Finances FYI Presented by JPMorgan Chase
Have you ever considered starting your own business? The Commerce Insitute notes, “data from the U.S. Census Bureau shows an average of 4.4 million businesses are started every year.” Many people start a small business because they want to be their own boss or are dissatisfied working for someone else, particularly in corporate jobs. Others have a passion or skill they believe can turn into a money-making business. Often owners aim to achieve financial freedom or want flexibility in their time.
Whatever the reason for starting a business, there are essential steps to selecting an idea that will be successful and opening the business legitimately.
Select a Profitable Idea
The first step in starting a small business is choosing the right business idea. There are several things to consider when making this decision, including your skills and experience, market needs, and your budget. Think about the amount of time and money you have to invest in your business and your long-term goals.
It’s also critical to analyze your strengths and weaknesses to determine a business idea that is a good fit for you. Once you’ve explored these questions, narrow down your list of potential business ideas. Then, vet your top idea or ideas.
Write a Business Plan
Business plans are usually a requirement if you seek a business loan. Even if you don’t need funding for your business, writing a business plan is a wise idea. The plan will outline your business goals, strategies, and financial projections. It will help you understand if the concept is viable, calculate the resources needed, and identify the steps to launch the business. Plans also help you stay on track as your business grows. Some key areas to include:
- A company description.
- The products or services you will offer.
- Your competitors and how you will differentiate.
- Strategy for launching your business.
- Staffing needs and position responsibilities.
- Start-up costs, funding strategies, and financial projections.
- Marketing strategies will you use to attract customers.
Business Setup Essentials
Once you’ve created your business plan, the next step is to register your business with your state and the Internal Revenue Services (IRS) to receive a tax identification (EIN) number. As you do this, you must select a legal structure determining how you pay taxes, personal liability, and paperwork requirements. Your EIN allows you to set up a business bank account to keep your business expenses separate from personal.
Obtaining business insurance protects you against costs and liabilities from unfortunate incidents such as accidents, theft, natural disasters, and lawsuits. Additional permits, licenses, and certifications may be recommended or required depending on the type of business and related regulations.
Brand Your Business
Your business name, logo, colors, and messaging are essential to launching a business. You can hire professionals for this process that range in price and skills. Even if you DIY your branding, soliciting feedback from various people is beneficial.
Some key considerations to make when going through the branding process include:
- Is there a website domain available for your business name?
- Does your business name have another meaning that could be inappropriate or offensive?
- Does your competition have a similar name that makes it harder for you to stand out?
- Is it clear what services or products you offer from your name, logo, and tagline?
- Did you avoid using misspelled or difficult-to-pronounce words that could make it difficult for customers to find you?
Market Your Business
Once your branding is in place, how will customers contact and find you? Establish a business phone number, email address, website domain, and social media handles to provide several avenues for reaching and communicating with customers. Will your marketing be online, printed materials, paid advertising, or a combination?
In a recent study, Top Design Firms found that 28% of businesses do not have a website. Websites are a vital avenue for customers to find your business and spend money with you. Even if you aren’t selling products online, websites convert visitors into paying customers by building awareness and trust. Websites provide information about your products and services, can provide a place to sign up for email newsletters, and connect visitors to your social media platforms.
Starting a small business can be a challenging but rewarding experience. It’s essential to find the right resources to help you. Consider talking to other entrepreneurs, joining networking groups such as the local chamber of commerce, or attending workshops and seminars. Also, look into government resources through the Small Business Association, such as grants, loans, and education, that can help you get your business off the ground.
Finances FYI is presented by JPMorgan Chase. JPMorgan Chase is making a $30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.
