More than half of working Americans are employed in small businesses – those classified as having 500 employees or less. As the unemployment rate continues to stagnate, current job seekers and others may be considering whether it makes sense to start their own business or continue to rely on corporations to keep themselves employed. While there is uncertainty in today’s job market, people consider starting their own business for other reasons too, including the freedom and flexibility offered when you become your own boss. And with the internet as a cost–effective marketing tool, people are finding the options to starting their own business more varied than they were decades earlier.
If you are weighing a small business option for yourself, there are certain things to consider and steps you will need to take.
Planning to develop a small business means that you have to consider many factors – from the financial investment required to development of a formal business plan. In fact, if you are considering tapping into outside funding resources, you will need a business plan. Your business plan should include an executive summary which outlines your business model. A company description is also necessary, including the types of products or services you will be selling. You will also need to include a marketing overview, including key competitive factors. An overall strategy and implementation plan will be required, focusing on roles and responsibilities and the dates and timelines necessary to start your business. And you will also need to outline your management team and include a financial plan.
Funding sources can be derived from several different avenues, including personal financing. If you do not have your own funding resource you may need to look to federal, state or local government agencies, all of which provide programs for small business start–ups. You may also look to local banking institutions to determine the types of small business loan programs they may have available.
Determine Your Location
Location is based on several factors and is dependent on the type of business you plan to run. If it is an internet–based establishment, you may not require a physical location; rather a home–based location may suffice. However, if you plan on hiring a pool of employees to support your venture, office space may be needed.
If you require a retail location to sell your products, you will need to determine the best location to drive foot traffic. Here you will need to consider multiple factors, including how will people get to your location – are you in a popular downtown area, close to a mall, or is there enough parking and access. What is the proximity to any competitors – or does the lack of competitors mean the location you choose is best suited for the products you will be selling. If you are opening a physical location, you’ll also need to research zoning and signage regulations for that specific area.
Develop a Marketing Plan
Marketing techniques again will be determined by the type of business that you open, but some of the main marketing tactics will be consistent regardless. From word of mouth to advertising, your marketing plan needs to include all elements that will drive customers to your products or services. Consider everything from advertising in offline print publication, radio and TV – to search engine marketing to drive traffic to your web site or your local retail location. Social media is also a cost–effective and highly utilized medium. You may want to look into advertising on Facebook, or promoting your business via Twitter, blogs and other social media platforms. Whether you have an online business or not, a web site is one of the most necessary marketing tools required for promoting any type of business today.
Understand the Legal and Tax Requirements
When staring a small business you should be aware of all the legal implications. First, you will need to establish your business as a legal entity. If you are developing new ideas – otherwise know as intellectual property – you will need to protect them. If you are developing a new product or invention, you may need to develop a patent.
You should also understand tax laws and regulations. If you have employees you are required to obtain an Employer Identification Number (EIN) or Employer Tax ID from the Internal Revenue Service for tax purposes. Visit the IRS’ website for more details on the tax implications for small businesses.
Register Your Name
Depending on the type of business you are running, you will need to register your name. This may also include registration of a domain name, if you plan on developing a website.
Understand Your Role as an Employer
As an employer, you need to withhold, deposit, report on and pay employment taxes – all of which is submitted to the IRS.
You should also be well–versed on employment hiring laws. These laws protect employees and prohibit discrimination in employment decisions based on race, color, religion, sex, age, ethnic/national origin, disability, or veteran status. These laws are enforced by the United States Department of Labor.