Do visions of launching a business dance in your head? Don't say sayonara to that 9-to-5 gig yet. There is a series of actions you should take between dreaming up a business idea and opening your doors.
Ahead, we provide a checklist for starting a business to help you avoid missteps.
Your friends and family might have given you an earful about why you shouldn't start a business. But here are some reasons why you should:
Use the steps below as a checklist for starting a business.
1. Do market research and competitive analysis. By far, this is the most important step in your checking for starting a business. It helps you gauge whether a market exists for your business offering and how to set your business apart. Likewise, market research involves doing surveys, questionnaires and interviews of your target market. Competitive analysis entails surveying the local competitive landscape.
2. Write a business plan. Start with an executive summary. Add in a business description, market analysis, a management structure and business offering. Then, add a marketing and sales plan, a funding request and a financial forecast. Round out the document with an appendix of supporting documents.
3. Put financing in place. Unless you plan to self-fund your business, you will need an infusion of capital to start a business. The source of financing you choose will depend on the amount you need. Investors, loans and crowdfunding are all options.
4. Pick a location. Your choice of location, both the state and the municipality, is a crucial one. It will affect the taxes imposed on your business and the laws that will govern its decisions.
5. Settle on a legal structure. After all, legal and tax benefits and ease of opening all factor into your choice of entity. You can open a sole proprietorship, partnership, LLC or corporation. Otherwise, start a cooperative that works for the mutual benefit of a group of people.
6. Pick a business name. It's better to settle on a brand-appropriate and unique name from the outset than to change it later. Make sure another business does not have the name in mind. Review the USPTO trademark database to rule out duplicates.
7. Register with the government. Your location and legal structure determine whether you need to list your business. If you do, file at the federal and state level on where you plan to operate.
8. Get tax IDs. Request an employer identification number (EIN) from the IRS for paying taxes. Of course, get a state tax ID if your state requires it.
9. Get business licenses and permits. You may need to get business licenses or permits at the federal, state and local level. The reason for this is so that you stay compliant with the law. Knowing your business niche, location and regulations dictate which ones you need.
10. Open a business bank account. Having one of these accounts keeps business transactions separate. Also, the separation simplifies tax preparation. You may need to show supporting documents (e.g., an EIN) to open a business bank account.
As you work your way down your checklist for starting a business, don't forget to: