Opening a Small Business
America has always been considered a land of opportunity. It also is known for being the birthplace of some of the world’s best and brightest entrepreneurs in every industry and at every scale (small business, medium-size and large companies on the stock exchange).
While starting a business may not be for everyone, it does offer you an avenue for earning extra money if you want to keep your existing job as your primary income source. It can help provide you with an alternative way of earning money doing work you enjoy. It can also become your primary source of income.
Starting a business is not hard, especially in the United States where barriers to entry are fewer than many other places in the world. Some businesses require a lot more capital and sufficient market research given the scope of work involved, partners, tools and equipment required as well as the time to market their products.
But many businesses – in fact the majority of all businesses are small businesses (SMBS) – can be started for as little as a $1,000! Almost anyone can come up with that amount of money to begin. Starting a business while you are already gainfully employed or at school or if you have free time already, is a very smart idea as you can research and grow your business on your schedule.
Building your business will take time and effort but before you invest all your money and resources, consider starting out small with just your idea, a $1,000 or more and testing out your sales first. This reduces your risk and lowers your anxiety about it, while also giving you some room to build out your idea and test it in the marketplace.
To begin, you will need to have at least a one-page business plan. You may have heard of people who launched these amazing companies with an idea on napkin. That’s true. Ideas can happen anywhere and anytime. You don’t need a cumbersome, printed business plan to start your first business.
1 – Page Business Plan
A one-page business plan is sufficient. Your plan must address in simple, clear terms what your vision is for your company, clear goals tied to that vision, your strategies to achieve the goals and then the steps (or tasks) you will take to achieve them! Later, after your business has had initial successful sales and you have committed to doing it as you know you can succeed at it, then you can invest in a more robust business plan. There are a lot of free resources available online from SBA.gov to Stumble Upon’s business plan guide.
Develop a Budget
Start out with as few expenses as possible. Add on an extra 20% to your anticipated budget to be realistic about creeping costs. Figure out your burn rate, or how much cash you will need to spend every month to run your business before you turn a profit. Be sure to set up your business to be profitable within 30 to 90 days. You will want to have enough to cover your expenses in the meantime as smoothly as possible.
Choose a Legal Entity
Figure out the right form of legal status for your company – sole proprietor, LLC or corporation. Fees vary by state and profession. Do your research. In your initial test phase, start out as a sole proprietor so you have less fees and less paperwork and can get going faster. However, you are liable for the business completely so you may want to consult an attorney about this and also get business insurance. After you have proven you can successfully bring in money repeatedly after six months, then you can change your filing status to a more suitable business entity.
Keep Cash Separate
Set up a business account at the bank separate from your personal account for both accounting and taxes.
Set Up Your Website
The world is online so having a website is essential. It does not have to be extensive but at least a site that explains what you offer (product or service), how to get in touch with you, who you are and any references or experience you have. You can further develop your website after you have a proven business model. To get started building a website and developing an online marketing campaign, we recommend you visit SquareSpace and Hubspot.
Let People Know
Tell everyone you know from friends and family to work colleagues, people you meet about your business. Go to the local chamber of commerce and see what resources are available. Attend networking events when possible and see if you can list your business in relevant directories (print and online).
Start small so if you are a service-based business, advertise with relevant directories, lead sources or businesses that are in your industry. Spend a little cash on advertising via Facebook to lift your brand awareness and possibly via other methods online such as Google Adwords with a budget cap.
Now you have enough set up to test your sales.
You will know after 90 days whether your business idea is genuinely viable or not. You’ll also gain tremendous experience in running a business without taking on too much risk. These are wonderful skills that you can apply to any work you do and also to creating successful relationships in work and your personal life. If your business generates enough of a profit, you can then look into developing your business plan and other aspects further.