Thinking of starting a business? Congrats! You’re probably passionate about something and want to share that with the world. It’s exciting and overwhelming all at the same time.
When you’re just starting out there is so much information to absorb. Where do you start? Here are three things that you need to know before starting a business.
While starting a business is exciting, it’s also something that needs to be done correctly. By starting a business you affect your taxes, your travel, and your financial obligations in general. There are legal steps you need to take to protect yourself and your business, and you may find yourself hiring people, which means you need to be well versed in HR department needs.
So before you jump into the deep end, here are three things to consider:
What kind of legal entity will I be?
There are many different legal designations you can give your business. Will you be acting as a sole proprietor? Do you want to form a non-profit or an LLC? Will you incorporate?
It’s important to find the entity that fits your needs best, as what you choose will affect your company’s abilities and taxes. This step requires research and trust me- you don’t want to skimp on it. Talk to other business owners, research your state’s tax law, and consult an attorney. While forming a business through an attorney can be expensive it’s important to set everything up correctly.
Take your time with this step. There’s no rush. This is your dream and you want to do it well right?
What are my expected start-up costs?
The clearer you can be on what your first year in business will look life financially the better off you’ll be. Most businesses fail within two years because of a lack of cash flow. If you can get a picture of what your expected costs will be for the first year, you can save personally, or get a more accurate number to present to investors.
To get an idea of your first year’s expenses, try mapping out your plans for the calendar year. If you’re planning on hosting events, pick the dates and write out descriptions of the events in advance.
If you’ll be shipping product, determine the shipping rates to various destinations. Calculate how much it’ll cost to produce and mail off your items.
Having even a general idea of your costs will allow you to set your prices, figure out workload, and determine how long you can last between sales.
Who will I partner with?
I read a quote once that has stuck in my head ever since: you’ll never do your best work alone. Partnerships are a great way to expand your profile, increase your customer base, and find people to help you.
You don’t need to do everything by yourself, and you shouldn’t! Look for partners who speak to the same audience and have the same values. Partner with people that you can help as well as those that can help you. Partnership is a chance to give as much as it is to receive.
Starting a business is a chance to share your talents and passion with the world. You can do it; just make sure that you set everything up for success right out of the gate!
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