How to start a small business in 2022 - GetJoobs

Starting a business is one of the most exciting and satisfying experiences you can have, but where do you start? 

There are many different ways to start your own business, but it's important to consider your business idea, how old you are, how long it will take, and how much money you can invest in it before making any decisions. To help take the guesswork out of the process, follow the steps to learn how to start a small business.

Make sure your mind is in the right place before you begin.

Audiences often hear about overnight hits because they make such a big headline. However, it's rarely easy: they don't see years of dreaming, building, and positioning before a big public launch. For this reason, remember to focus on your entrepreneurial journey and measure your success against someone else's.

Consistency is the key

New business owners are initially motivated, but become disillusioned when that motivation wears off. That's why it's important to develop habits and follow routines that will give you strength when motivation wears off.

Take the next step

Some business owners jump in head first without looking and making stuff up as they go. Then there are the business owners who get stuck in analysis paralysis and never get started. Maybe you are a mixture of both, and that is where you need to be. The best way to achieve any business or personal goal is to write down all the steps you can take to achieve that goal. Then list the steps that need to be done first. Some steps may take a few minutes, while others may take longer. The point is always to take the next step.

1. Refine your business idea

Most business advice tells you to make money doing something you love, but overlooks two other very important elements: it has to be profitable and something you're good at. For example, you may like music, but if you are not a great singer or songwriter, how viable is your business idea? Maybe you love making soap and want to open a soap shop in your small town that already has three nearby; It won't be easy to corner the market when you're making the same product as other stores nearby.

If you don't have a firm idea of ​​what your business will entail, ask yourself the following questions:

• What do you like to do?

• What do you hate doing?

• Can you think of anything that would make these things easier?

These questions may lead you to an idea for your business. If you already have an idea, they can help you develop it. Once you have your idea, measure it to see if you are good at it and if it is profitable.

Instead, you can take an existing product and improve it.

Consider your reason

Are you struggling to think of a business idea that will stick? Consider your "why." To be successful, you will need a clear purpose for starting your business. That "why" needs to be deeper than just making money—it needs to be something you're passionate about so that you stay in business through its ups and downs.

Some examples of business "whys" might be:

• To make a difference in your community

• To help people achieve their dreams

• Contributing to the environment in a positive way

• To cover this need that is currently not being met

For example, maybe you are the parent of a child with autism. Your child loves to travel, but it's hard to identify places, routes, and cities to meet the needs of families with disabilities. You could start a travel agency or other initiative that specializes in autism-friendly travel, even going so far as to create a certification by labeling a destination autism-friendly.

Some business coaches argue that your "why" should make you cry. Although not essential, having a strong emotional connection with your partner can help you persevere when the going gets tough.

2. Know your competitors and the market

Most entrepreneurs spend more time on their products than on the competition. If you ever apply for outside financing, a potential lender or partner will want to know: What makes you (or your business idea) different? If a market analysis shows that your product or service is saturated in your area, see if you can think of a different approach. Take home maintenance, for example, instead of general cleaning services, you can specialize in pet homes or focus on garage cleaning.

Primary Research

The first step in any competitive study is primary research, which involves obtaining data directly from potential customers rather than basing your findings on past data. You can use questionnaires, surveys, and interviews to find out what customers want.

Surveying friends and family are not recommended unless they are your target market. The people who say they will buy something and the people who do are very different. The last thing you want is to take too much into what they say, build the product, and have it fail when you try to sell it because everyone who said they would buy it did. Something you would actually buy.

Secondary research

When doing secondary research, use existing information sources, such as census data, to gather information. Existing data can be studied, compiled, and analyzed in a variety of ways to suit your needs, but it cannot be as detailed as primary research.

Do a SWOT analysis

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. By conducting a SWOT analysis, you can see the facts of how your product or idea could perform if brought to market, and it can also help you make decisions about the direction of your idea. There may be weaknesses in your business idea that you hadn't considered or opportunities to improve on a competitor's product.

3. Create your business plan

A business plan is a dynamic document that serves as a roadmap for establishing a new business. This document makes it easy for potential investors, financial institutions and company management to understand and absorb. Even if you plan to be self-financing, a business plan can help you refine your idea and identify potential problems. A good business plan should contain the following sections:

• Executive Summary: The executive summary should come first in a business plan, but it should be written last. Describe the proposed new business and outline the company's goals and ways to achieve them.

• Company Description: The company description covers what problems your product or service solves and why your business or idea is the best. For example, maybe you have a background in molecular engineering and have used that experience to create a new type of sportswear – you have the right credentials to create great materials.

• Market analysis: This part of the business plan analyzes how well the company is positioned against its competitors. The market analysis should include the target market, segmentation analysis, market size, growth rate, trends, and competitive environment assessment.

• Organization and Structure: Write about the type of business organization, you envision, what risk management strategies you propose, and who will be on the management team.

• Mission and Goals – This section should contain a brief mission statement and a description of what the business wants to achieve and the steps that need to be taken to get there. These goals should be SMART (specific, measurable, action-oriented, realistic, and time-bound).

• Products or Services – This section describes how your business will function. This includes what products you will offer to customers at the start of business, how they compare to existing competitors, how much your product will cost, who will be responsible for creating the product, and the content you will use. They cost a lot. To create.

• Background Summary: This part of the business plan takes the most time to write. Compile and summarize all the data, articles, and research studies on trends that may affect your business or industry, both positively and negatively.

• Marketing Plan: The marketing plan identifies the characteristics of your product or service, summarizes the SWOT analysis, and analyzes the competitors. It also looks at how you will promote your business, how much money will be spent on marketing, and how long the campaign is expected to last.

• Financial Plan: A financial plan is probably the most important part of a business plan because, without money, the business will not be able to move forward. Include projected financial statements, such as an income statement, balance sheet, and cash flow statement, along with a proposed budget in your financial plan. In general, five years of prospective financial statements are acceptable. This section is also where you should include your funding request if you are seeking outside funding.

Consider an exit strategy

An exit strategy is important to any business, seeking financing because it outlines how the business will handle it if it decides to retire or move on to other projects. An exit strategy also allows you to get the most value from your business when it comes time to sell. There are a few different options for getting out of business, and the best option for you depends on your goals and circumstances.

The most common exit strategies are:

• Sell ​​the business to another party

• Transfer of business to family members

• Liquidation of business assets

• They closed the doors and left

Develop a scalable business model

As your small business grows, it's important to have a scalable business model so you can accommodate more customers without incurring additional costs. A scalable business model is one that can be easily replicated to serve more customers without significantly increasing costs.

Some common scalable business models are:

• Subscription-based business

• Businesses that sell digital products.

• Franchise business

• Network marketing business

Start tax planning

One of the most important things to do when starting a small business is to start tax planning. Taxes can be complicated, and there are several different types of taxes you may be responsible for, including income tax, self-employment tax, sales tax, and property tax. Depending on the type of business you operate, you may also have to pay other taxes, such as payroll taxes or unemployment taxes.

4. Choose your business structure

When structuring your business, it's important to consider how each structure affects the amount of taxes you owe, day-to-day operations, and whether your personal assets are at risk.

• LLC: An LLC limits your personal liability for business debts. LLCs can be owned by one or more individuals or companies and must include a registered agent. These owners are called members.

• Limited Liability Company: An LLP is similar to an LLC but is typically used for licensed business professionals such as lawyers or accountants. These agreements require a partnership agreement.

• Sole Proprietorship: If you are starting a sole proprietorship, you may want to consider a sole proprietorship. The company and the owner, for legal and tax purposes, are treated as the same. The business owner assumes responsibility for the business. Therefore, if the business fails, the owner is personally and financially responsible for all business debts.

• Corporation: The liability of a corporation is limited just like that of a limited liability company. A corporation can be taxed as a C-corp or S-Corp. S-corp status offers tax pass-through to small corporations that meet certain IRS requirements. Large companies and startups hoping to attract venture capital are typically taxed as C-corps.

Before deciding on a business structure, discuss your situation with a small business accountant and possibly an attorney, as each type of business has different tax treatments that can affect your bottom line.

5. Register your business and take care of the paperwork

After choosing your business structure, there are several legal issues to address when starting a business. The following is a good checklist of items to consider when setting up your business:

• Choose your company name: Make it memorable but not too difficult. To establish your Internet presence, select the same domain name if available. The trade name cannot be the same as any other company registered in your state, nor can it infringe any other trademark or service mark already registered with the United States Patent and Trademark Office (USPTO).
• File business formation paperwork with your state: You will officially form a corporation, LLC, or other business entity by filing forms with your state's business agency, usually the Secretary of State. As part of this process, you must choose a registered agent to accept legal documents on behalf of your company. You will also pay a filing fee. The state will send you a certificate that you can use to apply for licenses, tax identification numbers (TINs), and business bank accounts.
• Apply for an Employer Identification Number (EIN): All non-sole proprietorship businesses with no employees must have a federal employer identification number. Submit your request to the IRS. You will usually receive your number within minutes.
• Applications for the licenses and permits you need: Legal conditions are determined by your industry and governance. Most businesses bear a combination of original, state, and civil licenses to operate. Check with your local government office (and even a lawyer) for licensing information specific to your area.
• Open a business bank account: Keep your business and personal finances separate. Since being how to choose a business checking account and why separate business accounts are important. 
• Choose a bookkeeper or get accounting software: If you sell a product, you need an inventory feature in your accounting software to manage and track inventory. The software should have the ability to generate a general ledger and journal entries and financial statements. Take a look at the best small business accounting software.

6. Get your finances in order

Before you finance your business, you need to estimate your startup costs. To determine these, make a list of all the physical supplies you will need, estimate the cost of professional services you will need, determine the cost of licenses or permits needed to operate and office space, or estimate the value of other real estates. Include payroll costs and benefits, if applicable.

It can take years for a business to turn a profit, so it's better to overestimate start-up costs and have too much money than too little. Many experts recommend having enough cash on hand to cover six months of operating expenses.

When you know how much you need to start your business, you need to know at what point your business is making money. This figure is your break-even point.

Breakeven point = fixed cost ÷ contribution margin

While the contribution margin = total sales revenue - the cost of manufacturing the product

For example, let's say you start a small business that sells miniature birdhouses for fairy gardens. You have determined that it will cost you $500 in start-up costs. His variable costs are 40 cents per birdhouse made, and he sells them for $1.50 each.

Let's write them down so it's easy to follow:

Fixed cost: $500 first month

Variable costs: 40 cents per birdhouse

Cost per aviary: $1.50

Formula: $500/($1.50 – 40 cents) or $500/$1.10 = 456 units

This means that you need to sell at least 456 units just to cover your costs. If you can sell more than 456 units in your first month, you will make a profit.

7. Finance your business

There are many different ways to finance your business – some are labor-intensive, while others are easy to come by. There are two types of financing: internal and external.

Internal financing includes:

• Personal savings

• Credit card

• Funds from friends and family

If you finance the business with your own funds or credit cards, you have to pay off the credit card debt and if the business fails, you lose a portion of your wealth. By allowing family or friends to invest in your business, you risk hard feelings and strained relationships if the business goes under. Business owners who want to mitigate these risks may want to consider external financing.

External funding includes:

• Small Business Loans.

• Small Business Grants

• Angel investors

• Venture capital

• Fundraising

Small businesses may need to use a combination of various sources of capital. Consider how much money is needed, how long it will take for the company to pay it back, and what risk you are exposed to. Regardless of the medium you use, plan for profitability. It's better to take home six figures and keep only $80,000 than to win seven figures.

Financing ideas include:

• Invoice Factoring: With invoice factoring, you can sell your unpaid invoices to a third party at a discount.
• Business lines of credit: The credit limit and interest rate will be based on your business income, credit score, and financial history.
• Small Business Administration (SBA) Microloans: Microloans are loans of up to $50,000 that can be used for working capital, inventory or supplies, and machinery or equipment.
• Grants: The federal government offers grants to companies that promote innovation, and export growth, or are located in historically disadvantaged areas. You can also get grants through local and regional organizations.
• Crowdfunding: With crowdfunding, you can raise money by asking a large group of people for donations or by selling shares in your company.

Choose the right financing source for your business considering how much money you need, the repayment term, and your risk tolerance.

8. Apply for business insurance

You need to have insurance for your business, whether it's a home-based business or you don't have employees. The type of insurance you need depends on your business model and the risks you face. You may need more than one type of policy, and you may need additional coverage as your business grows. In most states, workers' compensation insurance is required by law if you have employees.

Work with an agent to get insurance

An insurance agent can help you determine what coverages are right for your business and find insurance policies that offer the best rates.

Basic Types of Business Insurance Coverage

• Liability insurance protects your business against third-party claims for bodily injury, property damage, and personal injuries, such as defamation or false advertising.
• Property insurance covers your business's physical assets, such as office space, equipment, and inventory.
• Business interruption insurance pays for lost income if your business is forced to temporarily close due to a covered event, such as a natural disaster.
• Product liability insurance protects against claims that your products cause bodily injury or property damage.
• Employment practices liability insurance covers claims made by employees alleging discrimination, sexual harassment, or other wrongful termination.
• Workers' compensation insurance covers medical expenses and income replacement for employees injured on the job.

9. Get the right trading tools

Business tools can help you make your life easier and run your business smoothly. The right way can help you save time, automate tasks, and make better decisions.

Consider the following tools in your arsenal:

• Accounting Software: Maintain a record of your business income and expenses, prepare financial statements, and pay taxes. Examples include QuickBooks and FreshBooks.
• Customer Relationship Management (CRM) Software: This will help you manage your customer relationships, keep track of sales and marketing data, and automate tasks like customer service and follow-up. Examples include Zoho CRM and monday.com.
• Project Management Software: Plan, execute, and track projects. It can also be used to manage employee tasks and allocate resources in our business. Examples include Airtable and ClickUp.
• Credit Card Processor: Customer credit card payments will be accepted through this method. Examples include Stripe and PayPal.
• Point of Sale (POS): This system that allows you to process customer payments. Some accounting and CRM software have built-in POS features. Examples include Clover and Lightspeed.
• Virtual Private Network (VPN): Provides a secure and private connection between your computer and the Internet. This is important for companies that handle sensitive data. Examples include NordVPN and ExpressVPN.
• Merchant Services: Money is deposited into your merchant account when customers make purchases. You may also use the Merchant Services to set up recurring billing or subscription payments. Examples include squares and stripes.
• Email Hosting: This allows you to create a professional email address with your domain name. Examples include G Suite and MS 365.

10. Market your business

Many business owners spend so much money building their products that they don't have a marketing budget when they launch. Alternatively, they have spent so much time developing the product that marketing is an afterthought.

Create a website

Even if it's a physical business, a web presence is essential. Building a website doesn't take much time either: you can have one up and running in a weekend. You can create a quality informational website or an e-commerce site where you sell products online. If you sell products or services offline, add a page to your site where customers can find your locations and hours. Other pages include an "About Us" page, product or service pages, frequently asked questions (FAQs), a blog, and contact information.

Optimize your site for SEO

Make sure your website or e-commerce store is optimized for search engines after you've built it. That way, when a potential customer searches for keywords specific to your product, the search engine can direct them to your site. SEO is a long-term strategy, so don't expect a lot of search engine traffic initially, even if you're using all the right keywords.

Create relevant content

Provide quality digital content on your site that makes it easy for users to find the right answers to their questions. Content marketing ideas include videos, customer testimonials, blog posts, and demos & more. Consider content marketing one of the most important tasks on your daily to-do list. It is used in conjunction with social media posts.

Get listings in online directories

Consumers use online directories such as Yelp, Google Me Business, and Facebook to find local businesses. Some town halls and chambers of commerce also have business directories. List your business in as many relevant directories as possible. You can also list your business in specific directories that focus on your industry.

Develop a social media strategy

Your potential customers use social media every day. You should be there too. Post content that is interesting and relevant to your audience's interest. Use social media to drive traffic to your website, where customers can learn more about what you do and buy your products or services.

You don't have to be on every social media platform available. However, you must have a presence on Facebook and Instagram because they offer e-commerce features that allow you to sell directly from your social media accounts. Both platforms have free advertising training to help you market your business.

11. Scale your business

To scale your business, first of all, you need to grow your customer base and revenue. This can be done by increasing your marketing efforts, improving your product or service, collaborating with other creators, or adding new products or services to what you already offer.

Think of ways you can automate or outsource certain tasks so you can focus on growing the business. For example, if social media marketing takes up a lot of your time, consider using a platform like Hootsuite to help you manage your accounts more efficiently. You may also consider outsourcing the part-time user entirely.

You can also use technology to automate certain business processes, similar to the argument, email marketing, and lead generation. Doing so will give you more time to focus on other aspects of your business.

When scaling your business, it's important to keep track of your finances and make sure you stay profitable. If you are not making enough money to cover your expenses, you need to find ways to cut expenses or increase your income.

Create a team

As your business grows, you'll need to delegate tasks and build a team of people who can help you run the day-to-day operations. This may include hiring additional staff, contractors, or freelancers.

Team building resources include:

• Recruiting platforms: To find the right candidates, recruiting platforms like Indeed and Glassdoor can help you post job descriptions, review resumes, and conduct video interviews.
• Job Boards: Job boards like Craigslist actually allow you to post open positions for free.
• Social Media – You can also use social media platforms like LinkedIn and Facebook to find possible workers. 
• Using Freelancer Platforms: Up Work, Freelancer, and Fiverr can help you find talented freelancers for short-term or one-time projects. You can also outsource certain tasks, such as customer service, social media marketing, or accounting.

You can also consider partnering with other companies in your industry. For example, if you are a wedding planner, you can partner with a florist, photographer, caterer, or venue. This way, you can offer your clients a one-stop shop for all their wedding needs.

Another example is an e-commerce store that partners with a fulfillment center. This type of partnership can help you save money on shipping and storage costs, and can also help you get your products to your customers faster.

To find potential partnerships, look for businesses in your industry that complement your work. For example, if you are a web designer, you can partner with a digital marketing agency.

You can also find companies that serve the same target market as you, but offer different products or services. For example, if you sell women's clothing, you could partner with a jewelry store or hair salon.

The bottom line

Starting a small business takes time, effort, and persistence. You can achieve your dreams and goals by putting in the effort, though. Be sure to do your research, create a solid business plan, and pivot along the way. Once you're ready, remember to stay focused and organized so you can continue to grow your business.