your business plan, be sure to conduct some market research. Whether you conduct formal market research like focus groups or simply use public data to find the information you need, market research will help you understand your customers’ preferences and behaviors, so you can quickly identify both the opportunities you have within the market as well as any potential limitations.
Selecting a business structure is key during this process, as it affects almost everything. It changes who is liable if something goes wrong with your company and even how you file your taxes. Sole proprietorships mean you own the business entirely, and you plan to be wholly responsible for it.
If you have a partner, though, you can have a business partnership where two people can be held accountable for the business’s debts and obligations. You can also form a corporation to help separate your liability from that of your company.
An LLC offers you a hybrid structure that protects you and gives you the tax structure of a partnership. Before you decide, it’s best to chat with an attorney and your accountant to see what might be right for you.
You’ll also likely want to identify an exit strategy within your business plan. Understanding what your end game is from the very beginning is the best way to begin a business and help it reach its goals as well as your own.
Step 3: Create a Clear Financial Picture
Starting a business isn’t free. Know how you’re going to cover the cost of creating and running your business. This is the part where you decide whether you’ll need to borrow money to start your company.
Keep in mind that if you’re leaving your current job to focus on your business, you’ll need to be sure you have enough money to sustain your own life until you begin to make a profit.
Begin by looking at the startup costs of your business. Your best bet is to overestimate the amount of money you may need to get started because it can take some time to begin seeing a solid profit.
After you know your start-up costs, you’ll want to know how much it’s going to take to make a profit from your company. Most people do a break-even analysis to find this number.
If you divide the fixed costs by the average price minus the variable costs, you’ll quickly find the break-even point for your product. That will help you know exactly how well you have to do to achieve a profit at all. More than that, though, it will help you to better price your products and services.
Don’t forget to factor in your potential expenses as you begin to plan the finances for your company. It’s easy to overspend on your business, but continually monitoring your expenses can help you avoid spending money on those unnecessary expenses, like too much office space or software that you simply don’t need at this point.
Step 4: Register Your Company
Before you begin operating your business, you will need to register it. Often you’ll need to register it with your state government. You’ll likely also need to register with the federal government and possibly your local government as well.
To do so, you’ll want to create articles of incorporation or an operating agreement, depending on your business structure. You may also need to file DBA (Doing Business As) paperwork. Additionally, you need to obtain an employer identification number (or EIN) from the IRS. Your industry may also require some kinds of licenses and permits to operate.
Step 5: Open your Doors and Start Advertising
Once you’re ready to start selling your products or services, you’ll want to build a base of customers, which will come from advertising. Don’t forget to build a solid company website, as these days, many customers turn online first to learn more about a business.
You’ll also want to use social media to help spread the word about your company. You want to build a marketing plan to help guide you beyond your company’s launch to ensure you’re continually reaching out to customers at every opportunity.
With so many new businesses opening their doors every single year, the key to starting your own profitable company is to keep those doors open, and by following these simple steps, you can do precisely that.
Contact AMB Performance Group today for help creating systems specially designed to work for your unique business.