Thinking about starting your own business? You’d be in good company. According to the Small Business Administration (SBA), there are “23 million small businesses in the U.S., which account for 54% of all U.S. sales.” What’s more, at a time when big companies are downsizing, small businesses are growing, growing, growing.
It’s easy to understand why so many people are starting businesses; business ownership comes with some exciting benefits. You can control your own destiny and financial future and make your own schedule. However, as with any type of venture, there are drawbacks as well, including unsteady income and financial risk. That’s why it’s so important to tread carefully when starting your own business and follow these key steps suggested by the SBA:
- Write your business plan. Before you quit your salaried job or invest any of your own money, take the time to write a detailed business plan. A business plan can help you determine the sources of revenue for your business, project expenses and assess future threats and opportunities. There’s another good reason to have a business plan: financial institutions won’t even consider lending you money without one.
- Get schooled on business training. There are plenty of free and credible resources to help you get the information and assistance you need to manage the various aspects of starting a business, such as writing your business plan and securing financing. You can find these resources from the SBA, Chamber of Commerce and through our Business Portal.
- Determine the location of your business. Is it central to where your customers are?
- Review financing sources. When you write your business plan, you’ll get a good sense of the funding you’ll need to start your business. Do your homework and research possible funding sources, including venture capital firms, government-backed loans, grants and other sources of funds. Also, depending on your background, you may qualify for specialized financing. For example, if you are a woman, minority or veteran you may be able to take advantage of unique programs.
- Choose the legal structure of your business. You will need to determine the type of business ownership that works best for you. For example, will you be a sole proprietorship, partnership, non-profit organization or a limited liability corporation (LLC)? The type of ownership you choose will determine the type of tax forms you will need to file.
- Obtain a Federal Tax ID. Once you establish your business, you’ll need to obtain a Federal Tax ID, also known as an Employer Identification Number (EIN). You can obtain a Tax ID from the Internal Revenue Service (IRS).
Get down to business.
These are just a few of the critical steps you’ll need to take to start the process of opening your business. To learn more about other steps, as well as free resources available through our Business Portal and the Small Business Administration (SBA).