10 Key Steps to Starting Your Business

Before launching a startup, create a solid plan to increase its survival chances. Here are ten things to help you start on the right foot.

The idea of starting a business can be quite daunting. What steps do you take? How much money will it cost to get started? Is there a way to reduce my risk before starting a business?

Before launching a startup, create a solid plan and commit to follow that plan in order increase the chances of your business’ success. If you’re an aspiring business owner, here are ten things to help you start on the right foot.

1.   Learn Your Industry

Understanding the industry is essential to developing a strong competitive position. Through research, you can gather useful information about the market you’re eyeing. Watch competitors, talk with similar businesses, and analyze your competitor’s websites and social media pages to better understand the industry. Compare your business to your competitors. What is the quality of their goods or services? Are their prices competitive? How are they marketing their businesses?

Also, research the market demand for your goods or services. Is demand growing or declining in your location? Are there opportunities to diversify your product line or services to reach more customers without jeopardizing expertise and customer service?

2.   Know Your Target Market

Research the demographics of your potential customer base and pay close attention to the frequency and amounts of their purchases. Identify their basic demographics, like age, gender, and location. Analyze their interests and behaviors. What activities do they have in common? Do they prefer to shop in person or online? How important is price point to their ability to purchase goods and services? Understanding these and other characteristics of your target market will put you in a better position to address them and create lasting relationships with your clients.

This research is essential in establishing your brand message. It also enables you to spend your funds and energy efficiently.

3.   Know Your Purpose

Having a mission guides your business in the right direction, helping you make decisions that boost your revenue. Think about your organization’s purpose to understand the goals you should be pursuing. Once you’ve set your goals, you can develop a strategy geared to accomplishing them. Your purpose is the foundation on which you will build your business from the ground up.

4.   Develop a Business Plan

Whether you’re starting a business or taking your existing business to the next level, you should compose your ideas in a business plan. It helps you articulate a strategy for getting started by outlining the steps you must take to move forward in your business.

A business plan also provides the timelines for achieving the anticipated results. It serves as a roadmap for growth, explicitly indicating how various objectives will contribute to business growth.

Without a well-designed business plan, the chances of success for a business decrease substantially. Likewise, successful businesses frequently modify their business plans to address new challenges and pivot to meet new customer needs.

RCLF has provided an interactive Business Plan template in COMPASS. If you need assistance with this process, contact your RCLF Business Coach for advice and guidance.

5.   Map Your Finances

It’s often stated that “It takes money to make money!” Well, it takes money or startup capital to start a business. Startup businesses often require the purchase or lease of furniture, equipment, business space, inventory, utilities, marketing, renovations, salaries, insurance, and many other expenses. At this point in the process, calculate how much money you need to start the business and devise a plan to acquire those funds.

The need to adjust in your personal finances and household budget often serves as the first step in this process. Reduce your credit card debt and personal spending. Work toward increasing your credit score. Pay all charge-offs that negatively impact your credit score. Save money and prepare to put “skin in the game” or invest your personal finances to make your business successful.

Often, the costs associated with starting a new business far exceed the amount of money saved to invest in the business. At this point, a new business owner will need to pursue other financing options for the business.

Sources of business capital include but are not limited to

• Nonprofit loan funds like RCLF,
• Banks and credit unions,
• Angel Investors,
• Crowdfunding websites, and
• Friends and family.

Explore all these options and make wise decisions. Choose financial options that provide cash at the least cost with the best terms. Seek a lasting relationship with your lender and pursue opportunities to foster partnerships for future expansion. For instance, RCLF provides coaching services in addition to commercial loans.

6.   Know Your Business Risks

Business risks are factors that might hinder your business from achieving its goals. For instance, your products can lose demand due to a change in customer preferences. A production line can break down when you’ve not met the output target.

Typical risks that small business owners should look out for include:

• Financial
• Business disruptions
• Liability
• Business interruptions
• Security/Cyber threats

You cannot avoid risks altogether, but you can create a risk management strategy to minimize their impact. For example, investing in sound legal advice and appropriate insurance can prevent or control liability risk.

Research standard liability and other risks for your industry. Create a plan for limiting that risk and prepare to invest money to put that plan into action.

7.   Select a Business Entity Type

Business structure choices have long-term implications on liability, tax, and income, so you should be careful with your decision. To choose the right business entity type for your business, analyze your goals and consider local, state and federal laws. For new businesses consider your startup’s financial needs, risk, and ability to grow.  Seek expert advice from business professionals when considering the pros and cons of your options.

Watch the video series— “Starting a Business”—to learn more about business entity types in Alabama and Mississippi.

8.   Understand Your Tax Burden

Once you open a business, be ready to understand your tax obligations. Business taxes include Federal and State income tax, self-employment tax, payroll tax, sales tax, and local taxes.

A qualified accountant can help your business comply with various tax laws and file your return accurately. Noncompliance with Federal, State, and Local Tax requirements can result in audits and hefty penalties. Your tax obligation depends on your business structure and whether you have employees.

If you hire workers, your business will be obligated to withhold federal income tax from their wages, pay FICA tax for each employee, and pay unemployment tax. Also, businesses in Alabama and Mississippi must withhold state income taxes from employee wages.

9.   Schedule Your Business Launch

Look for optimum opportunities to launch your business. If your business targets holiday shoppers, start the business a few months before the holidays to build excitement in time to produce maximum sales.

Avoid setting an unrealistic launch schedule to meet emotional or artificial goals. Ensure that funding is in place, infrastructure meets all legal requirements, and systems have been tested and proven before launching your business.

10.  Build Professional Relationships

Build a team of trusted professionals to seek advice along the business ownership journey. Having an accountant, business attorney, lender, and quality mentors to ask questions to and receive advice from will separate your business from most of your competitors and create a foundation for success moving forward.

Always remember that your assigned RCLF Business Coach is here to assist you along the way as well.

Written by Gina King-