Starting a business is a dream come true for many entrepreneurs. Being your boss, pursuing your passion, and seeing your business idea become a reality is truly exhilarating. According to SBA estimates, approximately 600,000 new businesses start annually in the United States. At the same time, 20 percent of new businesses fail within the first year of operations.
Hence, bringing your dream venture to reality will require much hard work. You need to have a good sense of the business landscape in which you operate, plan, and strategize, and be dedicated to your dream venture.
In this blog, we will explore six steps to help you launch a small business and turn it into a successful one.
So, let’s get started!
Step 1 – Get an Employer Identification Number (EIN)
The first step in starting a new business is obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This unique nine-digit number acts as your company’s identity for tax purposes. An EIN is required if you intend to hire staff, create a company bank account, or file specialized business tax returns. It not only keeps your personal and corporate finances separate, but it also ensures tax compliance.
The procedure to apply for EIN number is now easier than ever. The online application by IRS is simple to use, and you will obtain your EIN immediately after submitting it successfully. Even if you are a sole proprietor with no workers, you must get an EIN. It simplifies tax procedures, facilitates business transactions, and establishes the groundwork for your company’s official recognition.
Step 2 – Define the Business Idea and Target Market
After obtaining your EIN, you are ready to start the most critical part of your entrepreneurial journey – developing your business idea and determining your target market. This is the point at which your passion collides with reality.
Begin by thinking about what problem your business aims to solve or what unique products or services it will offer. Your business idea should align with your beliefs, objectives, and long-term vision.
Conduct extensive market research to discover more about the needs and wants of your target audience. Thoroughly understanding your target audience allows you to address their needs more effectively. Listen to what they say, empathize with their problems, and look for opportunities in their unmet needs and wants.
Step 3 – Draft A Solid Business Plan
A solid business plan serves as your road map, leading you through each stage of your entrepreneurial journey. Begin by establishing your company’s goals, strategy, and financial projections. This approach enables you to establish specific goals and map out a plan to achieve them. Consider your target market carefully and thoroughly investigate your competition to identify your unique selling point (USP).
Marketing strategies are critical to reaching your target audience and increasing brand awareness. Your operational plan, which outlines how you will efficiently supply your products or services to the customers, is just as vital.
Financial projections provide credibility to your proposal by demonstrating your company’s viability to potential investors or lenders. A good business plan gives much more than just capital; it provides a clear direction for your company’s growth and development.
Step 4 – Choose The Best Legal Structure
Choosing the best legal structure for your small business is a big decision with significant implications. It directly impacts taxation, liability, and ownership possibilities; therefore, making an informed decision is critical.
Small businesses’ four most popular legal structures are sole proprietorship, partnership, limited liability company (LLC), and corporation. Each structure has advantages and disadvantages that cater to different business demands and goals.
- The simplest and most popular structure is a sole proprietorship, yet it exposes the owner to infinite personal liability.
- Partnerships require a well-drafted partnership agreement because several owners share earnings and liabilities.
- A Limited Liability Corporation (LLC) has the advantage of limited liability. It protects personal assets from corporate debts and liabilities.
- Corporations have their own legal body, which provides even more protection, but requires a board of directors and comes with other complicated formalities.
We recommend that you seek legal counsel to assess which option is best for your company. They can assist you in evaluating your circumstances and guide you toward the legal structure that matches your goals and protects your interests.
Step 5 – Secure Funding For Your Business
You cannot turn your business idea into reality without financial support. Securing funding is the most crucial step after developing the business plan that can make or break your dream venture. You must clearly understand how much capital you need to get your business and run operations smoothly. Your business plan should have a dedicated portion to finances to help you attract investors and make an informed decision.
We recommend exploring all funding options. Self-funding means using your money to establish and run your business; this capital can come from your savings or selling a personal asset. Angel investors and venture capitalists invest a certain sum of money in your business against stake and ownership. Many banks also offer small business loans to provide immediate funds with manageable monthly repayments. Other ways to secure funding include SBA microloans, small business grants, online lenders, and crowdfunding.
Step 6 – Build A Strong Team
Building a solid and reliable team is one of the most essential parts of assuring success as a small business owner. You should identify people with the necessary skills and competence and share your enthusiasm and vision for the company. When your team members share your vision and values, they become more than just employees; they participate in your journey.
Take the time to select people whose skills complement your own carefully. A varied workforce with a wide range of skills may approach problems from many viewpoints and bring new ideas. Create an open communication and collaboration culture in which team members feel valued and encouraged to contribute their thoughts.
Bottom Line:
Kickstarting your dream venture isn’t going to be easy. It will require consistent effort and undeterred passion. If you follow these six steps, you can lay a solid foundation for growing your business. Hence, obtain an EIN, identify your target audience, draft a solid business plan, and choose the right legal structure for your business. Once you’re done with these steps, the next step is securing funding and building a solid team that complements your skills.