According to Bloomberg, 8 out of 10 new small businesses will fail within the first 18 months. In other words, it’s not easy being your own boss. To make it as a company involves planning, making sound financial decisions and carrying out what seems to be an endless list of legal activities.
Of course, that’s just the beginning. Even after all your paperwork has been completed and you’ve given the first down payment to secure that business location you had your eye on; there are other things you need to figure out: Will you limit your online presence to a “simple” website or will you have some sort of social media presence? Will you buy a phone system or settle for a softphone? Will you hire any remote workers or you plan to keep your staff local?
Here are the key obstacles an entrepreneur must overcome to successfully start a new business:
1. Plan ahead
You must create a business plan. We won’t go into details here, because this topic is meaty enough to write a whole book about it, but you do need to map out how you plan to start as well as how you will run your business over the first few months (ideally the first semester). If you don’t know how to work on a business plan by yourself then get business assistance. There are several free (online) training services that can help you prepare a business plan.
2. Determine the Legal configuration of your business
Do you know which form of ownership is the right one for your company? You should. Organizing your business as a legal entity is essential before you open up shop. Obviously, there are several options and they all have various considerations. Just keep in mind that the right legal structure for your business depends on various factors. Some of the most common legal configurations are proprietorship, corporation and Limited Liability Company (LLC).
If you are not sure about your legal configuration yet, don’t worry. The first type of business you choose doesn’t have to be permanent. For example, you could register as a sole proprietorship at first, and then change it to an LLC.
3. “Doing Business As”
This step is quite obvious, but you need to register your business name with your state government. By default, the legal name of any business is the full name of the person who owns it. Nevertheless, if you are not the sole owner, then the legal name is the one defined in your partnership agreement. Your business’ name is mandatory for all government documents, including employer tax IDs, licenses and permits.
4. Get a Tax Identification Number
Your business is required to get an Employer Identification Number (EIN) from the U.S. Internal Revenue Service. The good news is that you can put apply for an EIN online and it is completely free.Additionally, you also need to register with your state for local taxes. This way you will acquire a tax identification number among other things.
5. Acquire Business Licenses and Permits
There’s a full list of federal, state and local licenses and permits you will need for your business. You need to get them all. It’s crucial to understand the licensing rules where your business is located, because regulations not only change by industry, they also change by state and locality.And it goes without saying but if you fail to adhere to these regulations there can be costly fines that could put your business at serious risk.
6. Location, location, location… and other things
A customer-friendly location can be the difference between thriving and going bankrupt. The real estate term “location, location, location” has been around for decades and there is a good reason for it. However, now there are other things as indispensable as finding the right spot to open up shop. If you think that quality products, great service, a good lawyer, and a reliable accountant all are you need… You are wrong!
A responsive and user-friendly website, a good social media strategy, a fine communications system can help you go the extra mile. Thankfully, there are online tools that can help you a great deal. From free online phone system configurators to in-depth analytics tools for social media by Google, there’s plenty you can do without pushing your budget to the limit.
The “secret” to starting your own business is that there’s no secret. You just need to understand that it is not over once you are done with the paperwork; it’s not over because you have a company logo on the front door of the office. Owning start-up means you have an uphill battle ahead that involves everything from dealing with taxes to opening a Facebook account. In the end, your company success depends on you.
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