As the new year approaches, you may already be thinking about your 2025 resolutions. Maybe this will finally be the year that you step into franchising or start the small business you’ve always dreamed about. Whichever may be the case, starting a business involves significant planning, funding and preparation before you can truly start working for yourself. As you step closer to your entrepreneurial goals, here are some steps you’ll need to take to start your business:
Research Your Market
Market research will tell you if there’s an opportunity to turn your idea into a successful business. It’s a way to gather information about potential customers and businesses already operating in your area and how you can best attract their needs.
Gather demographic information to understand opportunities and limitations for gaining customers. This could include population data on age, wealth, family information or anything relevant to your business. This information may already be available through existing sources, but you can also conduct surveys, questionnaires and focus groups to understand your audience better.
Once you’ve done this, you should be able to answer the following questions:
- Demand: Is there a desire for your product or service?
- Market size:How many people would be interested in your offering?
- Economic indicators: What is the income range and employment rate?
- Location: Where do your customers live, and where can your business reach?
- Market saturation:How many similar options are already available to consumers?
- Pricing:What do potential customers pay for these alternatives?
Write a Business Plan
A written business plan will serve as the foundation for your company. It’s a roadmap for how to structure, run and grow your new business and a tool you’ll need to request funding or partnerships for your company. There is no right or wrong way to write a business plan, but you will want to include the following information:
- Company description
- Details on your products and services
- Market analysis and intended audience
- Financial projections
- Your business’s legal structure
- Employee information, especially for owners and managers
- Request for funding and how the funds will be used
It’s important to remember that business plans can be lengthy and should be detailed. Keep track of as much information as you can.
Business Structure
Your business structure influences everything from day-to-day operations to taxes and how much of your personal assets are at risk. You should choose a business structure that gives you the right balance of legal protections and benefits. Common business structures can include one or a combination of the following:
- Sole proprietorship: A single person who owns a business.
- Partnership: Two or more people who own a business together.
- Limited liability company (LLC): A combination of corporation and partnership business structures.
- Corporation: A legal entity separate from its owners; corporations can profit, be taxed and be held legally liable.
- Cooperative: A business or organization owned by and operated for the benefit of those using its services.
Fund Your Business
Your business plan will help determine how much money you’ll need to start your business. If you don’t have that amount on hand, you’ll need to raise or borrow the capital. This can be done by self-funding campaigns, partnering with investors, taking out loans or earning grants.
The Small Business Administration (SBA) offers numerous programs to help you contact lenders, apply for grants, receive training and mentoring opportunities, and more.
Register Your Business
Once you’ve picked the perfect business name, it’s time to make it legal and protect your brand. For most small businesses, registering your business is as simple as registering your business name with state and local governments. If you conduct business as yourself using your legal name, you won’t need to register anywhere. But remember, if you don’t register your business, you could miss out on personal liability protection plus legal and tax benefits.
Depending on where you live, this process will need to be done with the federal government and maybe your state government.
Federal & State Tax IDs
Your Employer Identification Number (EIN) is your federal tax ID. You need it to pay federal taxes, hire employees, open a bank account and apply for business licenses and permits. Applying for an EIN is free, and you should do it right after you register your business.
More information on what you need to receive your IDs can be found at sba.gov.
Licenses & Permits
Most small businesses need a combination of licenses and permits from both federal and state agencies. Requirements and fees depend on your business activity and the issuing agency and should be considered early in business planning.
Business Bank Account
You’ll want to open a business bank account once you’re ready to start the buying and selling process. A business bank account helps you stay legally compliant and protected while providing benefits to your customers and employees.
Once you pick the bank you want to work with, you must gather your EIN, formal business documents, ownership agreements and business license to open your account.
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