Top Tips for Becoming an Entrepreneur

Becoming an entrepreneur is not for everyone. For a new business to succeed, you need hard work, startup capital, a great idea, and a solid business plan.

This article briefly overviews how to start a business and become an entrepreneur. FindLaw’s Starting a Business section contains links to more in-depth articles and small business tips.

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Entrepreneurs’ Best Business Advice

Before business growth, you must create a foundation for your small business to flourish. Whether you’re starting a business for the first time or want to become a serial entrepreneur, here are some tips to use.

Understand Being an Entrepreneur is More Than a Business Idea

Starting your own business takes a lot of time and work, so choose a company that inspires and excites you. The hours you put into your startup business will feel fruitful in more ways than one.

• Pick an industry you understand. Successful entrepreneurs work from their strengths. If you love real estate, consider starting a real estate business. If you have a fashion background, consider a jewelry store, shoe store, or cosmetics business.
• Understand how active you want to be in the business. If you can hire managers and chiefs of operations, then this may not apply to you. When you are a startup, you may not have that luxury. If you’re a night owl, opening a coffee shop won’t work. Opening a hookah lounge, a nightclub, or a late-night cafe has better functionality. Maybe you prefer to engage in entrepreneurship from a distance. Consider operating a laundromat or a car wash.
• Understand your comfort level with new customers. Some people work best alone. Others thrive when working with others. You can find business success by choosing a startup that fits your style. Do you like to work alone? Consider starting a cleaning business or a massage therapy business. Do you thrive with teamwork? A construction business finds success when everyone pitches in to do their part. You could also start an online content marketing and search engine optimization (SEO) firm.

Most successful entrepreneurs have a lot of personal contact with vendors, suppliers, employees, business partners, and customers. Who would you like to spend your workday with? If you love to be around active people and sports enthusiasts, consider opening a gym or becoming a personal trainer.

Research Entrepreneur Financing Options

When you consider the successful entrepreneurs you see in Forbes magazine, they have one thing in common: They gathered financing for their start-ups and used the financing wisely.

Here are some common financing sources for entrepreneurs:

• Crowdfunding
• Family loans
• Friend loans
• Personal or business loans from traditional banks
• Personal savings
• Retirement savings and 401(k) plans
• Small Business Administration (SBA) 7(a) loans

Successful small business owners also create an operating budget for their organization. This budget gets reviewed and revised each quarter to ensure the costs and expenses are within acceptable margins.

Create a Business Plan

Once you’ve identified a business that seems like a good fit for you, take some time to write a business plan. Writing a business plan helps you think through short-term and long-term details. It’s the foundation for business success and future growth.

Your business plan should include:

• An executive summary is a synopsis of your plan to show others to understand your business goals.
• The background and purpose allow you to share your vision as a business leader for your company and discuss your business model, products, or services.
• Market analysis details the interest in launching a successful business. Thorough market research into your potential customer base and competition helps you choose a location for your business, refine your product and service offerings, and create a pricing strategy.
• Marketing strategy starts before you open your business. How will you reach new customers? Social media? LinkedIn? A podcast or YouTube channel? Affiliate marketing? Take time to consider referral programs and create a to-do list.
• Financial information allows you to seek capital from investors and lenders. Understanding the basics of your business finances is critical. What are your startup costs? What cash flow do you need to keep your bottom line profitable? When will you break even?

After you have worked out the details of your business plan, you’re ready to implement it.

Legal Tips for Entrepreneurs

Being an entrepreneur means understanding legal risks and responsibilities with your businesses. Consider the following tips to stop others from getting your personal assets in a lawsuit.

Create a Formal Legal Entity for Your Business

Before doing business, create a formal legal structure for your business. Consider creating a legal entity for each business idea.

Choose and register a business name with your state. Protect it with a trademark. Pick a name not used by another business in the same industry as you.

Decide what kind of legal structure you want. Many small businesses start as a sole proprietorship or a partnership. Later, these businesses may grow into a corporation or limited liability company (LLC). Others open as an LLC to start. Consult a small business attorney in the state you want to open in to ensure you choose the correct business formation.

Gather Formation Documents

There are certain documents every small business owner must have:

• If required, file for a business license with your Secretary of State and local municipality.
• If you sell products in person or via ecommerce, apply for a seller’s permit.
• You can use your Social Security number (SSN) to pay taxes if you are a sole proprietor with no employees. Other structures need an employer identification number (EIN) for payroll and taxes. Sole proprietors can apply for EINs, too.
• Some businesses require special permits and licenses.

Now, choose appropriate insurance policies.

Purchase Small Business Insurance

Entrepreneurs must assess the liability risk for each business under each legal entity. This allows them to select an insurance plan that protects them.

Some common types of insurance include:

• Automobile insurance if you use vehicles in your business, including your own car
• Director’s and officer’s liability insurance for corporations and nonprofits
• Errors and omissions insurance
• General liability insurance
• Malpractice insurance
• Product liability insurance if you create products
• Property insurance, like business interruption, fire, and flood
• Renter’s insurance if you do not own the building you operate from
• Worker’s compensation insurance for when you hire employees or laborers

Remember that insurance policies cover any damage claims against your business up to the policy limit and usually provide an attorney to defend your organization. Without insurance, you would be responsible for paying damages from your own business bank accounts.

Be sure that all of your insurance needs are taken care of before you even open your doors.

Create Legal Agreements

Legal agreements, or contracts, help establish boundaries and expectations in your business, not only for others but also for your business.

You should create contracts where applicable for:

• Advertisers
• Clients
• Contractors
• Distributors
• Employees
• Exhibitors
• Social media managers and marketing firms
• Sponsors
• Vendors

Confidentiality agreements protect your intellectual property, ideas, and insider information from being leaked to the public or competitors. Employee policies and procedures help protect your business if the employees disobey them without your approval.

Opening Your Business To The Public

Once your business is legal, you can sign legal documents for your building or a rental agreement. You could rent an office, retail, or workshop space, buy a building, or work from home.

Are you ready to take in money? Create an efficient and reliable bookkeeping plan. You should not combine your personal funds with your business funds.

Use Small Business Resources To Your Advantage

A successful entrepreneur understands the importance of taking advantage of their surroundings. This includes networking in their community and securing beneficial partnerships. Joining your local chamber of commerce creates a local network of other business owners with whom you can partner. The SBA has Small Business Development Centers in most states, offering community events and mentoring.

Entrepreneurs Consult With Experts

Starting a business is one of the biggest things you will do. It’s a large investment of time and money. It pays to get the help you need at the start. Talking to an actual accountant, tax expert, and business lawyer can be invaluable in launching a successful small business.