If you’ve decided 2021 is the time to start up your small business, you aren’t alone. There’s a wealth of individuals out there with the same goal.
The small business sector has been growing for years now. While it has slowed a bit recently, thanks to a global recession, entrepreneurs’ outlook remains positive.
In just a short time, you’ll be up and running with your new venture. So let’s delve into this small business guide for 2021 to help you with starting a business.
Steps to Launch Your Business
Launching your business can be a daunting prospect, but if you create a business plan, you’ll find it a breeze. A business plan is, essentially, a small business creation checklist. It provides structure in getting you to your end goal.
Here are some of the key stages you’ll want to follow when creating your business plan to make sure nothing is missed from your start-up strategy.
The first step, of course, is forming your company. You can go about several ways, and it’s important to choose the best option for your business.
Pick Your Business Location
Most people choose to locate where they live. But if you’re fortunate enough to have flexibility in your choice, think long and hard about where the best place is to set up your business. Whether it’s locating further outside the city to save on overheads or closer for ease of access. Even things like business insurance play a key role in this decision.
You’ll also need to consider the state in which you wish to register your business. While many states are easy enough to get going in, some are more expensive or complicated than others. Some states have lower fees and taxes, while others offer incentives for business relocation.
Choose a Business Structure
There are five main company types in the USA, each with its own benefits and disadvantages. Let’s look at what each one entails:
Limited Liability Company (LLC)
LLCs are the most popular choice in the USA. They offer an excellent degree of protection for your personal assets from creditors.
Still, They provide you with a single income tax return. LLCs also offer flexibility when it comes to taxation and/or management options.
It is not difficult for two partners to start off as general partners. Still, it can create legal headaches later if they fail to draft proper agreements and plans beforehand. This kind of partnership also offers no protection from creditors should one partner default.
If you’re just starting out, a sole proprietorship is an easy way to start. Basically, this means that you’re running the business all by yourself; however, it offers very few legal protections should things go south.
Running a corporation as your small business requires high up-front costs and lengthy filing procedures with the federal government. However, they offer many advantages, from personal liability protection to tax breaks.
If your start-up is organized around a community service purpose or cause, forming a nonprofit organization may be the best option for you.
Choose Your Business Name
This isn’t as easy as it looks. There’s a good reason we’ve brought this up later on in the list, and that’s because by now, you should know what your business will look like. There’s no point in branding your company to appeal to those in the Midwest, then relocating to New York.
If you’ve decided on a name for your business, check to ensure that no one else already has the same name registered with the state. If you run into any problems registering your business name, then make a list of other names you like and keep it in your records. You can always go back and change the name later if necessary.
Plus, the business name should reflect your branding. Brand psychology is a huge market, and there are many specialists trained in this. They can assist you throughout the process.
Register Your Business
Now it’s time to register your business. In the USA, you must register with the state and the federal government to benefit from being legally protected from creditors and clients, thus having a legal entity.
Your State Government can direct you to the official website or provide you with assistance to register your business.
Getting your financials in order as a priority will put you in good stead as your business grows too large to rectify any simmering issues. It’s better to put the procedures in place early to not run into trouble later.
Get Federal and State Tax ID Numbers
Now’s the time to establish yourself as a legitimate business, which means getting a tax ID number. This can be completed at the IRS website. Many states require a business to have a tax ID number to do business within their state.
Apply for Licenses and Permits
The US Small Business Administration (SBA) recognizes that every business will be different. It’s not realistic to provide a detailed list of licenses and permits you will need here since these vary from health and safety to security certifications.
The SBA has created a great tool called the Business Licenses & Permits Checklist, which allows you to enter specific services or products that your business offers.
Open a Business Bank Account
Once you have an income stream, you need to open a business bank account and start managing your cash flow.
Set Up an Accounting and Record-Keeping System
As we mentioned above, this is one of the most crucial factors to get right early on in the business development stage. If you’re taking your business seriously, this is the time to put the procedures in place.
The accounting and the record-keeping system will include financial management tools, such as an accounting program, and relevant legal documents, such as a Certificate of Incorporation.
Get the Right Business Insurance Policies
Insurance is something that most small business owners put off until they absolutely must have it. If this is you, find an agent immediately.
Once you experience your first accident and realize how expensive it is not to be insured, you’ll regret not getting the right business insurance in place. And don’t forget that expense can extend beyond financial into a moral and ethical expense.
Consulting a company such as ourselves specializing in this area helps you find the right policy for your specific needs.
For example, do you need General Liability? This covers some of the most common claims against a business, such as fire damage, bodily injury, or property damage caused by employees while on company premises. General liability policies typically don’t cover theft or personal injury liability.
This covers some of the most common claims against a business, such as fire damage, bodily injury, or property damage caused by employees while on company premises. General liability policies typically don’t cover theft or personal injury liability.
E & O (Errors and Omissions) protects you against claims stemming from a mistake in judgment or failure to deliver on a commitment. Write and publish an online newsletter, for example.
Now that you have your legal and financials in place, it’s time to plan to get your business operations up and running. Operations can be thought of as any activity that needs to be accomplished to run the business, which generally requires people resources and a physical location. These are the non-legal elements that will set a precedent for how you operate your business.
If you don’t have any employees, that doesn’t mean you’re off the hook. You should still decide if your business will include employees in the future. Even if you don’t have employees, you may outsource some tasks to contractors or other small businesses in the beginning.
If you do hire employees, you’ll need to follow all the employment laws for your industry. For example, suppose you are hiring employees who will handle customer service issues. In that case, you’ll have to train them on handling the calls and avoiding violating any privacy laws.
And because every business differs in size and how tasks are completed, there’s no one-size-fits-all employee handbook. In the United States, employers must withhold income taxes, Social Security, and Medicare taxes from their employees’ paychecks.
Suppose you plan on hiring employees regularly. In that case, it’s worth considering getting professional help with setting up employee handbooks and completing other administrative tasks.
Don’t forget to execute a solid marketing strategy. Come up with some ideas for how you’ll get customers through different marketing channels. For example, if you’re selling products online, make sure you have a professional website with a robust product catalog.
Having a strong website will help with the other marketing funnels such as advertising, public relations, social media, and networking.
If you’re planning on offering free consultations to get new customers, make sure there is a process in place for handing out business cards and contacting them after the consultation
Here we answer some of your most burning questions
1. Is Starting a Business Worth It?
When starting a business, you get out of it what you put in. Get it right, and it’s the most rewarding experience in the world. Get it wrong, and it might surprise you to hear it can be equally rewarding, as it becomes a learning curve for your next venture.
Sir James Dyson turned his 5,127th prototype of a bagless vacuum cleaner into a retail product. With the same determination, we’re confident you’ll go far with your entrepreneurship.
It’s okay to acknowledge that not every business idea will succeed. Mistakes are there to be learned from, and most of the great entrepreneurs have ventures they’d rather forget about.
2. How Can I Get Ideas for Starting a Business?
There are loads of business ideas out there, but you’ll need to narrow it down. Create a list of your skills and interests, and then see if anything sparks an idea. Carry a notepad (or cellphone) everywhere with you, just in case the idea strikes when you least expect it.
Also, it’s best not to go looking for business ideas. Some happen completely by accident. The matchstick was invented because John Walker in the UK set fire to a stick when trying to get chemicals off it.
Look for the problems, not solutions. Sir James Dewar used his knowledge of chemistry to create a flask that insulated liquid for prolonged periods; this became the Thermos Flask.
3. How Can I Start a Business with No Money?
It depends on the industry you’re working in, but if you’re starting small, a great way is to skill swap. Many freelancers use this technique to start from nothing, providing a valuable service in exchange for other goods and services. For example, a marketing agency may agree to promote a web designer who designs the business’s logo and website.
4. Where Can I Find Grants For Starting a Business?
There are thousands of grant programs out there, from the smallest grants to well over a million dollars. Many are private venture capitalists that are looking to invest in new, exciting products and services.
A good suggestion is to set up a basic business plan and finance strategy first. This will help you find out if there’s money to be made from the initial idea.
But there are plenty of government grants available as well. For these, it’s best to check with the government website to see if there are any local, state, or national grants applicable to you and your business.
Small Business Administration is the place to look when you’re starting a business. But do make sure you have a legitimate reason for applying for a grant. It’s better to over-prepare when drafting a business pitch.
5. How Can Starting a Business Help Others?
When starting a business as a social enterprise, the objective should be to derive revenues that align with the business’s primary purpose. The main purpose of any organization is to be profitable.
Social enterprises and purpose-driven organizations often get confused, but they mean different things. A social enterprise’s goal is to achieve both a social and economic benefit.
In contrast, purpose-driven organizations’ goals are entirely social or entirely economic. Furthermore, your business can also be a nonprofit, in which case you can take income from the business but, at the end of the money year, it’s reinvested in the business’s interest.
Starting a Business: Now Is The Time
As you’ve seen from the above, starting a business in 2021 can be tricky to get right, especially if your industry is new and untested.
In most cases, this is a great way to learn essential skills quickly, but if you’re working with limited funds and time, it’s best to take a more cautious approach. That doesn’t mean being risk-averse; rather, it means finding ways to minimize your risk through small tests and experiments.
Nowadays, there are plenty of tools online that make starting small businesses easier than ever before. If you’re still unsure, talk to LoPriore today and get professional advice on the best business insurance policy for you.