Becoming an entrepreneur is not for everyone, but with hard work, start-up capital, a great idea, and a solid business plan, it can be a richly rewarding career path. This article is a brief overview of how to start a business and become an entrepreneur. You will find links to more in-depth articles and small business tips at FindLaw's Starting a Business section.
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How To Become an Entrepreneur: First Steps
Your Business Idea
Starting your own business takes a lot of time and work, so choose a business that inspires and excites you and lets you do what you love. The hours you put into your startup business will feel fruitful in more ways than one.
- What do you know about/have expertise in? Successful entrepreneurs work from their strengths. Do you love homes? Consider starting a real estate business. Love fashion? You should think about a jewelry store, shoe store, or cosmetics business.
- When do you like to work? Are you an early riser, ready with a smile at 6 am? Maybe you'd enjoy opening a coffee shop. Would you rather not see the sun before noon, and go strong in the evening? How about opening a hookah lounge, a nightclub, or a late-night cafe? Maybe you prefer engage in entrepreneurship from a distance. Consider operating a laundromat or a car wash.
- Who do you like to work with? Some people work best alone and others thrive when working with kindred spirits. You can find business success either way by choosing a startup that fits your style. Like to work alone? Consider starting a cleaning business or a massage therapy business. Maybe you want to start an e-commerce site, an Etsy shop, or sell on eBay? Doing bookkeeping for other small businesses can also be lucrative. Maybe you don't want to do the work yourself but you have excellent administrative skills. You could start a business where you secure the property and/or handle scheduling and billing while outsourcing the customer-facing work to independent contractors. Cleaning and massage businesses work well for that, too.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.
- Who do you like to interact with? Most successful entrepreneurs have a lot of face-to-face 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. Like kids? Consider starting a nonprofit that works with youth.
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. It doesn't matter how small your business will be, doing the work of writing a business plan will help you think through all of the details. It's the foundation for business success as well as future growth.
Your business plan should include:
- An Executive Summary: This is a synopsis of your plan that you can show to anyone who needs to understand your business goals. It's particularly important for potential investors, so take the time to write this well.
- Background and Purpose: This is where you share your vision as a business leader for your company, and discuss your business model, products, or services.
- Market Analysis: How much opportunity is there to launch a successful business? Thorough market research into your potential customer base and your competition should help you choose a location for your business, refine your product and service offerings, and create a pricing strategy.
- Product/Service Description: Having completed your competitive analysis and market analysis you should be able to refine your product or service offerings to neatly fit your market niche.
- Marketing Strategy: It's not too early to develop a marketing strategy even before you have opened your business. You want to hit the ground running. Who is your target audience? Where do they live? What do they like to do? How will you reach new customers? Social media? LinkedIn? Word of mouth? A podcast or YouTube channel? Affiliate marketing?
- Financial Information: This is the meat and potatoes if you are seeking capital from investors and lenders. But even if you are just writing a business plan for yourself, understanding the basics of your business finances is critical. What are your start-up costs? What cash flow do you need to keep your bottom line profitable? When will you break even?
- Organizational Structure: Decide what kind of legal structure you want. Many small businesses start out as a sole proprietorship or a partnership and then grow into a corporation or LLC. You may want to consult a small business attorney at this time to ensure you choose the right business formation.
After you have worked out the details of your business plan, you're ready to put it into action.
Make It Legal
Now that you've chosen a legal structure, you can begin forming your business. Your first step is choosing a business name and registering it with your state. Protect it with a trademark.
There are certain documents every small business owner must have:
- File for a business license with your Secretary of State and your local municipality, if required.
- If you are going to sell products, apply for a seller's permit.
- If you are a sole proprietor with no employees, you can use your own Social Security number (SSN) to pay taxes. If your business structure is anything other than a sole proprietorship, you will need an employer identification number (EIN) to enable you to do payroll and pay taxes. Sole proprietors can apply for EINs as well in order to safeguard their SSNs.
- Some businesses require special permits and licenses.
Before You Open the Doors
Find your space: Once your business is a legal entity, you can sign legal documents for it. You're ready to find a location. You can rent an office, retail, or workshop space, buy a building, or choose to work from home.
Now choose an insurance plan. Every small business owner needs to assess their risk of liability so they can choose an insurance plan. Be sure that all of your insurance needs are taken care of before you even open your doors.
Are you ready to take in money? Create an efficient and reliable bookkeeping plan so your business starts off on the right foot immediately.
Consult the Experts
Starting a business is one of the biggest things you will do in your life. It's a huge investment of time and money. It pays to get the help you need at the start. There are a plethora of self-help books and free online resources, but talking to a real accountant, or tax expert, or business lawyer can be invaluable in launching a successful small business.
Talk To a Business Lawyer for Legal Guidance
As a business startup entrepreneur, you wear a lot of hats. You don't need to wear the hat of a legal expert, too. Leave legal matters to the attorneys. Contact a business and commercial law attorney before opening your new business.