1. Write a Business Plan
Before you start, you will need to know what kind of business you want to start and how you are going to make money. Do your research; know the landscape of your industry and your competition. Include a plan for marketing, pricing, operations, and financing. Most people don’t understand the value in preparing your own business plan. Preparing your plan or at least being involved in the preparation of your own business plan, helps you go through a dry run of what your business might look like in the future. Don’t pass up this important step it is the foundation of everything else that happens.
2. Choose a Business Structure: Understand your options for structuring your business. Consider personal liability, taxation, and operational structures. Some of the most common options include a sole proprietorship in which you alone will be responsible for your business’ assets and liabilities, a corporation which defers liability from its shareholders to the corporation itself, and a limited liability company which limits your personal liability while providing operational and taxing flexibility. Choosing the right structure could be the “make you or break you decision”. Corporations, while more costly, shield you from the downside of creditors. The right decision here could save your personal credit or maybe your personal assets. Choose wisely.
3. Assess your Financing Options: You may have a healthy savings to fall back on, or you may keep a full-time job until your business is profitable. However, it is likely you will need to seek external funding for your business. This can be done through small business loans, grants, and venture capital. Whichever you decide, be sure to weigh out all of your options first.
Sometimes the capital you need to get your business started may be small enough to get it from your personal credit cards. Amounts like $5,000, $10,000 or slightly more are very doable. If your credit score is 670 or better this might be a really good choice. It will be faster and significantly less paperwork. When it comes to bank loans most banks want at least 3 years in business. But the SBA.gov could be your next stop. A new and up and coming way to raise money is “crowdfunding”. Go to one of many sites like indiegogo.com, gofundme.com or kickstarter. These websites can help you raise funds for your ideas and small business. Billions of dollars are now being raised by small business people all across the country. Your business idea could be one of them.
4. Get the Proper Licenses & Registrations: If you are starting a business you should operate with the proper license. Check for license requirements with the state, county and city you operate in. Any or all of them may require a license of some sort. Also, you will likely need to get an employer Id number (EIN) from the IRS. Go to IRS.gov and search under EIN to apply online. Having an EIN number helps you separate your business from your personal. This is also likely a requirement when opening a business bank account under the company name. Getting an EIN number might save you personal tax problems in the future. The key here is to separate yourself out from your business in every way and to operate within the law in your area.
5. Hire Good People: Determine your personnel needs and find employees to fit those needs. You can hire qualified people from many online employment sites including monster.com, indeed.com or Craigslist. For simplification purposes you may consider starting new hires out as contract workers until you get the business up and running. However, this approach should be used sparingly and with full agreement clarifying their status to avoid future tax problems. Remember someone needs to pay the payroll tax unless the person you hired is a self employed independent contractor.
Also, always remember, hiring the right people is the most important job that an entrepreneur has. Your business is about people not just products or ideas. The right people can make your business prosper and the wrong people will surely put you under.
Marvin Wilcher www.MarvinWilcher.net) is President of NationWize Solar, Managing Director at Solar Capital Inc., and sponsor to a clean energy camp for kids called Camp Green USA (CampGreenUSA.com). Mr. Wilcher is also a regular contributor to MarvinKnows.com. •