Getty Images
1 in 5 businesses fail within the first year, according to the US Bureau of Labor Statistics.
Setting your business up requires careful planning and consideration.
These seven basic steps can help create a solid foundation for all entrepreneurial endeavors.
Becoming an entrepreneur, being your own boss, and leaving the 9-5 work life behind can be a dream come true. Unfortunately, there is no full-proof plan to ensure your business will be a success.
However, if you’re considering taking the leap and starting your own business, here are a few tips to help get your idea off the ground.
1. Know your customer
Before starting your business, research your potential customer base and competition. It helps to know if your idea truly resonates with your audience. Checking out existing sources for trends in your industry and performing direct research methods like surveys, focus groups, and interviews are great ways to start this research and get some feedback on your ideas.
2. Create a detailed business plan
While not necessary, having a full-fledged business plan in place can be useful, especially if you intend to seek funding for your business. Think of it as your blueprint for how you plan to organize, operate, and expand your business. Usually, a business plan includes, but is not limited to:
Your company nameAn executive business summaryOperations and managementMarketing and sales strategyFinancial projections
3. Secure funding
It takes money to make money. Some entrepreneurs are able to start their businesses with their own funds. But if you’re not in that position, you may consider courting investors who will offer you money in exchange for owning a piece of the company. You also have the option to apply for a small business loan through a qualified financial institution.
4. Develop your organizational structure and logistics
Understanding how you want to structure your company legally, such as a sole proprietorship, partnership limited liability company (LLC), or a corporation will be helpful when starting your business. Understanding these structural differences is important, so consulting with an attorney and tax professional can help aid and inform your decision.
5. Register and protect your business
Once the company’s name, location, and business structure are determined, you may consider registering your business. Doing so allows you to access legal benefits, tax benefits, and business insurance, like State Farm’s Business Owners Policy, which can help protect your operations from unforeseen events.
In most cases, it’s as simple as registering the name with state and local governments. You can also register to receive a federal Employer Identification Number with the Internal Revenue Service. Depending on the kind of product or service you provide, you might need certain licenses and permits issued by either federal or state agencies. So it’s important to know how your industry is regulated.
6. Put your team together and create a culture
Even if you plan to run the business yourself at first, it can be most efficient to have partners, freelancers, contractors, and consultants on board to help guide you through the early days of starting your business. If you plan to have employees, hiring the right people is critical to your business’s long-term success and creating a culture that attracts the right talent. One option would be to consult or hire a Human Resource expert to help you craft policies and protocols for employees and staff.
7. Start selling
Once everything is in place, it’s time to start marketing and selling your product or service. Successful businesses leverage the best tools like internet providers or a great website to help them acquire the right customers — and provide experiences that keep them coming back.
This post was created by Insider Studios with State Farm.
State Farm Bloomington, IL.
Neither State Farm® nor its agents provide tax or legal advice.