You have a great idea for your own small business; you are excited and raring to begin. And you’re not alone. According to the Small Business Association around 145,000 small businesses are begun each year.
Alas, of those, according to a study done by Inc. magazine and the National Business Incubator Association (NBIA), 80 percent of new businesses fail within the first five years.
This means that for you to succeed and have your business thrive, you must be diligent and prepared to stay the course. Building a successful small business requires time, thought, and planning. Especially if you are embarking on the road to entrepreneurship for the first time, you might find it overwhelming. With so many details to pay attention to, where should you begin?
Marc Goldberg, a SCORE mentor with business management and marketing expertise, has outlined some first steps that are appropriate for nearly every type of business:
- Contact your Northern Arizona chapter of SCORE for expert guidance from a local business mentor and learn what to expect when starting a business.
- Determine your value proposition. What customer needs will you fulfill and do you have a large enough base of prospects with those needs?
- Find a good attorney who specializes in small business issues. Legal formation, human resources issues, etc.
- Find a small business accountant to ensure you comply with requirements and file taxes accurately.
- Determine what legal form will your business take? Sole proprietorship, Limited Liability Corporation (LLC), S Corp, or C Corp? Consult with your attorney and accountant.
- Create a business plan. You don’t need a full plan with financials unless seeking start-up capital. Consider using the lean start-up approach of the Business Model Canvas.
- Select a bank or financial institution for general use and one that can potentially provide funding if you’ll need it to start or expand your business.
- Secure business insurance for liability protection. Talk with a trusted agent who can guide you in acquiring the proper types and amount of insurance coverage.
- Create your brand identity. Choose your business name and develop a logo. Verify with Arizona and the U.S. Patent and Trademark Office that the name and logo design you’ve chosen aren’t already taken.
- Have a website created. An online presence is essential, as most potential customers will look for information there to learn about your company, its products and services.
- Identify the appropriate social media platforms that will work for your business based on where your potential customers spend their online time.
- Find a printing company. While much of your marketing and sales may be done online, you’ll need a reliable printing source for business cards, sell sheets, brochures, etc.
- Secure a dedicated location for your business. Your needs may be vastly different if you’re a brick and mortar retail store vs. a service provider.
- Identify your technology needs. What hardware, software, apps, IT services, etc. will you need to serve customers, market your company, and manage your business?
- Execute a cash flow analysis. The #1 reason small businesses fail is they run out of cash. Do a month-by-month Source and Use of Cash projection for the first year. It will help you determine what your selling terms need to be so you’ll have enough revenue to support your business.
- If you have employees, get a quote for payroll services. Most are reasonably priced and deliver peace of mind as they process payroll (including applicable taxes), file the necessary paperwork, and handle tax filings.
Your new business may have other needs as well, but these steps from Goldberg are a solid starting point.