How to Open Your Own Small Business

Let’s say you have an idea for a unique prod­uct or ser­vice. You want to open your own small busi­ness. You’re darned sure it will work and you have no doubt that you want to be your own boss. You are ready for action. It’s time to do some­thing. Great! Hang on. Here you go!

Select a busi­ness name

• Claim your fic­ti­tious busi­ness name with an FBN (DBA).
• Fur­ther pro­tect your busi­ness with Copy­right, Trade­mark and/​or Ser­vice Mark.
• You will need a Fed­eral Employer Iden­ti­fi­ca­tion Num­ber (FEIN) from the IRS to open a bank account or process payroll

Open a busi­ness bank­ing account so you can sep­a­rate busi­ness and per­sonal finances

• Do this as soon as you secure your busi­ness name and know your busi­ness own­er­ship type.
• Pay your start up costs with this account, not with your per­sonal account because you will likely want to deduct these expenses on your taxes.
• Sep­a­rat­ing per­sonal and busi­ness finances makes the tax­man happy.
• While require­ments for open­ing an account vary from bank to bank, most require copies of part­ner­ship and cor­po­ra­tion paper­work and com­ple­tion of an FBN/​DBA certificate.

Decide on the best Legal Struc­ture for you

• This will have a big impact on your taxes, start up expenses, as well as daily busi­ness operations.

Write a busi­ness plan

• as a guide to you now and in the future
• to impress back­ers, bankers and SBA to help obtain loans and financing
• to include sec­tions on prod­uct, cus­tomer, com­peti­tors, etc., will help you write a mar­ket­ing plan

Write a mar­ket­ing plan

• Start with a logo and use to iden­tity your busi­ness on all mar­ket­ing materials.
• Build your web­site, blog and social net­work­ing sites.
• Join net­work­ing orga­ni­za­tions such as your local Cham­ber or Wom­ens’ Network.
• To stretch your bud­get con­sider low cost/​free mar­ket­ing such as word of mouth, press releases, guest speak­ing, net­work­ing, and find­ing places to post announce­ments of your new ven­ture and events (super­mar­ket bul­letin boards, Craig’s List, penny shoppers)
• Use every tech­nol­ogy avail­able, includ­ing the inter­net, to gain a com­pet­i­tive advan­tage. When cus­tomers do research, make sure your com­pany is there with the infor­ma­tion they seek.
• Use the Inter­net to aug­ment your research.

Build a work­ing knowl­edge of fed­eral and state laws affect­ing businesses

• Know which licenses and per­mits you need to oper­ate your business.
• Find a com­pe­tent legal adviser to help you with legal papers.
• Under­stand Occu­pa­tional Safety and Health require­ments, and haz­ardous mate­r­ial regulations.
• Be famil­iar with local ordi­nances for sig­nage, park­ing, zon­ing issues.

Before you hire employees

• Obtain an employer ID from the IRS plus employee forms. Apply for this tax id num­ber even if you don’t plan to hire employees.
• Con­tact your local INS office to get Employ­ment Eli­gi­bil­ity Ver­i­fi­ca­tion forms (Form I-​9) to prove your employ­ees have the right to work in the United States.
• Con­sider using inde­pen­dent con­trac­tors, but know the difference!
• You may be able to cut expenses by hir­ing fam­ily mem­bers. Check IRS first.

Estab­lish busi­ness records

• Laws, tax code and good busi­ness prac­tices require records
• If nec­es­sary, find a pro­fes­sional to do this for you.
• Main­tain com­plete records of sales income and expenses, accounts payable and receivables.
• Decide how to han­dle pay­roll records tax reports and payments.
• Set up and sched­ule finan­cial reports.

Bud­get your start-​up costs and project your on-​going oper­a­tional costs

Obtain nec­es­sary Workmen’s Com­pen­sa­tion Insurance

Obtain insur­ance for fire, theft, rob­bery, van­dal­ism and liability

Find a Busi­ness Location

• Buy, rent, lease or work from home
• Work on line

Arrange Ini­tial Financing

• Take time to find the best source for you – a bank, ven­ture cap­i­tal­ist, angel investors, SBA grants (government).
• Be cau­tious when using your own savings.
• It can be a few years before you make enough profit to replace savings
• Do not touch your exist­ing 401K or IRA to back your busi­ness. Taxes and penal­i­ties can grab around 40% of the money you take out of a 401K or IRA.
• You need per­sonal emer­gency sav­ings of 10 – 12 months of expenses – espe­cially now that your income is risky.

Get ready to sell merchandise

• Get a Resale Permit.
• Draw up a mer­chan­dise plan using sales esti­mates to deter­mine how much inven­tory you will need so you can con­trol your expenditures.
• Find reli­able sup­pli­ers will­ing to help you in the start-​up phase of your business.
• Always com­pare the prices, qual­ity and credit terms of sup­pli­ers. These can vary greatly.

Get ready to get paid

• Use infor­ma­tion gath­ered in your busi­ness plan to price your prod­uct or service.
• Set up an accounts receiv­able to han­dle billing.
• Make it easy for your cus­tomers to pay you with credit cards.

Tips:

Have the full, enthu­si­as­tic agree­ment of your life part­ner, busi­ness part­ner or spouse (unless you’re on your own). With­out it, you’ll have no one to hang on to dur­ing the rough and rocky ride ahead of you.

If you plan to accept credit cards, you need a mer­chant account–a con­tract between you and a bank that extends a line of credit so a mer­chant can accept pay­ment card trans­ac­tions. These accounts are brand spe­cific (Visa or Mas­ter­Card, etc.) With­out an account, you can’t take credit card payments.

Many busi­nesses never know if they are mak­ing money or fail­ing because they do not keep good records or have a solid busi­ness plan.

Find a men­tor to offer ideas, sug­ges­tions, resources and help keep your busi­ness on track.

It is usu­ally eas­ier and less expen­sive to start up an online busi­ness than an offline business.