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The Business Start-Up Primer You’ve Been Asking For

The Business Start-Up Primer You’ve Been Asking For

Hello Friends!  We frequently receive inquiries from aspiring entrepreneurs about the process that is involved with starting a small business, which can be daunting if you’ve never done it before or do not know the steps involved.  We’ve therefore decided to share with you all the steps that we know, and while not completely exhaustive and universal to every business, this should point you in the right direction.  One other important note.  We wrote this assuming that you want to do this “right” out of the gates.  We have no desire to scare you and there is a pretty solid case to be made for starting things when you don’t have all the answers.  There are definitely steps below that you can skip, we just wouldn’t recommend it as this is a huge investment in your long-term success.  Apologies for the length, but as stated, we wanted to provide as much direction as possible.  Here we go!

  1. Step #1- Research: We can’t emphasize enough that before you spend the time, energy and resources to launch a new business, make sure that you do your due diligence.  There is nothing worse than investing a bunch of money on a failed venture.  Research on-line and talk to friends, colleagues, family members and anyone else that will provide you with candid feedback to determine:
    1. Is this a product or service that people want, need, or would want or need if it was available to them?
    2. Who is your competition and what barriers need to be overcome to “beat” them?
    3. What are people willing to pay for this product or service?
    4. How many people or businesses would genuinely be interested in your product or service?
    5. What are the costs associated with this venture and does the potential for profit make sense versus the investment of time, energy and resources?
    6. Can this business scale?
  2. Step #2- Buckle-Up: Now that you’ve vetted whether or not there is interest in your product or service, before proceeding any further you need to commit to the entrepreneurship journey.  This journey can be extremely difficult, lonely and isn’t for those without thick skin.  You’ll think that if you build it, people will come.  They won’t.  You’ll think that all of your friends and family will buy your product or service.  They won’t.  You need to be able to navigate through these challenges.  We highly recommend talking with some other current or former entrepreneurs about their experience.  In addition, we recommend reading the book The E-Myth Revisited by Michael Gerber, which is outstanding.  If at the end you still find yourself fully committed, proceed to the next step.
  3. Step #3- Create Your Story: In the words of author Simon Sinek, “people don’t buy what you do, they buy why you do it.”  Your business needs to tell a compelling story that is genuine and also solving a problem.  We recommending spending some time reading Start With Why by Simon Sinek (TED talk also available on-line) as well as checking out on-line courses from Storybrand (there are some paid and some free).
  4. Step #4- Get Visionary: Now that you have a clear picture of the problem that your business is trying to solve, it’s time to lay-out the mission, vision and values that will be the foundation your business is built upon.  There are plenty of on-line resources out there to help guide you through this process.  Just remember to keep it simple, inspiring and easily remembered.  Some good resources we would recommend would be The Advantage by Patrick Lencioni and Built to Last by Jim Collins.
  5. Step #5- Define Your Market: We know that eventually you are going to take over the world with this new venture, but for the time being let’s define something more readily achievable.  Remember that if you’re trying to be all things to all people your business will be relevant to nobody.  Take some time to define your primary customer and primary market, and be as specific as you can.  This will help you focus and say no to some things that are incongruent with your mission, vision and values.  If you’re worried about having too narrow of a focus, please relax.  You can always widen these later.  For now, however, eyes on the target.
  6. Step #6- Document & Quantify Everything in a Business Plan: Once you’ve determined that there is a need for your business, created your story, defined your mission, vision and values, and defined your market, it’s time to write them all down in a business plan.  For now this will serve as validation for yourself of all the hard work that you’ve done as well as provide a true north down the road when things get tough and you need some direction.  A critical part of this step is also to develop some financial projections, based upon your research, that will create a good scorecard for you as to whether or not the investment makes sense on the front end, and how you’re doing on the back end.  Make sure that you are painfully realistic on both your sales expectations and cost estimates, and don’t forget about some of the items mentioned in this primer, technology costs, rent, inventory, etc.  Also, don’t get too far out down the road of projections. The further you project the less you know right now, and the more likely you are to favorably bias the numbers.  To start out perhaps just try to focus on a 1 year and a 3 year plan.
  7. Step #7- Name that Baby: We’ve saved this step for here because your business’ story, mission, vision, values, and defined market will ultimately contribute to an appropriate business name and brand identity.  If you have a great idea for a business name, great!  If you don’t, no problem.  There are plenty of marketing agencies out there that can help at this stage, and this is an area that Third Road Management can help at as well.  Our advice, particularly with establishing the branding for the business, is to invest wisely.  Don’t underspend here.  People intuitively know a quality brand when they see it.  Before moving on, you may want to do a preliminary search on-line to make sure that your business name is not already a registered corporation.  For example, in the state of Illinois, you can check this at cyberdriveillinois.com.
  8. Step #8- Lawyer-Up and Incorporate: Assuming that your business name is available, it’s time to get this thing legally registered.  There are on-line resources that you can do this through that would work for you such as legalzoom.com or bizfilings.com.  We might also recommend that you identify a great lawyer to help you with this process as the cost will be only marginally more, you’ll receive personalized guidance on what type of business to register as, and you’ll need to have a business relationship with an attorney down the road anyways so this is a good place to start.
  9. Step #9- Choose a Bank: Since you’ll need someplace to deposit your earnings and write checks from, it’s time to choose a bank.  There are pros and cons with which bank to choose; however, in general it’s hard to go wrong and you can always change your bank later.  In general, the larger banks are going to have more robust technologies (apps, accounting plug-ins, etc.) but be less personal, whereas the smaller local banks are going to be somewhat the opposite.  Just pay attention to any fees that they are going to charge you including general account fees, ACH and wire fees, app deposit fees, etc.  Hard to go “wrong” here so don’t overthink it.
  10. Step #10- Register a Domain: The first thing you’ll need to do with establishing your on-line presence will be to register a domain name for your website and email.  There are a number of on-line resources to choose from for domain name registration including Google Domains, Go Daddy, and others.
  11. Step #11- Build a Website: At this stage things can get a little trickier depending upon your comfort level with building a website.  If you want to build a website on your own, there are some platforms such as Squarespace and Wix that are pretty user friendly, and if you’re looking to have an on-line store of any kind you’ll also want to check out platforms like Shopify and Big Commerce.  Bigger picture though, none of these platforms might be ideal for you long-term depending on your business objectives, so it would probably make sense to at least have a conversation with a firm that can both recommend an appropriate platform and help with the development of the site.  Third Road Management, in addition to other firms, can help at this stage.
  12. Step #12- Seek Out a Tax Advisor: Similar to establishing a relationship with an attorney, it will make sense for you to establish a relationship with a reputable tax advisor.  This tax advisor, in addition to helping out with your year-end tax work, can help provide you with guidance on how to set-up accounts with the appropriate federal and state tax organizations and provide you with the steps you need to take and when you should be taking them.
  13. Step #13- Bookkeeping: You’ll want to choose a bookkeeping platform to keep your company’s profits and losses.  There are a number of good options out there for small businesses such as Xero, Freshbooks and Quickbooks.  We suggest utilizing Quickbooks On-Line as it is pretty standard in the industry, and it is web-based so your data is backed-up to the cloud.  All of these are pretty solid options though and will allow you to create invoices, receive payments, cut checks, reconcile at the end of each month, etc.  Costs among them are marginally different.  When it comes to the keeping of your books, Third Road Management provides outsourced bookkeeping and payroll services, so please contact us if interested.
  14. Step #14- Payroll: If you are not planning on having any employees immediately, you may not need to take this step.  We recommend checking with the tax advisor outlined above first.  If you are going to have employees, however, there are a couple of things to note.  First of all, make sure that you are aware and clearly understand the additional taxes that an employer is required to cover for their employees including unemployment and the company’s share of social security and medicare taxes.  The tax advisor should be able to assist with this.  Secondarily, you’ll need to choose a payroll platform.  Again, there are many quality, simple on-line platforms to choose from including Intuit, ADP, Gusto, and Paychex, among others.  We recommend using Intuit’s payroll as it integrates seamlessly and easily into the Quickbooks On-Line accounting platform (they are owned by the same company).  Again, costs are marginally different, and Third Road Management provides outsourced bookkeeping and payroll services, so please contact us if interested.
  15. Step #15- Get Yourself Covered: Purchasing insurance is a necessary reality of owning your own business.  We recommend establishing a relationship with a sharp, respected, and trustworthy insurance broker that can guide you appropriately to the coverages and the coverage amounts that you need.  The costs of this insurance should not be too scary at the outset and you’ll thank yourself later for being prepared should anything come up.  These insurance brokers can also help you later adding employee benefit coverages.
  16. Step #16- Score Some Swag: Get yourself some business cards, stationary and other promotional items to begin to establish your company’s brand identity.  No need to overspend here but you’ll want to invest some money out of the gates in these items.
  17. Step #17- Get Social: Social media can be your friend.  Take some time to establish profiles for your business on all the major social media channels as these can be used as a voice to reach your audience.  We recommend Facebook, Twitter, Instagram and Linked-In.
  18. Step #18- Extra Credit Points: If you really want to set the tone for your business well out of the gates, take some time to develop some initial human resource infrastructure, especially if you plan to have employees out of the gates or in the near term.  Examples of this infrastructure include establishing an Employee Handbook, written job descriptions, and templates such as offer letters.  It is very important for you to keep in mind with this process that you will need all documentation to be compliant with all state and federal regulations, so be conscientious.  Third Road Management can help with establishing this infrastructure so please let us know if interested.
  19. Step #19- Go live!

In conclusion, remember in Step #2 above when we recommended that you buckle-up?  We meant it.  Whether you handle each of the steps noted above out of the gates or revisit some of them at a later date, one thing is certain that eventually you will encounter them, and much more, at some point.  We hope that this information provides you with solid guidance on your first steps of entrepreneurship.  The road to independent success is a challenge but the reward is worth it.  Please let us know if there are any questions at info@thirdroadmgmt.com.

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