Starting First Business: Everything You Need to Know
Starting first business is a serious commitment that takes research, dedication, and you should be willing to invest your time and money to your business.3 min read
2. Mistakes to Avoid When Starting a Business
3. Tips for New Businesses
Starting first business is a serious commitment that takes time, research, and dedication. A first business should be one you are passionate about and are willing to invest your time and money into cultivating. Many business owners don't understand the true time commitment, which is why focusing on a product or service you are passionate about is in your best interest.
Starting a Business
Before you begin to operate a first business, the owner(s) should start by completing the following tasks:
- Research the industry, including:
- Price margins.
- Target demographics.
- Understanding the needs of the customers.
- Create a business plan to lay out a strategy to reach your ideal customer base and make a profit.
- Select the legal structure of the business, such as an LLC or a Limited Liability Company. The type of business entity structure impacts responsibilities, including:
- Tax liabilities.
- Required paperwork.
- Owner liability.
- Ability to hire employees.
- File the proper paperwork to register the business with the government. For corporations, articles of incorporation are required, and for LLCs, articles of organization should be filed.
- Obtain an employer identification number (EIN) from the Internal Revenue Service.
- Apply for any required business licenses.
- Track the finances of the business.
- Work to obtain additional capital to offset startup costs. This can be accomplished by seeking funds from the following:
- Angel investors.
- Venture capitalists.
- Small-business loans.
- Hire employees. The number of employees can start small and then be increased as needed.
Along with employees, new business owners should consider finding a coach or mentor, as well as professional help such as an accountant and a lawyer. Paying for these types of service might seem like extras at the start of a business, but they can often help save money in the long run.
Mistakes to Avoid When Starting a Business
Owning a business is not a simple feat, and at the start, it may be easy to get caught up in the dream of your ideal business. To avoid this issue, new business owners should remember to be realistic when creating your business plan. Additional mistakes to avoid include:
- Adjusting your business to please your customers in a way that negatively affects your profits.
- Putting a family member's savings or retirement at risk.
- Setting unrealistic time frames when launching the business will result in unneeded stress and anxiety.
- Confusing personal experience in a field with expertise in business. Business knowledge, for some, is not an inherent skill. New business owners should take time to learn more about all aspects of running a business.
Tips for New Businesses
Running a successful business requires a variety of pieces to fall together. Tips that will benefit a new business include:
- Confirmation that the product or service sold is legal.
- Set a realistic price point that customers can afford before designing it. This will eliminate creating a product that is too expensive.
- Create a marketing plan to advertise the product. Without marketing, customers won't know your product exists.
- Make the payment process simple to avoid delay. Delays in payment negatively affect all aspects of the business.
- Offer products and services that will benefit the customer by solving existing problems.
- Keep the product simple to understand. Many products fail because they are difficult to understand or explain.
- Patience is a must when starting a new business. Software companies, in particular, may take more time than initially expected.
- Set pricing that isn't so low that making a profit is impossible. New business owners may think that lower prices will attract more customers, but it may actually result in a more difficult customer base. By setting premium prices, you will:
- Appear knowledgeable.
- Have fewer complaints.
- Raise the quality of service by dealing with a smaller, but higher-paying customer base.
- Raise your reputation by providing exemplary customer service.
- Know what your competitors are charging.
- Save a percentage of all money coming into the business to create a financial cushion. With savings, you will avoid running out of money during slow periods.
- Cultivate a customer pipeline through networking, marketing, and customer referrals.
- Focus on the products the customers want and continue to develop and improve them. Adding too many products that customers don't want or need will be costly and won't create a return on investment.
If you need help with starting a first business, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.