So, you have an amazing idea for a business! But where do you even start?
We don’t want the not knowing what to do to keep you from starting your own business. Whether you want to start small or come out with a bang right off the bat, here are five key steps—taken from Christy Wright’s Business Boutique—that will get you started.
Related: Already have a business, but looking to grow your business even more? Check out Dave Ramsey’s EntreLeadership: 20 Years of Practical Business Wisdom from the Trenches. This book is for leaders like yourself!
1. Determine Your Why
Before you put yourself out there in the world as a business, the first question you need to answer is, “Why am I doing this?” Owning a small business is hard work. According to the Small Business Association, only two-thirds of small businesses survive two years. It’s a roller coaster ride, so you better love what you’re doing in order to survive the ups and downs. If you’re just in it for the money, you won’t make a lot of money—and you won’t be in business long, either.
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Christy loves to talk about her mom, who owns a cake shop. She says, “Now, in her mid-sixties, she’s still making cakes. When she has a stressful day and vents to me about being bogged down with orders, sometimes I ask, ‘Mom, why do you still do it?’”
Christy says she always replies, “Because it matters to the families who have gotten their cakes from me for over thirty years. It matters to that bride who will never forget her wedding day and the cake I made. I’m not just making cakes. I’m a part of some of the most special, important, and remembered moments in someone’s life. That’s why I still do it.”
2. Work Out the Logistics
Once you have your why, it’s a good idea to plan out the specifics on the front end, like how you will actually do business. Be sure to answer these questions:
- What product or service will you offer? Remember to stay in your lane. Opportunities in business are endless, but not every opportunity is a good one. Successful business leaders are willing to let good opportunities pass them by if they aren’t the right opportunities for their specific businesses.
- What schedule will you work? Your schedule can look any way you want. There’s no “right” schedule, and you certainly don’t have to abide by a nine-to-five day.
- What will your budget be? You need to make sure that you know what your business income and outgo will be, even when you first start out. The last thing you want to happen is to go into debt for this business. Knowing your budget will also help you figure out . . .
- How much will you charge? Setting the right price point is critical to your profitability, marketing ability, and overall success in business.
- What will your policies be? You need policies for shipping, returns, cancellations, and other situations that will come up. Setting your policies on the front end helps ensure you aren’t taken advantage of later.
3. Make It Official
Getting your business license shouldn’t be an afterthought. It’s not a big expense: probably around $15, depending on where you live.
Another thing you’ll want to do right away is open a separate checking account for the business. A business checking account can be listed under your name and Social Security number. For example, the account could be named: John Doe, DBA (Doing Business As) John Doe Plumbing. Place all of the money you make from the business into that account. Pay all of your business-related expenses from there as well.
Income minus expenses equals profit, so if you’re putting your income into this account, and you’re taking your expenses out of here, then the balance will be your profit. But, most importantly, don’t go into debt to start this business. Follow the steps we’ve outlined, pay cash as you go, and start building your business slowly. And while we’re on the subject of money . . .
4. Pay Your Taxes
If you take home any of those business profits, you need to set aside one-fourth of that income in a small savings account for taxes. Legally, if you make over $600 gross income on the business in one quarter—a three-month period—then you’re supposed to file quarterly estimates on your taxes and pay withholding. And that should usually come out to around 25%.
So, for instance, if you make $10,000 and spend $9,000, then you have $1,000 left to take home. Write a check for $750 to yourself and a check for $250 to go into your tax savings account. That will take care of your taxes.
If you’re not aware of your tax situation, a withdrawal in November could bring a major tax bill in April. Not a good deal. To avoid any confusion, make sure you have a tax professional—one with the heart of a teacher—that you can trust. Be smart about what you are doing with your money—keeping in mind that what you are doing now can affect you later.
5. Put Yourself Out There
This is the moment you’ve waited for! You’ve laid a solid foundation by knowing your why, making your business official, and working out the logistics. Now it’s time to tell the world about your business through marketing!
Think about the brand you want to build. What do you want your business to look and feel like? What words do your ideal customers use? Everything from the colors on your website to the font on your business cards should reflect a consistent brand experience for your customers.
With that in mind, it’s time to set up a website or a (free!) social media account for your business. This is where you get to start the conversation with your potential customers, tell your story, and share what you have to offer! People buy from people they know, like, and trust—so this is your opportunity to establish those connections.
Bonus: Stay Motivated
It’s hard to start a business, and it’s also difficult to keep your business going while you’re working hard in the trenches. Keep yourself motivated by subscribing to our EntreLeadership Podcast, or attending one of our business live events for a resourceful and inspirational experience that will help you not just stay in business, but live out your dream for your business.
So get out there and start your business now!
For the complete plan on how to start or grow a business, pick up a copy of Business Boutique: A Woman’s Guide for Making Money Doing What She Loves.