Congratulations on wanting to start your own business or branch out as an entrepreneur! Perhaps you are brand new to it or you’ve already gotten started but want to make sure you’re checking all the boxes. There are many ways to start a business and several key factors you should consider before diving in headfirst. Read on for our top tips for entrepreneurs and new business owners.
The most important thing is to plan! But, keep in mind, over-planning can lead to perfectionism, get you stuck in the weeds on minor details, and discourage you from moving forward. Under-planning and jumping in blind can lead to making costly mistakes that can increase your likelihood to fail. The right strategy will land you perfectly in between.
These five top tips for entrepreneurs and new business owners will help you navigate the unknown that lies ahead and set you up to be as successful as possible.
1. Research Your Market
If you’re ready to start a business, you probably already know what it is you want to do or sell. (And if you don’t, press pause here and do that first.) Many entrepreneurs spend a lot of time focusing on their product or service, but it’s just as critical to go out and research what your soon-to-be competitors are doing and how it might impact your business.
A few good ways to accomplish market research are through questionnaires and surveys from potential customers, existing data and statistics about your product/service market fit and its long-term performance, and a SWOT analysis (strengths, weaknesses, opportunities, and threats) of your business idea.
2. Define Your “Why” and Create a Business Plan
Once you have a good idea how your product or service will be received by potential customers, the next step is to determine your “why”. Why are you starting this business?
- Are you looking for flexibility in your work structure and the ability to make your own decisions?
- Do you recognize a need that is not being met in the space?
- Are you extremely passionate about baking cakes, writing blog posts, providing coaching services, or [insert your business focus here]?
The list can go on forever, and your “why” is likely a combination of several things. It’s important to nail down exactly what your “why” is — what truly motivates you to start this business — and determine if it’s enough to keep you motivated through the ups, downs, and in-betweens of running a business.
With your “why” at the core, the next step is to create a well-thought-out business plan. You should define:
- The unique problem you’re solving for your customers, and the unique needs you are able to meet. (Think much deeper than, “I sell/provide XYZ.”)
- A mission statement.
- Your vision.
- What accomplishing your goals looks like in six months, one year, or five years.
- A plan of execution for bringing your products or services to market.
- The business’ financial plan and budget.
3. Assess Your Finances and Open a Bank Account
Taking a long hard look at your finances and determining what you will need monetarily to successfully operate a business is paramount. Without money, a business can’t move forward. From the start, you need to analyze how much money you already have that can go toward the business, what your overhead costs will be, what your monthly or yearly expenses will look like, whether you need funding from a small business loan or investor, and what your budget is.
With that, it’s important to keep business money separated from personal funds. All business-related income and expenses should go in and out of a business checking account so you can easily see how much you are spending on your business, how much money you have coming in, and your profitability. Having a separate account is also helpful for when tax time rolls around in case you can take any deductions, write-offs, etc.
4. Choose an Entity and Register Your Business
Before you can register your company with the government and IRS, you’ll need to choose an entity. The type of entity your business is determines everything from legal and personal liability to how you file your taxes.
- Sole proprietorship — owning and being responsible for all debts and obligations of the business
- Partnership — means that two or more people are personally liable for owning the business
- Limited Liability Company (LLC) — separates your personal liability from your company’s and is taxed as a sole proprietorship (single-member) or a partnership (two or more members)
- Corporation — makes the business a separate entity than its owners, and is especially fitting for a business planning to “go public” or pursue funding from investors
Once you’ve determined your business entity, you’ll want to register with federal, state, and local governments, which will vary by location and industry.
5. Put Yourself Out There!
When you have the details above hammered out, it’s time to make a name for yourself. These guidelines are a great place to start:
- Networking — Connect with family, friends, former colleagues, and other professionals in the industry to let them know about your business. Building relationships from the start is a great way to create a foundation and open opportunities for future business deals.
- Create a brand — This includes things like creating a logo, building a website, determining your marketing messaging, and so on. You can do this on your own at the start or hire writers and designers to help you.
- Social media — Online marketing and outreach is one of the fastest growing channels out there! Share updates, thought leadership content, and more to start attracting an audience.
- Reach out to prospects — There are many ways you can start to directly contact your potential customers, such as email, phone calls, LinkedIn, and social media.
Questions on our top tips for entrepreneurs and new business owners? Ask our team!
We know that organizing your business finances among everything else can be confusing and overwhelming. At Republic Bank of Chicago, we have excellent bankers and financial advisors available to help you put together your financial plan and set you up with the right tools. Reach out to us at 800-526-9127, or read more financial tips on our website.