For entrepreneurial spirits, there's no better time than the present to apply that innovation. Wall Street is experiencing the second-longest bull market since 2009. Congress just passed the $1.5 trillion tax bill, which will allow most small businesses to deduct up to 20 percent of their income. By all accounts, the outlook for 2018 is positive.
So what's stopping you?
According to the latest Global Entrepreneurship Monitor report, the fear of failure prevents up to 61.6 percent of people from pursuing their entrepreneurial goals. But with the proper roadmap, you can turn your dream into reality.
Is my idea viable?
Once you figure out the type of business you are interested in starting, you need to determine if there is an existing or potential market for your product and/or service. This requires research. Performing a market analysis which assesses strengths, weaknesses, opportunities and threats (otherwise known as a SWOT analysis) is a must.
Do I need a business plan?
Yes! According to Harvard Business Review blog, a recent study using comprehensive data found that those who wrote a formal business plan are 16 percent more likely to achieve viability than those who did not. Another recent study performed by Palo Alto Software founder Tim Berry found that those who completed business plans were almost twice as likely to successfully grow their business or obtain capital.
A business plan will help guide you through each stage of your business planning and launch. The SBA has two business plan formats to assist you in what to include in your plan.
What's my market entry strategy?
How you will enter the marketplace is another question you will need to address early on. Can you buy an existing business? Or are you creating a new product for a market that does not currently exist? How you enter the market will dictate the path you take.
What's my 'preneur preference?
Are you planning to be a solopreneur or an entrepreneur? The differences are subtle, but they mainly have to do with whether or not you want to own and operate the business yourself (which includes doing all the work) versus being more of a manager and hiring staff. If you are planning on working with a business partner, this will impact many of your operational and strategic decisions, so it's important to identify your approach upfront.
What's my organizational structure?
The type of business structure you choose will have far-reaching impacts on you as a business owner from both a legal and tax perspective. Each business structure has its advantages and disadvantages. The types of structures are:
- Sole proprietorship
- S corporation
- C corporation
- General partnership
- Limited partnership
- Limited liability corporation (LLC)
The SBA has more details on each structure here.
How can I fund my business?
Once you determine how much money you need to start your business, you will need to procure the money. There are various ways to do this. Self-funding, also known as bootstrapping, involves using your own financial resources – savings, capital from friends and family, and other investment accounts. The advantage is that you are in control over the business, but you also take on 100 percent of the risk.
If self-funding is not an option, try venture capital funding or crowdsourcing. Other paths include working with lenders directly or going through the small business administration (SBA) for either a loan or via an investment program.
Should I buy or build?
Depending on your product or service, you may want to buy an existing business or franchise. Benefits of buying include having an existing blueprint while still being able to control overall direction of the business.
If you are creating a new product and/or service, you will most likely need to build the business from scratch. This can be especially rewarding for those who are innovative and may be more appealing to those who are comfortable with taking greater risks.
Where should my business be located?
Where your business is located can be critical if you are starting a brick-and-mortar business. It isn't as important if you are launching an online-only business. Is your business a retail store or an industrial shop? Keep in mind that your business location will determine the local taxes, zoning considerations and regulations applicable to your business.
Should I register my business and business name?
Your business location and business structure will dictate the need to register your business, though most small businesses will need to register with state and local governments. Once you register your business, you will need a federal and state tax ID. Your bank will need this number if you want to open a business account.
You will definitely want to register your business name. An entity name protects you at the state level, meaning another company can't register the same name once you've registered it, and vice versa. A doing business as (DBA) registration does not provide legal protection, but most states require you to register your DBA if you use one. Don't forget about procuring a domain name through an accredited registrar for your online presence.
Do I need to obtain any business licenses and permits?
State licenses and permits required by the state, county or city are based both on business activities and location. For example, if you're starting a charter airline company, you'll need to check in with the Federal Aviation Administration (FAA) for licensing requirements.
The SBA publishes an online list of business activities linked to the relevant issuing agency. If you're wondering about which state licenses apply to you, Fundera publishes a complete online listing for each state.
Which insurance policies do I need?
Depending on the type of business you are starting, you'll need to choose from a variety of options specific to your business needs. The most common types of business insurance include general liability, product liability, professional liability and commercial property insurance.
A business owner's policy (BOP) helps owners manage business risk and reduces the overall cost you would otherwise pay purchasing each policy individually. BOPs can also save you time – something that is extremely valuable as a business owner.
When do I start advertising?
Your marketing strategy and plan should be a key component of your business plan. Building brand equity is critical to your go-to-market success, so you'll need to create a logo and build a visual brand identity for your business with the right messaging.
Once you've created a target profile of your customer base, figure out which channels reach your targets. If you want to move product as soon as the doors open, best to start advertising a few months before. Keep in mind your budget and account for seasonality.
I've opened the doors – what's next?
Congratulations! Now that you've successfully set up your business, you're now ready to start running it. That means managing finances, hiring staff, paying taxes and more.