Starting your Business with helps from our friends at DIGITAL.COM
Step One: Coming Up With Your Business Idea
Every good business begins with a good idea. Since you’re reading this article, you might already have a great idea that you’re trying to turn into a reality.
However, if you’re not in this category but still want to work for yourself, you’re not out of luck. It’s common for first-time entrepreneurs to spend as much time coming up with their business idea as they do getting it off the ground. The questions below will help you lock on to whatever business ideas could work best for you.
What Skills Do You Have?
The first question you’ll want to answer is whether you have any specific skills that would transition easily into starting a business. C Did you work as an electrician? That might be a good answer. How about logistics? Even if these areas don’t fit, with some creative thinking you can come up with some good ideas. Those might also be of good use.
What Interests You?
The second question is whether there’s something that specifically interests you. This may be one of the most important things you need to answer. If you’re going to do a job and do it well, you’re going to want to like what it’s you do. If you enjoy something, the chances are that you’ll be better at it. Beyond that, having a passion for something you like to do will make your days go by a lot better. As the saying goes, if you love your job, you’ll never have to work a day in your life. It’ll be your driving force and what will get you out of bed in the morning. It could be that your hobby could become your profession.
What Resources Do You Already Have?
Thirdly, look at your existing resources. You might already have in hand various things that might suit you. For instance, if you already have access to a storefront ― perhaps it’s from a family business ― this can be a good start to getting you going. Similarly, if you have built up a solid tool shed and have a large set of tools, you might be already set up to begin some sort of maintenance, carpentry, or odd jobs business. Remember, one of the largest barriers to a business is expense. If you have anything already on hand, you’re already partially ahead of the game.
What Need or Niche Will You Fill?
Another thing to do is to look for an existing need in your community. There may be a shortage of people with a certain set of skills in your town or a business that doesn’t exist beyond a certain driving distance. You might find yourself filling a niche that has been needed for a long time. It never hurts to talk to people about what sort of things that they wish they had available to them. There may be a need that people have that they might not even realize. If you can come up with this, sometimes a simple need can be translated into a profitable business.
Step Two: Developing Your Business Plan
An often-overlooked area of starting a business is the need to create a clear business plan ahead of time. You need to have a plan in place to get from where you’re now to where you want to be. It’s best to lay out this information well before you begin. Set a few milestones, including dates, for how you plan on obtaining a set of individual goals.
Not only is this a good idea, and helps you find a way of measuring your success, but it’s also necessary if you intend on getting some help in financing your business. We’ll address this a bit later in this article.
What Should a Business Plan Include?
A business plan is a document that provides a summary or overview of your business, including a simple summary that can be presented to potential investors or others interested in your ideas, an overview of how you plan on running your company, analysis of the market ― who is your competition ― how your business will be organized, how you plan on developing and producing a product ― if that’s your plan ― financial projections, and more. Let’s break these down.
The first part of your business plan will be an executive summary. An executive summary provides a quick overview of your entire business plan. It’s useful for readers to get a brief glimpse of your plan without having to read the entire document. In most cases, the entire document will be read, but this serves as an introduction to make absorbing the information easier. You should consider this to be one of the most important parts of your entire business plan. It should have the following pieces.
The Mission Statement
This should be a brief paragraph describing what your business is, and what needs it’s attempting to meet. Define your higher-level goals here, including what you wish to accomplish.
Here’s where you can provide some insight into the thinking behind your business. For example, you should include when it was formed, and who you are. Include everyone involved in creating the business, such as your business partners, and list what roles each of you’ll fulfill, the number of employees you have or expect to have, and where it’s located.
If you already have started your business, this is a good place to mention any milestones you have already achieved. Include your gross earnings or other financials. It’s normal to want to bolster your credentials by including overly rosy information about your financial achievements. However, it’s important to tell the truth here, especially since this will come into play at some point in the future when you pay your taxes. The point, however, is to provide a positive snapshot of where your business is and where it’s going based on these numbers.
Products and/or Services
This is where you describe what product or services your business provides. Outline who your primary customers are or will be.
This section is crucial if you plan on getting any financial assistance from an official outside source, such as a bank or loaning institution, or if you plan on selling equity in your business. If you have any existing loans or grants, you should list these here.
Explain how you intend for your business to grow. You should create several projections about where you plan or wish your business to be in the next three to five years.
After you have constructed your executive summary, you’ll want to go into some more detail about your company and the unique proposition that you have constructed, including your plan on how you’ll be successful.
You’ll want to give a brief pitch for what your company does that nobody else already does ― at least in your area. Failing that you can go into an explanation for why you’re better than your competition. Think of this as a brief statement that you might commit to memory so that you have an answer for when someone asks you what it’s you do.
After this, provide a value proposition. Go into some detail about the nature of the existing market and why you’ll help fill a gap that exists. You’ll also want to describe the structure of your company. Is this something you’ll be running by yourself? Will you have partners? How many employees will you have, and what roles will they fulfill? Here, you’ll also want to explain how you’re legally set up. We’ll go into some detail later about various types of legal business types there are.
Before going into business, it’s important to have a clear sense of the landscape. What’s your competition? Are there many competitors in your niche reaching your particular area? You should identify how much money is typically spent on your product or service, and research what possible areas there are for growth.
Describe your industry in general, report on market trends, and provide the outlook for how your general segment of this market sector will trend in the near future.
Identify who your target market is. You may want to draw up a few personas that would represent your ideal customer. How old are they? Are they predominantly male or female? How much money do they have available to spend? You’ll also need to clarify how long it’ll take to get your product to your consumer from the moment they request it to the moment you deliver it.
Next, you’ll need to provide detailed results of any market research that you have done. Identify by name who your top competitors will be. Identify if there’s more work available than they can provide. This may be true in many service sectors. For instance, it can often be several months between the time a customer requests, say, a roofing job to be done and the time that your competition can fulfill this request. If it’s more than a month or so, you have a great opportunity here.
Define your business’ management structure here. You’ll need to include how many employees you’ll have, and what roles they’ll fulfill. Define your ownership structure here as well. If you’re a sole proprietor, with no employees, say so. If there are several other people who have invested equity into your company, explain their roles.
If you need people with specific talents, you’ll need to identify what roles you need to fulfill, and what sort of credentials and experience you’ll expect from them.
Product Development Plan
Here’s where you cover what services or products you intend to sell. Provide a basic description of the product or service. Describe how it meets the needs of your potential customers or clients. Explain why your product or service is better than your competition. If it’s a new product, go into detail about what it is, and what features it has. If it’s new, is it available right away or do you need investment to get it created and produced? Explain all of this. If you need to do more research, that’s okay, but include this in your plan, including the research you plan on doing, and what resources you need to accomplish your goals.
Do you plan on relying on external vendors or manufacturers for providing you with the product? Explain this clearly, including how to get needed materials and supplies.
If you’re entering into the tech sector, you’ll likely want to make some statements about your intellectual property. Digital products are relatively easy to steal so make sure you have covered the mental labor you have put into creating your tool or product. Make sure you register or patent any inventions and list those patent numbers here.
Money is important for running most businesses. There’s a high chance that you may not have a large amount of money available, but it’s very important to outline what it’s you do have and how you plan on raising the necessary capital.
Provide records for your:
If you have any documentation on accounts receivable (A/R) or accounts payable (A/P), you’ll need to list these out as well.
Remember, if you’re attempting to get a loan from a bank or other source, this information will need to be accurate and verifiable.
You also need to plan out for the future. You should create statements on your:
- Projected earnings
- Projected cash flow
- Balance statements
- Expenses, including any initial capital expenditures, such as machinery or equipment you need to buy
If you are trying to get money from outside sources, make this explicitly clear here. How much do you need at this moment? Will you need more in the future? Explain all of this.
Step Three: Registering Your Business
Now we need to get into the nitty-gritty of going through the legal procedures for operating a business. It may seem like a pain but it’ll save you many problems in the future.
Choose a Business Name
This part might seem easy, or it may be difficult. Either way, once you’ve come up with a good brand name, you’ll need to register that name with your local state authorities as a doing business as (DBA). This will enable you to cash any checks issued to that business into a bank account you create for your company.
Define Your Legal Structure
These are the main types of businesses:
- Sole proprietorship: This is what it sounds like. You’re the only person in your business, and you have no employees. This is simple, and it’ll enable you to do business as yourself. Don’t forget to register your DBA.
- Partnership: If there are at least two people involved, this is a partnership. You’ll need to hire a lawyer to draft a formal agreement between the two or more of you.
- Corporation: Corporations are far more complicated. These are separate legal entities owned by shareholders, which will require incorporation. Most businesses starting out may not wish to do this, but there are many legal advantages, such as the fact that you personally won’t be subject to any losses gained by the company.
- S corporation (S-corp): Similar to corporations, but slightly different, S-corps can avoid the double taxation that can occur for regular corporations.
- Limited liability company (LLC): LLCs are combinations of partnerships and corporations. Those who own shares in an LLC aren’t liable for losses incurred by the business. Taxes pass through to the shareholders.
- Franchises: Although not exactly a legal entity, franchises are a great option for those who might find starting a business from scratch to be overwhelming. In franchises, you don’t specifically own the company but do own the income you generate for your individual franchise. In a good franchise, you’ll typically receive a lot of marketing help in selling an already established brand.
Register for Taxes
Don’t forget this. Your company once it has been established legally will need to be registered with federal and, where applicable, state and local authorities. You’ll likely need to get an employer identification number (EIN), although, in some cases, you can use your Social Security number.
In Indiana, register your business with INBiz as a one-stop-shop for all things related to the Secretary of State's Office. If you need assistance, the Chamber of Commerce is glad to assist with helping you register your business in Indiana!
Get Your Documents, Licenses, and Permits
While this may be a chore, this is important. These vary from state to state and locality to locality and depend on what your specific product or service is. You’ll need to research before you even think of getting started.
Step Four: Funding Sources
Loans - You may have a well-established relationship with a local lender or lender of your choosing to secure additional financing. If you are looking for information regarding SBA Loans and Lenders, be sure to visit the SBA website for additional information. For is list of Chamber-Member backs, please visit our directory under "Banks and Credit Unions" for more information related to local financial institutions. Locally, the Urban Enterprise Association, Discover Connersville, and Economic Development all have funding resources available for those who qualify. If you need assistance reaching those organizations, we are here to help! Please reach out to the Chamber of Commerce!
GRANTS - Although rare, there are occasions where grant funding may be available for the purchase of real estate or remodel of certain real estate locations. The Chamber of Commerce can assist you in navigating these local programs to assist in securing funding for your building. If you need assistance, don't hesitate to reach out and ask!
Indiana Small Business Development Center - With the office located near-by in Richmond, the Indiana Small Business Development Center provides resources for items such as review of your business plan, market research, training, financings, any many other items. You can schedule an appointment with the Richmond office and have access to the Chamber of Commerce office to meet with the local ISBDC representative for your business plan review or for any questions related to business development.
Indiana Economic Development Corporation - If you are expanding your business into Indiana, the Indiana Economic Development Corporation is your source for all things related to business relocation in Indiana, including financial incentives, tax incentives, relocation incentives, training dollars and program specific items.