The process of starting a new business doesn’t have to be complex and confusing. By following a very specific checklist from the outset, it’s possible to be up and running faster than you ever anticipated. While the precise steps might differ depending on your specific industry or sector, it’s possible to come up with basic steps that apply to any new business.
STEP 1: Create a business plan
The starting point for launching a new business needs to be a business plan. There are plenty of templates that you can find online – including the actual business plans prepared by some of the most famous startups in Silicon Valley. In general, a business plan will include a discussion of the overall market problem you are trying to solve, and a summary of your company’s financial projections, marketing strategy and operational approach.
STEP 2: Take care of all the legal issues
The major legal issue to address is determining the overall legal structure of your business, such as a sole proprietorship, limited liability corporation (LLC) or partnership. From there, you’ll have to register your business name with federal and state tax authorities. You’ll also have to line up any necessary business licenses or permits. Here’s where your CPA can play a very important role.
STEP 3: Line up enough financing for the first 6 months
For some entrepreneurs, it’s possible to finance the launch of a new business solely with bank savings. Others turn to credit cards as a source of financing. And yet others turn to friends and family for financial assistance. As a rule of thumb, you’ll want to have enough of a cash cushion to last at least 6 months. Once you have figured out your monthly “burn rate,” you’ll be able to adjust this figure accordingly.
STEP 4: Determine your business location
You should have already been thinking about business location in Step 1, but now’s the time to actually choose a location for your small business. In most cases, it will be a brick-and-mortar location. But for some online entrepreneurs, it might be possible to run a business solely from home (and the occasional Starbucks). Others might prefer to rent or lease office space. When searching for the perfect business location, don’t forget to inquire about zoning laws. And understand how your choice of location could impact your future success. If you’re a new restaurant business, for example, you don’t want to be located in a desolate part of town!
STEP 5: Hire employees
Anytime you hire new employees, you’ll need to understand all the legal obligations you have under the law (such as providing the right tax documentation). You’ll also have to give thought to issues like employer insurance. This might be a step where you need to consult with your CPA, just to make sure that you’ve covered all your bases.
After these five basic steps, you’re ready to launch! Remember – it takes more than just opening your doors to the public for people to start buying your products. That’s why your business plan from Step 1 is so critical – it’s basically a blueprint of how you plan to attract new customers, and how you plan to win market share from your competitors. If you’ve taken all the necessary legal and regulatory steps to set up your business (as outlined above), you’ll be well on your way to business success.
This article was contributed by Lorra Brown - an author, speaker, CPA, and the CEO of LBE Consulting, PLLC a consulting firm based in Grand Prairie, Texas. Having early on recognized the specific accounting and tax needs of female business owners, Lorra was inspired to develop her consulting company as the ultimate solution. She has since garnered a wealth of f emale entrepreneur clients, and become widely known as both a thought leader and leading authority in small business accounting and tax.