With the advent of internet shopping and social media advertising, there has been a boom in small businesses over the last decade. In 2021, 5.4 million new business applications were submitted in the U.S. - more than 20 percent higher than any previous year. If you aspire to be a small business owner, it’s important to be prepared and have a plan before making a financial commitment. In this article, we’ll explore three keys to starting a small business from scratch.
Determine what Drives You
It goes without saying, but every business starts with an idea. There are plenty of obstacles waiting to impede your path to a profitable business. Do yourself a favor and start with an idea you are passionate about. If you believe in what you’re doing and are passionate about helping people, you are well on your way to providing a service that’s beneficial to society. If you care about something and become really good at providing a service to people, then you can add a ton of value to people’s lives. That is what makes a business successful.
Make a Plan
Obviously, you can’t start a business without a clearly defined roadmap. Define your mission, vision, and values before getting too granular. This is effectively an offshoot of the first step (above) but allows you to flesh out your “drive” a little more. Once you’re comfortable with what your business is going to be about, start to ask questions like “What is my budget,” “How will I make my services available” (online, brick and mortar etc.), and “What will my policies be?” You may even find it advantageous to use a calendar to plan out your timeline for gathering information, making your plan, and applying for the appropriate business license.
Get Granular
This is where the real work begins. You’ll need to decide on your business structure, the number of funds needed upfront, and the tax implications of starting and sustaining a business. It is always a bad idea to go into debt in order to start a business. It is wise to pay for your business costs in cash and be committed to growing slowly. If you are on baby step two and have personal debt, take the time to pay it off completely before putting your plan into motion. It’s better to wait until you’re financially independent than to use debt as a safety net and watch your dream business go up in smoke. There is a reason that 1 in 5 small businesses fail. By the time the rubber meets the road, you want to be sure that you’ve thought through every angle of the business in detail. If you have, then going from concept to reality won’t be so daunting. For a more complete checklist, check out the article our friends at Ramsey Solutions wrote on starting a small business.
These three steps will have you well on your way to starting your business, but once you’ve thought through the important pieces of the puzzle, you’re ready to do the fun stuff like brand development. The whole process of starting a business takes time, so don’t be discouraged if you can’t start a business by next month. Remember, debt-free is always the best way to go so that you can live a financially independent life and live out your dreams.
At Whitaker-Myers, we have a team of professionals that offer diverse skillsets to our clients. With the heart of a teacher, we are ready to help you prepare for your goals. If you are interested in starting a business and need to talk with a tax professional, reach out to us so we can help you put together a plan that makes sense.
STARTING A SMALL BUSINESS
December 8, 2022
Nick Allen
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