Six Steps for Starting Up a Business

When you want to start a business, there are six things you need to think about before turning your dream into a reality.

• STEP ONE: Choose a name for your business. One of the first areas of concern for any business is its public persona, i.e. its business name. What is your business going to be called? There is a lot in a name. Get a sheet of paper and brainstorm words that are related to your business. Make sure the domain name is available. Do a Google search and determine if anyone else is using the name in your area of industry. You may also want to consider registering the name as a trademark either in your state or federally.
• STEP TWO: Decide what form of business entity you will use. How you decide to operate your business will have an effect on many other decisions, and should involve the assistance of a qualified tax accountant. A business entity may take one of many forms. The most prominent are sole proprietorship, corporation (Subchapter C or S), partnership, and limited liability company. That decision will, in part at least, determine what type of documentation you need to submit to the state in which your company’s principal place of business is located. One factor that weighs in favor of forming either a corporation or limited liability company is that these business entities offer a form of protection against personal liability (i.e., your house, car and other personal possessions). As indicated, the choice of entity will also affect how you are taxed and what taxes you are paid.
• STEP THREE: Gain a general understanding of the laws affecting your area of industry. While you don’t have to go to law school to understand your business, you should certainly “do your homework” and research the laws regarding your industry. Google is always a great place to start your basic research. Then, of course, there’s always the traditional methods, bookstores, libraries, etc. Find out as much as you can about the legal aspects of your business prior to retaining a lawyer. Does your type of business have any type of license requirements, or is a standard business license all that is required? Does it require any permits? For example, some states require that a booking or talent agency be registered with the state. Of course, most professionals must be state licensed. There may be special laws that apply only to your specific industry. Are there federal laws that you have to comply with, such as OSHA, EEOC, or the various environmental laws and regulations, in addition to the standard tax codes. Much of this information is easily attainable on the various governmental web sites.
• STEP FOUR: Assemble your Team – Hire a lawyer, banker and accountant. There are certain people that just help you get your business off the ground: a lawyer, banker and accountant. While judicial use of the lawyer and accountant may be necessary, you should certainly consider forming a good relationship with all three professionals. Choose a lawyer and accountant that have particular experience in your area of business. Choose a local banker who is hungry for business. Make appointments with them and sit down and talk to them about what your plans are for your business. You can tell more about a person in a ten minute face-to-face than you can from hours of phone calls or reading a resume. Ask the lawyer and accountant about flat rates for certain services, such as establishing your limited liability company, for example.
• STEP FIVE: Consider finding an insurance agent. Small businesses can be devastated by small disasters: fire theft robbery, vandalism, slip and falls. You should consider what types of insurance are necessary to protect your business. Do you need CGL coverage (comprehensive general liability), accident, error and omission, fire, theft, etc. Consideration should also be given to insuring your health and loss of income, since most small businesses operate as a result of one or two person’s efforts. Ask your lawyer, accountant and banker for recommendations and get quotes from several agents before making any final decisions.
• STEP SIX: Consider drafting a business plan. Writing things down can be beneficial from both a theoretical and practical point of view. Seeing the numbers on paper can help focus your attentions on the things that are important. Figure out how much money your are going to need to operate your business for at least three to five years (the average time it takes for a small business to get going). Write a mission statement. Consider your competition and how your are different. How are you going to attract customers. Develop a budget. Develop goals. Project your income and expenses. These types of exercises can help you spend your energies wisely. A well-developed business plan can also be used to obtain funding for the start up, either in the form of small business loans or venture capital.