Most of us at one time or another have dreamed of owning our own business. Maybe it’s a big dream, like a corporation with thousands of employees to execute your game-changing strategies…or maybe something a little more down to earth, like a neighborhood coffee shop. Regardless, every great business idea needs planning and groundwork – a lot of groundwork – before you can get to the good stuff. This guide points out the steps you’ll take to get there from market research to determining the right structure for your business; to dealing with selecting the right name for your venture and final details to get you off the ground.
1. First, Know Your Market
Before anything else, you need to know if your idea, big or small, has a chance to be successful. Market research will tell you a lot about your potential customers, location and your competition. When you have that knowledge, it’s easier to stake out a position that sets you apart and attracts the clientele you want.
Whether you choose to hire professional market researchers or do your own study, using surveys, informal focus groups or one-on-one interviews, the goal is the same: to figure out just how solid your idea is. Think of it this way – at best, after your market research, your big idea looks like a winner; at worst, you’ve saved yourself a lot of pain and money.
2. We Love it When a Plan Comes Together
A business plan puts meat on the bones of your idea and gives it an actual shape. Plus, it explains to others how you intend to structure, run and develop the business. Whether you’re looking to add investors or secure a loan, the better your plan, the better your chances of success.
There’s no one “right” way to write a business plan. It can be a multi-page document that uses colorful charts and graphs to tell your story, or simply a one-pager that summarizes your market strategies and goals. Before you begin, it’s a good idea to search online for some sample plans to help you develop a format you like.
3. Fun with Funding
So you’ve got your idea. And a suitable plan. What you need now is to determine how to find the money to get things off the ground. Your plan should have given you a good idea of how much you’ll need to open the doors; if you can’t self-fund, you’ll need to raise funds, or borrow them.
The size and scope of your potential business will help determine the type of help you need. Capital can come from friends and family like rich Uncle Ralph, single outside investors, venture capitalists, business loans or even non-traditional avenues, like crowdsourcing. While we’re at it, here’s the obligatory plug: First Internet Bank can help with traditional business loans and Small Business Administration (SBA) guaranteed loans – as well as the checking and savings accounts you’ll need (more about this in Part 2). If you’re in the market, check us out!
4. The Cliché is True
It really IS all about location – and where you land can have a big impact. Regardless of whether you’re planning a warehouse-sized facility, a small neighborhood shop or running the business from home, the choice you make could affect the taxes you pay, legal requirements, and how customers interact with you.
Once you’ve chosen a location, it’s best to double-check with city and county officials to ensure that your business meets local zoning regulations and to determine whether incentive programs exist, such as benefits related to jobs, energy efficiency, etc.
5. Making Sense of your Business Structure
LPs. LLPs, C-Corps, S-Corps…it can be confusing, but the type of legal structure you choose can determine what you pay in taxes, what registration you’ll be required to provide and even how much personal liability you might have if something goes wrong.
The wide range of options, from sole proprietorship to any of a number of corporate structures means that you might require a professional business counselor, accountant or attorney to assist you in making the right decision. And once you have, you can move to the fun part…
Want to learn more? Contact Eve Wilkerson, VP – SBA Loan Officer, at ewilkerson@firstib.com for more details on our SBA program.
6. Name That Business!
Yeah, we know…most of the time before there’s a plan, a structure – maybe even before the idea is fully formed in your brain, there’s a name. Something cute, or funny or the result of a lightning bolt of inspiration. But wait:
It isn’t as easy as you think to come up with the right name – something that can become your brand and resonates with your buyers. The name that seemed so catchy a few months ago might not be the long-term answer when your business has grown and evolved. So it’s worth much more than passing consideration. When you’ve arrived at your ideal name, you’ll then need to register and protect it.
7. Registration, Please
If you’re doing business under a name different from your own (DBA, or “doing business as”), you’ll need to register with the federal government…and maybe your state government, too. Think of this as protection; by registering, a competitor in your field can’t steal your awesome company name.
The registration process for state and local governments is generally very simple. It’s important, though, because it provides some liability protection as well as legal and tax benefits. At the federal level, you can choose to have your company name, logo or products trademarked by filing with the U.S. Patent and Trademark office. If you’re forming an S-Corp, you’ll also need to do an additional filing with the IRS.
8. And While You’re at it…
Your federal employer identification number (EIN) is required to open a bank account and pay taxes. Think of your EIN as a social security number for your business. The IRS website has a tool that allows you to supply answers to basic questions: name, social security number, etc. and provides you with the EIN immediately after verification.
Most states have a corporate income tax as well; if you’re operating in one of them, you’ll need to have a state ID number so you can pay the necessary taxes.
9. It’s the Law! (At Least for Most)
If your business is regulated in any way by federal law, you’ll most likely need applicable licenses or permits to stay legally compliant. These licenses and permits vary by industry, state, location, and other factors.
The information you need concerning state licenses, permits and fees can generally be found on your state’s website. If there is a federal regulatory body that oversees your business segment, it’s best to check that department’s website, too.
10. Hey, We Know Somebody!
One other step remains before you can earn that first dollar to frame on the wall. A business checking account lets you handle legal, tax and day-to-day issues. The good news is it’s easy to set one up if you have the right registrations and paperwork ready. If you’ve secured your commercial loan, or one through the Small Business Administration, you probably already have a particular bank in mind.
There’s a lot to consider when you make that choice: interest rates for checking and saving accounts, transaction and account balance fees, plus a lot more. But the right bank (hint, hint) will provide not only the best overall balance between rates and service, but also be the type of partner you’ll need to help your business thrive. And we think First Internet Bank has got that covered! We have a full range of checking and saving account options with better rates and lower fees, backed by easy-to-use online tools.
Oh, yeah…one more thing: along with your banker, don’t forget to find an insurance agent who can provide the coverage and expertise you’ll need as your business takes off.
Now you’re ready to put that big idea to work and take on the world! Good luck! If you want to find out how First Internet Bank can help make your business dreams a reality, contact Eve Wilkerson, VP – SBA Loan Officer, at ewilkerson@firstib.com.
