Starting a Business
Deciding to start your own business can require a hefty amount of bravado - and cash. Before you take the leap, you're going to need to make sure you've done your homework. You want to do more than just collect a check, after all. Maybe you want to build something. Maybe you want to help people. But whatever it is, you want to do it on your own.
By developing a solid business plan, getting funding, and spreading the word, you'll be on your way to living your dreams - on your own terms.
- Written By Rachel Christian
Writer & Researcher
Rachel Christian is a Certified Educator in Personal Finance with FinCert, a division of the Institute for Financial Literacy. She is committed to promoting financial literacy and making complex financial topics accessible to readers from all walks of life.Read More
- Reviewed By Roger Wohlner
- Updated: May 8, 2023
Get Started by Writing a Business Plan
You have hopes and dreams for your business – and a business plan is a great way to map out how to turn those hopes and dreams into a profitable, tangible reality.
If you’re nervous about sitting down and writing it, don’t be. Some people think they need to have all the answers before sitting down to write a business plan, but that’s not true at all.
The process of writing one can help you iron out all the details of what exactly you want to do, how you want to do it, and how to get your operation running. Start by creating a working copy, or a business plan that’s still in the process of being written, and fill in the blanks.
Just like every business is unique, every business plan is going to include different elements reflecting the new idea your business creates and the industry it fits within. Still, some things are standard to include, according to the U.S. Small Business Administration:
- Executive summary
- Simply put, this is who’s in charge and what their qualifications are.
- Company description
- What’s the gist of what you’re business does and how do they do it.
- Market analysis
- What is the state of the industry you’re getting into, and how your idea fits into that market.
- Description of product or service
- In detail, exactly what service or product you are providing people in exchange for money. This means you need to include how much it costs to do or produce, and how much you plan to sell it to people for.
- Sales strategy
- How you plan to reach your target audience and realistic expectations for how much time, and money, it will cost you to reach them.
- Pro forma
- This is a precise summary of financial projections in the short, mid and long term. By having a product description and sales strategy, you should be able to estimate what your growth looks like and how much it costs.
All the Paperwork
It doesn’t stop with a completed business plan. By setting up a clear way to organize your financial plan you’ll be poised to make informed decisions with your business’s best interest in mind.
Business Licenses and Permits
Creating a limited liability company, or LLC, is the simplest way to make sure you’re not solely responsible in the long term for any of the company’s debts or liabilities.
Registering for Taxes
The only certainties in life are death and taxes. Obtain an Employer Identification Number (EIN) from the IRS for your business’s taxes.
Even if you’re running a one person show from your laptop, having a separate bank account is a must. It might seem overzealous and superfluous at first, but you’ll be happy you have it when it’s time to handle invoices and taxes.
You don’t have to do it alone. There are numerous groups and organizations across the country to help your business succeed.
- Your bank account: Most startups get their cash from the original founder or founders’ bank account.
- Your current income: Many get the money from other income, keeping their day jobs until their side venture is a full-fledged venture of its own.
- Your assets: If you have a structured settlement, you can cash out your future payments to get capital to get your business up and running.
- Friends and Family: If your friends or family have money to lend this is an option. However, it’s best to put everything in writing to make sure everyone has the same expectations on when, how, or if the money will be paid back.
- Banks and Credit Unions: Some banks and credit unions will lend a blossoming entrepreneur money to start – if, that is, they have a solid and convincing business plan.
- Angel investors and venture capital firms: The terms might sound complicated but the concept really isn’t. These firms give you money to get going in exchange for partial ownership rights, or other financial gains once you succeed.
- Organizations: Groups like SCORE have offices across the United States and provide free information to help run and grow a small business.
- Consultants: Hiring a consultant with experience growing new ventures can be a great way to put your startup in the best position to receive funding from investors.
- Freelancers: When you’re starting out you may need help but find you’re not ready to bring on full-time help. That’s okay, freelancers can fill in the gap until you’re ready to make that move.
Knowing Your Target Audience
You may have a really cool idea for a product. Or maybe you just have a love of cooking you want to share with the world. Whatever your business is, if you’re hoping to make a profit from what you’re offering, then you need to understand the people you’re hoping to make money off of.
Questions to ask yourself:
- What problem does my business solve for someone?
- What is that person like?
- How does that person prefer to find a business?
The more you know who your customer is, the better you can design your product or service to meet their needs. From there, you can design your customer experience in a way that makes them so happy they’ll want to tell their friends about it.
Branding Bells and Whistles
Make no mistake, reaching your customers is a matter of life and death for your business.
A business plan lays out who you are as a company, but branding lays out the first impression you make with your clients or customers. Having a cohesive – and literal – vision for this impression is vital. This means having a business name and logo that people can recognize and connect to what you stand for and what you offer them.
Gone are the days of opening up shop and things just happening. Consumers expect to be able to find you on the internet, know what you’re about, and see what other people think about you.
- Website: Several free platforms exist for ordinary people to build a website. Or if you have the capital you can invest in having one made for you.
- Google Listing: By using the service offered by Google My Business, you can get your business found by customers through Google Search and Google Maps – for free.
- Social Media: If your business is being talked about by your customers, you want to be part of the conversation. Setting up an account is a free and easy way to get your name out there.
Entrepreneurship and Your Mental Health
Starting your own business isn’t going to be easy – but for those who persevere it will be worth it. When you become the CEO of your own company, you don’t stop being a person. When you become your own boss, you have to take care of yourself in the same way you’d want to be taken care of by your manager.
Take your strong work ethic and also apply it to taking care of yourself.
- Don’t spread yourself too thin. You might be able to perform a variety of tasks, but at the end of the day there’s only so much time. Be realistic as to what you can do and get help for what you can’t.
- Don’t hire your friends just because. You may need help, but make sure you’re getting the skilled employees that your company needs to be successful. On the other hand, if your friends have the skills you need and they need a job, go for it.
- Don’t take things personally. It’s good to be passionate about what you’re doing, but always keep in mind that sometimes business is just business.
- Expect setbacks. Things will go wrong and by anticipating problems you can make sure you are prepared to learn from, and overcome, them.
- Do keep up with your relationships and hobbies. If your hobby has become a business, find a new hobby. It might not be able to be extensive, but taking just a little time to do something non-work related will make your work time more productive. If your whole life is one thing, burning out won’t be a question of “if” – it will be a question of “when.”