You have the idea, you have the passion, now make it a REAL business.
Last summer while watching the news, I saw a young boy in Tampa, Fl have his lemonade stand shut down for operating it illegally. The boy was only 12 years old and had started his entrepreneur journey with a good old fashioned lemonade stand. He sold his lemonade for good profit and his business was booming. The problem arose that he had not taken the time to follow the steps to make his business legitimate. A neighbor filed complaints to shut down the boys business and police ultimately investigated his operation.
I am often asked the questions, “How do I get started with my business idea?”, “I have been doing X for awhile now, but don't know what to do next.”, and “How do I make my business legitimate?”Here are the steps that I have helped hundreds of start-ups with in regard to legitimizing their business idea into a small start-up business.
- Identify goals and establish a plan. — This should be the first step but rarely is for new entrepreneurs. Identifying your purpose in starting this business is critical for the long-term success. This will be the blueprint that helps create company culture, purpose, and expectations. Writing the goals and plan down is highly encouraged to track progress through your journey. This is an exercise that will get you started and show just how serious you are about your interests in this new business.
- Decide what type of entity type makes the most sense for your business. — Entity types include C Corporation, S Corporation, LLC, Partnership, and Sole Proprietorship, among others. The business structure will depend on the various circumstances involved in each business. Business owners need to identify criteria that fit their current and future needs. Each entity structure has various administration concerns, tax implications and legal liability. Do a little research to get a better personal understanding, and select one that makes sense for your business. It is worth noting that your entity structure may change as time goes on due to personal choices, taxes, shareholders, growth, or other business factors.
- Register your Federal identification number with the IRS. — This is one of the easiest steps and can be completed free online. Visit www.irs.gov and search apply for EIN or Employer Identification Number. The online application will walk you through various questions about your business and within minutes send you your brand new EIN!
- Register with your State authority, also with your town or city if necessary.— This step will vary based on your state and jurisdiction. These filings will make you a more credible business to your local customers. Registration includes obtaining DBA or “doing business as”, permits, licenses, and certifications. Registering in your state allows you to operate as a legitimate business without the possibility of being shut down.
- Organize the business and set up record keeping.— Keep it very simple! Organize yourself early and stay organized throughout the process. Eliminate surprises by keeping your numbers current and accurate.
- Set up your bank account with your new business EIN.— A bank allows you to deposit sales, write checks, and potentially apply for loans. Start off with a business checking and perhaps a business savings. It is important to form a strong relationship with a banker who has finance knowledge that can be of support to you as you grow your business.
- Find an insurance agent and acquire proper business coverage.— It is important to protect your new business as well as yourself from personal liability. A knowledgeable insurance agent will guide you in what coverage you need to protect your assets. They will identify whether it is a general business policy, workers compensation, or other form of customized insurance that fits your specific business needs. An insurance agent will keep your policies current and your business insured.
- Attack Social Media and Word of Mouth Marketing platforms —It is time to let friends, family and neighbors know that your business exists and the doors are open. It is time to share your business on social media platforms like Facebook, Twitter, Instagram, Linkedin, and Snapchat. Register a website with your domain that directs customers to your product or service. Spread your message. Let people know you are now in business!
“You don’t have to be great to start, but you have to start to be great.” Zig Ziglar
If you follow these steps it will not guarantee your success, however it will answer the question, “How do I formally turn my idea into a REAL business?” It is a start, an opportunity, and a chance to take your ideas to the next level.
Warning: Get ready to put in your time and effort with your newly legitimate business.
It is all so worth it!
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