Statistics show that 62% of United States billionaires are self-made. What does this mean? It means that these people either did well in investing or started their own businesses or both! It’s no secret that working 9 to 5 and coming home to watch Netflix for 4 hours until you fall asleep won’t make you a billionaire. If you are interested in starting a small business, you may have a few questions. Keep reading to learn more about how to start a business.
#1: Identify a Need & Provide a Solution
Do you want to create a product or service? This is the first question you should be asking yourself because the approach to each business is a little different.
Ideally, you can see a need in the market for a specific product or service and create a business that provides a solution in that area. Think of the people who started the ride-sharing companies. They saw a need for an affordable option for direct transportation from point A to point B. Not everyone can afford a personal driver but they made it possible by filling a need and creating jobs for drivers as well. This is an example of their market research proving there was nothing like this out there, so they started a business off of that idea.
#2: Pay Off Your Personal Debt
Do you have a lot of debt? Do you have a savings account to put toward this new business idea? What does your financial profile look like?
Paying off your personal debt is important for several reasons. First, lenders will be looking at how you handle debt before giving you a business loan of any kind. Having thousands of dollars in outstanding debt can make it more difficult for you to get a business loan. If you are wondering how to pay off credit card debt in order to improve your likelihood of getting a loan, read that article for more information. Using less of your available credit will improve your credit score, making you a more qualified candidate for a loan. A history of making payments on time is also something that lenders like to see because they want to be paid back in a timely manner on the loan that they grant you.
#3: Get Funding For Your Business
Businesses cost money before they make money. There are startup costs, legal fees, patents, contracts, and so many more things that you have to pay for to launch your business into the world.
In order to do this, you need funding. You can get business loans from the bank but they may not cover the cost to get started in some cases. Some businesses do crowdfunding in order to raise the amount they need to get started. Others allow family and friends to invest in their business with a monetary donation in hopes that they are able to pay them back once the business becomes profitable down the road.
#4: Get Advice From Other Business Owners
No one knows how to run a business better than someone who is currently doing it. There are business owners everywhere you look and each faces their own triumphs and challenges on a daily basis. Learning as much as you can about every aspect of running a business can help you save both time and money as you start on your business journey.
Talking to people in different industries than the one you are in can also be helpful because they can offer a perspective that you may not have been introduced to yet or ideas that you can adapt to your industry.
#5: Pick a Location
Are you going to have an online store? Is your business brick-and-mortar based? Will you have both? Maybe you won’t have a physical location at all and be remote-based.
Picking a location is an important part of the branding and incorporating of your business.
Your location will also affect how you advertise and promote your business. Deciding where you want to start is key and you can always expand to new areas in the future as your business grows.
#6: Make It Legal
There are many reasons that you need to make your business legal. First, you have to let the state know that your business exists for tax purposes. You will pay both state and federal taxes as a business and must report your income to both areas. Another reason is for liability purposes. You don’t want your personal and business finances to be mixed. If you were ever sued or found liable in a business situation, you don’t want your personal finances to suffer as a result.
In order to qualify for business loans and insurance, you will need proof that your business exists before those items are granted. There are many resources that can help you through this process and filing everything correctly.
#7: Attract Clients
Once you have everything set up to start your business, you need to start attracting your first clients. This may start by word-of-mouth, telling everyone you know that you are starting a business and need their help promoting it.
Partnering with other businesses or even attending community events are another way to get the word out at the beginning. It is hard spending marketing dollars during this time because you don’t have any clients yet to help you repay that cost. This client base you build at the beginning will be the early adopters of your product or service. They will help move your business forward for years to come.
#8: Build a Team
Once you start bringing on more clients, you won’t be able to do everything by yourself. You may decide to hire people right at the start, others wait until they have enough funds to pay them. It is important that you bring on people that are ready to work hard on a startup and likely be underpaid until you start seeing success. There’s stories of founders working for free at the beginning and having more money than they know what to do with a few years later. Hire the right people that are passionate from the start and they can grow with you for years to come.
#9: Don’t Wait to Get Started
Now that you have read more about how to start a small business, you can begin the process today. It will take time to get everything ready to launch your business but everything starts with an idea. Shameless plug: Check out our website for more informational business finance articles like this one.