When you feel the calling to start your own business, you hear the cautionary words all the time: Starting a small business is challenging and risky. The stats about success aren't in your favor. Funding is hard to come by. The economy is threatening. These suggestions paralyze many would-be entrepreneurs into not taking that first step.
At the end of the day, though, starting a small business really isn't all that difficult. These four steps lead you through the process:
Step 1: Incorporating
Incorporating your business encompasses all of the administrative paperwork you need to file and put through the system in order to have your business legally recognized by the government. Each state has its own rules around the steps you need to take. Head to the website of the Small Business Administration and the IRS to decide what form of business entity to establish, to apply for an EIN tax ID number, and to learn more about self-employment or small business taxes.
Step 2: Finding Funding
In today's business market, you have more options for funding than many generations of entrepreneurs before you. Commercial banks have eased the tight lending conditions on small business bank loans, and websites like Kickstarter enable crowdfunding at an incredibly accessible level. Many small businesses are also self-funded, and if you're able to set aside money for your own venture, this is a great way to start off without being in debt to someone else.
Depending on the nature of your business, you may also consider raising venture capital. You'll want to approach this carefully and will need to have an air-tight business plan. Be sure to conduct a lot of research on the proper ways to meet, contact, and pitch to VCs. One constant that we hear from many in the entrepreneurial community is this: it is imperative to get a warm introduction to a VC. That is, he'll be more likely to give you some of his valuable time if someone he knows and trusts puts you in touch.
Step 3: Developing Your Offerings
Whether you're creating a new set of products or using your skills to offer services to others, you'll need to spend some time developing your offerings. Putting together your business plan will help flesh out many of the details you'll need to think through. Who is your target customer? What need are you filling for them? What skills and ideas do you currently have, and which do you need to develop and/or hire for? If you're developing a tangible product to be used by consumers, research shipping and distribution options, and reach out to partners that can help you get your product into the right hands. You'll need a prototyping or sample to start with.
If you can (and you should), spend time talking to people in your target market and walk them through your existing products and services. Ask them what is missing, and brainstorm with these potential customers on ways you can differentiate yourself from the competition. When you put their ideas into action, communicate that to them and keep them apprised of your efforts and progress.
Step 4: Marketing & Selling Your Product
Once you have established your product or services and are ready to serve customers, you'll need to promote and market your company. In your discussions with potential customers through the product development phase, you should have been able to see trends in how your customers access information and what they consider when making purchasing decisions. Use this insight to devise your marketing plan.
Marketing properly will take both time and money. Budget will go toward traditional advertising, if you feel that's a smart way to get in front of your customers, in the form of banner advertising, Facebook ads, direct mail, and sponsorships. Social media contests, some blogger outreach programs, and a properly designed and functioning website will also cost money, so be prepared to "spend money to make money," as they say.
On the "free," organic side of marketing, be sure to set up a presence on Facebook and Twitter. You will need to work hard to develop a significant following here, but these channels give you a great way to communicate with customers en masse, get their feedback, and keep them apprised of product development.
Photo source: facebook.com