8 Steps To Start Your Own Business
August 31, 2020
Starting your own business can sound daunting. You may have a great idea, but what next? This article will help break down those initial steps and provide resources that will get your future business on a path to success!
- Market Research
Your very first step should be to understand your market. This should be done before any significant investment has been made into your new business. According to the U.S. Small Business Administration, find the answer to these 6 questions to get a good sense of your market.
- Demand: Is there a desire for your product or service?
- Market size: How many people would be interested in your offering?
- Economic indicators: What are the income range and employment rate?
- Location: Where do your customers live and where can your business reach?
- Market saturation: How many similar options are already available to consumers?
- Pricing: What do potential customers pay for these alternatives?
There are some great online resources to help you find the answers here.
Go directly to your market as well. Use social media sites like Facebook and Reddit to find groups of people interested in your offering and gain insights from them by reading comments and asking questions. Reading Amazon reviews is another creative and low-cost way to see what users like/dislike about a product.
Just as important as understanding your consumer base is understanding the competition your business will face. Conducting a competitive landscape analysis, such as Porter’s Five Forces Analysis, will help you gain insights into how intense the competition is, any barriers to entry that exist in the market, the power consumers and suppliers have over your offering, and more.
- Create a Business Plan
A Business Plan will not only guide you through each stage of starting and managing your business but it can also be used to help find additional funding through investors or business partners. A traditional business plan should outline a detailed and comprehensive proposal. Creating a business plan can be labor-intensive, but once it is complete you will have a better understanding of your business and a roadmap for success. To read more about the components of a traditional business plan click here.
- Determine Funding
Unless you plan on funding your business with your own resources such as savings or retirement, you will have to turn to outside lenders or investors. Your business plan should have already answered questions about your financials including the dollar amount required to start your business, and what you project your revenue stream to look like to pay back any debt financing. Experts recommend having a financial plan for at least the next 5 years.
Once you know what funding is required, further research some of the popular options below to determine what is best for your situation.
- Raises money in exchange for a share of ownership in the business
- Allows businesses to obtain funds without incurring debt
- Sources include
- Venture Capitalists (think Shark Tank)
- Borrows money that must be repaid over a period, usually with interest.
- No ownership is exchanged
- Loan is often secured by company assets and borrowers’ personal guarantee
If you are interested in receiving debt financing, SunMark Community Bank Offers 7a and 504 SBA- guaranteed loans. Talk to a SunMark lender to see if you qualify. To review a comprehensive list of small business financing options, take this free 30-minute course provided by the SBA here.
- Choose a Business Location
For all you Georgia residents out there, you are in luck! According to a study published by WalletHub in 2019, Georgia ranks as the 3rd best state in the U.S. to start a business. The study ranked all 50 states across three key dimensions: business environment, access to resources, and business costs.
There are also local taxes, zoning ordinances, and government incentives to consider. These are all things that can change from county to county and industry to industry. Be sure to research these factors for your location and business specifically. If you don’t know where to start, visit your local Small Business Development Center. There is one located in Macon for those in the Middle Georgia area.
- Choose a Business Structure
The business structure you choose affects how much you pay in taxes, your ability to raise money, the paperwork you will need to file, and your personal liability. Below are the most common business structures.
A type of business that is owned and run by one individual. This type of business structure can be a good option for low-risk businesses and owners who want to test their business idea before forming a more formal business. Learn more about Sole Proprietorships here.
A type of business that is owned by two or more people. Partnerships can be a good choice for businesses with multiple owners, professional groups (like attorneys), and groups who want to test their business idea before forming a more formal business. Learn more about Partnerships here.
Limited Liability Company (LLC)
A type of business that is a hybrid between a corporation, partnership, and sole proprietorship. It can be owned by a single person or a corporation. All owners of an LLC are referred to as “Members”. LLCs can be a good choice for medium-or higher-risk businesses, owners with significant personal assets they want to be protected, and owners who want to pay a lower tax rate than they would with a corporation. Learn more about Limited Liability Companies here.
There are several different types of Corporations. The most common being a C-Corp and an S-Corp. A C-Corp is a legal entity separate from its owners. It can make a profit, be taxed, and be held legally liable. A C-Corp is a good choice for medium or higher-risk businesses, businesses that need to raise capital, and businesses that plan to be publicly traded or sold.
S-Corps are like C-Corps with one key difference being in how they can be taxed. S-Corps are designed to avoid the double taxation drawback of a regular C-Corp. S-Corps allows profits and some losses to be passed through to owners’ personal income without also being subject to corporate tax rates. S-Corps are a good choice for a business that would otherwise be a C-Corp but meets the criteria to file as an S-Corp.
Learn more about Corporations here.
- Choose Your Business Name
Selecting a business name can be a fun step, but it also requires a great deal of consideration. You want to choose a name that positively reflects your product and brand. Forbes put together a helpful tip sheet for selecting your business name, below are some of the most valuable:
- Avoid hard-to-spell names
- Use a name that conveys meaning
- Put early ideas to the test
- Search other languages and even Urban dictionary to make sure other meanings of the name are not offensive.
- Make sure it has not already been trademarked. Search the U.S. Trademark database to find out.
Once you select a name, register it. There are 4 different ways to register your business name, each one serving a different purpose.
- Entity name protects you at the state level
- Trademark protects you at a federal level
- Doing Business As (DBA) may be legally required depending on your business structure
- The domain name (. com/.net, etc.) protects your business website address
Not all may be necessary depending on your business structure and location so be sure to research what applies to your specific industry and business location.
- Business Registration
Not all businesses are alike, therefore business registration is unique based on a variety of factors including business structure, your businesses’ offering, and the location of your business.
The IRS is the only federal agency most businesses will register with. File your business with the IRS to receive your federal tax ID, which doubles as your Employer Identification Number (EIN). You will need an EIN to pay federal taxes, hire employees, open a bank account, and apply for other business licenses and permits.
Beyond that, Federal Registration is required if your business activities are regulated by a federal agency. This list provided by the SBA breaks down the industry and what agencies are responsible for issuing the registration.
If you want to trademark your business or brand, file with the United States Patent and Trademark office.
In Georgia, your business will also need to be registered with the Secretary of State. This registration will cost you less than $300, but you will need a registered agent to file. A registered agent receives official papers and legal documents on behalf of your company. Once you are registered with the Secretary of State you will also need to register with the Georgia Department of Revenue.
- Open a business banking account
Once you are ready to begin accepting or spending money as a business, you should open a business bank account. Business bank accounts offer more protection by keeping personal and business funds separate. Building a business banking relationship makes it easier to get the resources your business needs when you need them. SunMark offers financing options for all kinds of businesses. SunMark also offers treasury solutions that help your business operate efficiently and allows you to focus on growing your business.
To open your with SunMark business account, you will need:
- Driver license of signers on the account AND beneficial owner if someone different than signers
- EIN Number
- Articles of Incorporation or Articles of Organization
- Operating agreement (if applicable)
- Secretary of State document
- Initial opening deposit
For more information about what business accounts with SunMark offer click here!
This is a lot of information but know that there are many resources to help guide and motivate you along the way. The Small Business Administration offers free business counseling and thousands of hours of free training videos to break down the complicated stuff one topic at a time. The Small Business Development Center is currently offering business webinars at no cost through 2020 due to federal funding from the CARES Act. To leave you with some motivation, Jeff Bezos, founder and CEO of Amazon, has said this of the decision to start the billion-dollar business “I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not trying.”