A lot of Americans dream about cutting ties with their day jobs and pursuing business ownership. How many? Estimates put it around 62 percent.
Of course, dreaming about entrepreneurial success and becoming a small business owner are dramatically different things. Launching a business takes a lot of planning, some luck, and careful financial consideration. What if you’re committed, but just don’t know where to begin.
Keep reading. We’ll give you a guide that will help transform your dreams of becoming a small business owner into an approach that will let you take active steps toward becoming one.
Pick Your Business
Unless you’re absolutely committed to the idea of running a specific kind of brick-and-mortar business, like a bakery or vintage clothing shop, online businesses offer you the most options. For our purposes, online means that your customers find you, purchase products from you, or hire you online.
That can mean you run a service business, like window cleaning or windshield repair, or you leverage a skill you have, like programming, writing, or graphic design. You can even consider eCommerce options, such as selling digital products online or dropshipping as a brand.
Ideally, you’ll pick something that plays to your strengths or interests. If you don’t have something particular in mind, consider a franchise business. You can find ones at most price points, and they typically provide good support.
Write a Business Plan
If you want to run a smart business, start by writing a business plan. Writing a business plan makes you think through parts of the business you might have glossed over mentally, like marketing, competition, or even the full costs.
If you’re thinking you’ll bootstrap an at-home business or freelancing business, you should still write a business plan. That business plan will help you develop a budget for your first six months, which you save up ahead of time. It doesn’t need to be as in-depth, but you should still look at costs, marketing, competition, and figure out what products or services you’ll offer.
If you plan on opening a brick-and-mortar business, you’ll need a fully fleshed-out business plan with everything from an executive summary to financial projections. Make sure you price out real estate costs for leasing as part of the financials. You’ll need all of that for banks or investors.
If you’re bootstrapping, the money all comes out of your pocket. That means you need enough saved up to cover all your personal and business expenses for six months to a year. The alternative is that you keep your day job to cover those expenses and work on your business in your free time.
If you’re seeking outside funding, there are a few main sources you can look toward. You can look for standard loans through a bank, SBA loans, or private funding. Private funding will typically come from friends, family, or acquaintances.
If you’re very lucky and have an exceptionally good idea, you might score some funding from an angel investor or venture capitalist. Don’t count on that, though.
There are legal hoops that most businesses must go through. In terms of taxes, most small businesses start out life as sole proprietorships. That basically means you file your business profit and loss on your personal taxes.
That often works in the long term for freelancers, since their odds of getting sued are generally low.
If you want to protect your personal assets from a business lawsuit, though, you’ll need to incorporate the business. Most small businesses opt for a limited liability company.
Depending on your business, you will likely need to register with the state and possibly get a local business license or permit. Some businesses must get insurance under the law, but all businesses should carry some to cover equipment and liability.
Spend some time figuring out your brand before you get too deep into marketing your business. That means understanding your target customer since you’ll approach a B2B brand differently than a B2C brand. In general, think of it as the overall attitude of your business.
That attitude will define your voice in terms of ads, blog posts, and even the copy on your website.
For brick-and-mortar businesses, there is a whole process for outfitting your space. You’ll want a contractor who specializes in commercial spaces.
All businesses need a business website. If you’re online-only as a freelancer, eCommerce business, or you provide digital services, make sure your website shines. It’s the first and possibly last impression you’ll make on potential customers.
When building your website, consider your needs in advance. Content management systems support plugins that can handle a wide variety of sales and scheduling needs. If those won’t cover your needs, you’ll need a custom site.
A successful entrepreneur understands that they have limits in terms of time, energy, and skills. When you first start the process, you’ll likely do a bit of everything, but that can’t last. At some point, the demands of your business will outstrip your available time and energy or your skills.
The trick is for you to recognize where your strengths are and delegate or outsource the rest. For example, odds are good that you don’t have a CPA on staff. So it makes sense to outsource your tax prep to a tax prep business, such as https://www.taxfyle.com/tax-preparation-outsourcing.
You should also consider outsourcing skill or tech-heavy elements of your business, such as bookkeeping and IT.
Becoming a Small Business Owner
If you’re set on becoming a small business owner, understand that even online businesses take time to set up. You should assume that the process of getting starting until the time that you open or go live will take months. For brick-and-mortar businesses, it may even take upwards of a year or two.
If the prospect of waiting for a year sounds unbearable, you should set your sights on an online venture.
Looking for more tips on becoming a small business owner. Check out the posts in our Business section.