National Entrepreneurship Week was initiated by Congress in 2006. The goal is to “promote awareness of the contributions of entrepreneurs as innovators, positive forces in the economy, and important resources for improving communities as places to live and work.” Solving the needs of people and harnessing the power of technology to enter global markets are just a couple of ways entrepreneurs play a significant role in the economy today.
Starting a business is challenging. At Hera Hub, we’ve seen hundreds of entrepreneurs come through our doors looking for resources and business support. There are a number of steps that must be taken to set up the business structure properly. More importantly, doing this correctly at the start will give you a solid foundation for business success in the future.
Sifting through all the “how to start a business” resources online can leave entrepreneurs feeling overwhelmed and confused. As a result, when we look under the hood, we often find they’ve missed critical steps even after years of operating their business.
Steps to Startup is an online program developed by Hera Hub Founder, Felena Hanson. It is a comprehensive resource that walks entrepreneurs through the step by step process of setting up a business. Also, it helps them avoid the common pitfalls, without the overwhelm.
In honor of National Entrepreneurship Week, we’re sharing a sneak peek into our comprehensive Steps to Startup online curriculum.
The Big Picture
The first step is validating the idea you have brewing in your head and ensuring there’s a market for it.
The most prominent mistake entrepreneurs make is trying to be all things for all people. Consequently, in this step, you’ll be interviewing your potential customers to determine that there is a need for what you are offering.If you can’t find customers willing to talk about their problems, you won’t be able to find customers. Click To Tweet
The customer discovery process helps you hone in on precisely who it is you serve. This isn’t to say you can’t expand and branch into new segments later on. As the saying goes, “there are riches in niches.”
A final thought when you’re vetting your idea. Are you trying to sell vitamins or pain-killers? The latter will be much easier. Watch this video by Steve Blank to learn more.
Lean Business Canvas
While there is merit to going through the traditional business planning process we advocate for a simple one or two-page document – The Business Model Canvas – that outlines the main areas of your business. Above all, remember the world is rapidly changing so getting your plan out quickly, testing and reiterating can help you move things along faster and more efficiently. Click here to learn more about the Lean Business Canvas.
One of the more exciting parts of starting a business is naming it. Choose a name that will describe your business and be memorable to your target market. This is why doing your homework before choosing your name is important.
Licensing & Permits
No matter what and wherever you live, your state will require you to have a business license. This is filed through your county agency. If you’re doing business with a name outside of your own, you will also need to create a fictitious business name.
Depending on your industry there may be other licensing or permitting requirements. Therefore, you may want to research within your specific industry to check the requirements.
When selling a taxable product, you will need to look into seller’s permits, resale certificates, and understand sales taxes.
Most businesses do NOT require a Federal license or permits – However, if you are engaged in one of the following activities, you should contact the responsible Federal agency to determine the requirements for doing business:
- Investment advising
- Drug manufacturing
- Preparation of meat products
- Ground transportation
- Selling alcohol, tobacco or firearms
Banking & Credit Cards
Once you have your business name (fictitious or otherwise), you must set up a separate bank account. Above all, it is imperative to keep everything separate for ease of tracking expenditures and revenue. We also recommend getting a separate credit card for your business (ask your bank for this when setting up your account). It doesn’t even have to be a business credit card, just a card that you ONLY use for business. Contact your bank to see what paperwork they need from you in order to open an account or credit card under your business name.
When starting your business you’ll want to set up your accounting and record-keeping system. As a result, keeping track of important documents like addresses, copies of all formation documents, financial statements, annual reports, amendments or changes to the company will be a lot easier.
Tax and Corporate Filings should be kept for at least 3 years so, create a filing system -digital or hard copy- that will keep your records organized and accessible. Secondly, when tracking your expenses, make sure you have a system for categorizing each expense and that you are consistent with your categorization. This will be important for deducting expenses on taxes.
There are many options regarding the legal entity of your business but you must pick a structure under which to operate. Watch this video to learn more about different business structures with Hera Hub member and CPA Clare Vazin.
Like it or not every business entity is responsible for federal and state income taxes. If your business is a sole proprietorship, partnership, S corporation, or limited liability corporation (LLC), pre-tax income is by reporting it on your individual return. (referred to as “pass-through” entities)
If your business is a regular corporation, it will be subject to corporate income taxes. Different reporting forms are required for different types of organizations.
An Employment Identification Number (“EIN”), also referred to as a Taxpayer Identification Number is a unique nine-digit number assigned by the Internal Revenue Service (“IRS”) for tax reporting. It’s kind of like a Social Security Number, except that it is for businesses. Corporations are required to have an EIN.
To sum it up, setting up your business for taxes correctly on both the state and federal level is imperative.
There is a lot that goes into deciding how to price your services or products. You likely want a price that keeps you competitive, but if you price too low, your potential customers may perceive that your product or service is less valuable, too high and you may lose customers. Some basic formulas can help you set a price and make sure you are covering your material costs and your time.
- Premium Pricing
- Penetration Pricing
- Economy Pricing
- Price Skimming
- Psychological Pricing
- Bundle Pricing
What does your business say? What do you want it to represent? The “brand” or business is the take-home message from your marketing. Your marketing and design should all form a cohesive message that revolves around that key concept.
According to Hera Hub members, Rebecca Tall-Brown and Leah Prehn, Co-Founders of Office of Awesome,
“A brand is not a visual. It is not a logo, tagline, mission statement, or a campaign strategy. A brand is what makes all of those things possible.
A brand is the commitment a company makes to its products, services, employees, and customers. It’s the compelling reason behind every vision, logo, tagline, campaign, sale and customer service.
If your brand isn’t doing this, it’s not working for you and you are missing out on arguably the most valuable resource your company has.”
– Office of Awesome
The number one rule in marketing is to know your target audience. Focus on the marketing tactics that will reach those people. Figuring out precisely what strategies to use and how to execute your marketing on those platforms can be tricky. Here’s a quick guide to creating a marketing plan for your business.
Your online presence involves your website, social media platforms, email, and professional mailing address. Consider companies like Squarespace or Wix when you’re getting started. When you’re choosing a social media platform always go back to who your target audience is and what platform they are on most. For many reasons, including safety and professionalism, is important to have a separate professional address both for your email and business location.
In an ideal world, you’ve saved some money since starting a business. However, not all businesses require a large overhead to get started. Consulting is a fairly
Getting a bank loan can be challenging within the first couple of years until you have financial documents that can support your business is profitable.
Organizations like Accion exist specifically helping startups get funding at the start. Once you’re more established, consider asking for a line of credit with the bank you’ve built a relationship with.
When exploring your funding options, there are several factors to consider:
- Are your needs short-term or long-term?
- How quickly will you be able to pay back the loan or provide return on their investment?
- Is the money for operating expenses or for capital expenditures that will become assets, such as equipment or real estate?
- Do you need all the money now or in smaller pieces over several months?
- Are you willing to assume all the risk if your company doesn’t succeed, or do you want someone to share the risk?
As we recognize the impact entrepreneurs make to both society and the economy for entrepreneurship week, we hope these steps help you launch your dream business.
Did you enjoy the snapshot of what is included in the Steps to Startup Curriculum? Gain full access for three months by grabbing Felena Hanson’s book, Flight Club: Rebel, Reinvent and Thrive: How to Launch Your Dream Business.
When you’ve purchased your book, go to www.stepstostartup.com to set up your account.