ten steps to starting a business

By: Brain-Busters

FLL Team # 130

www.Brain-Busters.com

TEN STEPS TO STARTING A BUSINESS

Ten Steps to Start a Business

Step 1: Write a Business Plan

Step 2: Get Business Assistance and Training

Step 3: Choose a Business Location

Step 4: Finance Your Business

Step 5: Determine the Legal Structure of the Business

Step 6: Register a Business Name

Step 7: Get a Tax Identification Number

Step 8: Register for State and Local Taxes

Step 9: Obtain Business Licenses and Permits

Step 10: Understand Employer Responsibilities

Step 1: Write a Business Plan The Business Plan outlines how to achieve the success you want. • What do you want your business to look like in 3-5 years from now?

• What level of revenues and profits do you have at that time?

• How Many employees?

• How Many locations? And so on

Simple Business Plan Outline

• Executive Summary • Company Description • Market Analysis • Organization & Management • Service or Product Line • Marketing & Sales • Funding request • Financial Projections • Appendix

Step 1: Write a Business Plan - Continue

Business Plan - Executive Summary

• Highlight the points you’ve made elsewhere in the plan.

• The most important section. The doorway to your plan

• The reader will either going to throw away your plan or keep on reading.

• The first opportunity to grab investor’s attention.

• Briefly tells where the company is, where you want to take it, and why your business idea will be successful.

• Focus on your experience and background as well as the decisions that led you to start this particular business.


Business Plan - Company Description

Provides Information on who you are and what you do, what differentiates your business from others, and the markets your business serves

• What to Include in Your Company Description

• Describe the nature of your business and list the marketplace needs that you are trying to satisfy.

• Explain how your products and services meet these needs.

• List the specific consumers, organizations or businesses that your company serves or will serve.

• Explain the competitive advantages that you believe will make your business a success such as your location, expert personnel, efficient operations, or ability to bring value to your customers.


Business Plan - Market Analysis

Before launching your business, it is essential for you to research your business industry, market and competitors.

• What to Include in Your Market Analysis

• Explain the type of business you’re in.

• You need to know

• your market and how it’s changing,

• your customers’ needs,

• where your customers are, how to reach them and

• how to deliver your product to them.

• You’ll also need to know who your competitors are and how you stack up against them—why are you sure there’s room for you in this market?


Business Plan - Organization & Management

Describe the organization of your business, and the key members of the management team. Include summaries of your managers’ backgrounds and experience - these should act like brief resumes -and describe their functions with the company. Full-length resumes should be appended to the plan.


Business Plan - Service or Product Line

What do you sell? How does it benefit your customers? What is the product lifecycle? Get tips on how to tell the story about your product or service.


Business Plan - Marketing & Sales

How do you plan to market your business. What is your sales strategy?


Business Plan - Funding request

If you are seeking funding for your business include the following information:

• Your current funding requirement

• Any future funding requirements over the next five years

• How you intend to use the funds you receive.


Business Plan - Financial Projections

If you need funding, providing financial projections to back up your request is critical.

What to include in your Financial Projections

• Include your projected profit and loss, and cash flow tables, and a brief description of the assumptions you’re making with your projections.

• May also want to include your balance sheet, your sales forecast, and a break-even analysis.

Step 1: Write a Business Plan - Continue Business Plan - Appendix • An appendix is optional, but a useful place to include additional information such as resumes,

permits, and leases.

• Some of the information in the business section you will not want everyone to see, but specific individuals (such as creditors) may want access to this information to make lending decisions.

The appendix would include:

• Credit history (personal & business)

• Resumes of key managers

• Product pictures

• Letters of reference

• Details of market studies

• Relevant magazine articles or book references

• Licenses, permits or patents

• Legal documents

• Copies of leases

• Building permits

• Contracts

• List of business consultants, including attorney and accountant

Step 2: Get Business Assistance and Training • Be sure to get as much business training

• The US Small Business Administration (SBA) – www.sba.gov/tools/sba-learning-center

• Small Business Development Centers of California (SDBC) – Californiasbdc.org

• The California Association for Local Economic Development (CALED) – www.caled.org

• Serivce Core of retired Executives Association (SCORE) – www.score.org

• California Center for International trade Development (CITD) – citd.org

• Disabled Veteran Business Alliance (DVBE) – www.cadvbe.org

• The Federal Technology Center (FTC) – TheFTC.org

• Business Marketing – www.businessmatchmaking.com/

Step 3: Choose a Business Location • Chances are, you've heard the term “location, location, location" more than a few

times.

• Keep in mind that as an Ecommerce company you are first and foremost a technology company.

• For e commerce business location in website, we need a robust website.

• We need to manage our inventory.

• Of course you need a winning product, too, but how will anyone know about that product unless you get them through the door?

• But your job isn't done even when you think you've found a good spot for your business.

• Negotiating a lease that works for you and your business is just as important as the location itself.

• It's very important that you have a good lawyer who can negotiate your lease.

Step 3: Choose a Business Location - Continue • Here are some things that all online businesses should consider

• Choice of Products

• Product Display

• Stocks availability

• Pricing

• Shipping

• Customer Care

• Search

• Innovation

• How to advertise using social media, other websites - banner ads etc

• Web security

Step 4: Finance Your Business • How to finance your ecommerce business:

• Bootstrapping

• Friends and family

• Network funding

• Crowd funding

• Small Business Administration

• Bank loans

• Cash advance

• Startup America

• Venture capital and angel investors

• Grants Source: http://www.theonlineseller.com/2012/04/30/10-ways-to-fund-your-e-commerce-business

Step 4: Finance Your Business - Continue • How to manage your finance for your ecommerce business: Financial Plan

Investments typically includes the cost of developing your website, building a product inventory and a promotional plan. It may also need to supply temporary income for the business owner until the business begins generating revenue.

• The first financial details that are critical to getting a business going is a Start -Up

Budget.

Start-Up Budget

• Website Design & Development

• Computer/ Hardware Equipment

• Promotional Programs

• Product & Service Inventory

• Hosting Services

• Merchant Account setup

• Legal & Accounting Services

• General Office Expenses

Step 4: Finance Your Business - Continue • Financial Planning:

• Projected Cash Flow

• Break-even Analysis

• Revenue - coming in

• Expenditure - going out

• Important Assumptions

• Interest Rate

• Tax

• Projected Profit & Loss

• Projected Balance Sheet

• Source:

• http://www.bplans.com/e-commerce_start-up_business_plan/financial_plan_fc.php

• https://ecommerce.shopify.com/guides/businessplan/sample-business-plan


• Sole Proprietorship

• Partnership

• A corporation

• An S corporation

• A cooperative

• A limited liability company


Sole Proprietorship –

It is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner.

• You need to obtain the necessary licenses and permits. Regulations vary by industry, state and locality

• Easy tax preparation-The business itself is not taxed separately-the sole proprietorship income is your income.

• You alone are ultimately responsible for the successes and failures of your business, you assume the all sole liability


Partnership – A partnership is a single business where two or more people share ownership • You need to obtain the necessary licenses and permits. Regulations vary by industry,

state and locality

• Legal partnership agreement- should document how future business decisions will be made, including how the partners will divide profits, resolve disputes, change ownership (bring in new partners or buy out current partners) and how to dissolve the partnership.

• you must register your business with your state

• You’ll also need to establish your business name.

• A partnership must file an “annual information return” to report the income, deductions, gains and losses from the business’s operations, but the business itself does not pay income tax. Instead, the business "passes through" any profits or losses to its partners

• In a partnership, each partner is equally invested in the success of the business. Partnerships have the advantage of pooling resources to obtain capital.

• Similar to sole proprietorships, partnerships retain full, shared liability among the owners. Partners are not only liable for their own actions, but also for the business debts and decisions made by other partners.


A corporation – (sometimes referred to as a C corporation) is an independent legal entity

owned by shareholders.

• Corporations are more complex than other business structures because they tend to have costly administrative fees and complex tax and legal requirements. Because of these issues, corporations are generally suggested for established, larger companies with multiple employees

• To form a corporation you’ll need to establish your business name and register your legal name with your state government (you need to file certain documents, typically articles of incorporation).

• When it comes to taking responsibility for business debts and actions of a corporation, shareholders’ personal assets are protected. Shareholders can generally only be held accountable for their investment in stock of the company.

• Corporations are costly and time-consuming ventures to start and operate. Incorporating requires start-up, operating and tax costs that most other structures do not require.


An S corporation –

(sometimes referred to as an S Corp) is a special type of corporation created through an IRS tax election.

• S corporations are "considered by law to be a unique entity, separate and apart from those who own it." This limits the financial liability for which you (the owner, or "shareholder") are responsible.

• Business is not taxed only the shareholders are taxed. Profits and losses can pass through to your personal tax return.

• Once your business is registered, you must obtain business licenses and permits.


A cooperative –

is a business or organization owned by and operated for the benefit of those using its services.

• Potential members must agree on a common need and a strategy on how to meet that need. An organizing committee then conducts exploratory meetings, surveys, and cost and feasibility analyses before every member agrees with the business plan. Not all cooperatives are incorporated, though many choose to do so.

• Most businesses need to register with the IRS, register with state and local revenue agencies, and obtain a tax ID number or permit.

• Cooperatives do not pay federal income taxes as a business entity.


A limited liability company – is a hybrid type of legal structure that provides the limited liability features

of a corporation and the tax efficiencies and operational flexibility of a partnership.

• The "owners" of an LLC are referred to as "members."

• There are 3 rules that your LLC name needs to follow: (1) it must be different from an existing LLC in your state, (2) it must indicate that it's an LLC (such as "LLC" or Limited Company") and (3) it must not include words restricted by your state (such as "bank" and "insurance").

• File the Articles of Organization. The "articles of organization" is a simple document that legitimizes your LLC and includes information like your business name, address, and the names of its members

• Once your business is registered, you must obtain business licenses and permits. Regulations vary by industry, state and locality

• an LLC is not a separate tax entity, so the business itself is not taxed. Instead, all federal income taxes are passed on to the LLC's members and are paid through their personal income tax

• Limited Liability. Members are protected from personal liability for business decisions or actions of the LLC. This means that if the LLC incurs debt or is sued, members' personal assets are usually exempt


An S corporation –

(sometimes referred to as an S Corp) is a special type of corporation created through an IRS tax election.

• S corporations are "considered by law to be a unique entity, separate and apart from those who own it." This limits the financial liability for which you (the owner, or "shareholder") are responsible.

• Business is not taxed only the shareholders are taxed. Profits and losses can pass through to your personal tax return.

• Once your business is registered, you must obtain business licenses and permits.

Step 6: Register a Business Name • You should pick a name that reflects your brand identity, but you also need to

ensure it is properly registered and protected for the long term

• How will your name look? – On the web, as part of a logo, on social media.

• What connotations does it evoke? – Is your name too corporate or not corporate enough? Does it reflect your business philosophy and culture? Does it appeal to your market?

• Is it unique? – Pick a name that hasn’t been claimed by others, online or offline. A quick web search and domain name search will alert you to any existing use.

• Trademark infringement can carry a high cost for your business. Before you pick a name, use the U.S. Patent and Trademark Office’s trademark search tool to see if a similar name, or variations of it, is trademarked

• Register Your New Business Name -Registering your business name involves a process known as registering a “Doing Business As (DBA)” name or trade name.

• Apply for Trademark Protection -A trademark protects words, names, symbols, and logos that distinguish goods and services.

Step 7: Get a Tax Identification Number

• If our business is going to employ workers, sends taxes on workers’ salaries to the federal government, WE NEED A BUSINESS TAX ID NUMBER!

• We can get a tax ID by visiting the IRS website (www.irs.gov). You will need to answer few questions.

• Once you complete the application, you will get a confirmation page that tells you your tax ID. PRINT IT!

• Remember you will need social security number(s) of business owners.

Step 8: Register for State and Local Taxes

• Since our business is located in California, we must register it with “CA Employment Development Department” (www.edd.ca.gov).

• We must do that so we can then send taxes on workers’ salaries to the state government.

• As a business, we need to obtain a seller’s permit since we are going to sell products or goods in California. Visit www.boe.ca.gov and click on new registration. The seller’s permit allows you to charge sales and local taxes to your customers and report them back to the state government.

• We may have to do this for other states if we wish to sell our products to customers in those states.

Step 8: Register for State and Local Taxes - Continue

• Information Required to Complete the Applications • In general you will need the following for each business owner/partner:

• Name

• Date of birth

• Social Security Number

• Government provided ID (Driving License/Passport/State ID)

• Bank Account Information

• A parent or an adult needs to join if minors want to start a business (for legal purposes)

• See http://www.sba.gov/blogs/young-entrepreneurs-advice-starting-business-minor

Step 9: Obtain Business Licenses and Permits

• To run my business legally, there are certain federal and state licenses and permits I may need to obtain

• Certain businesses, like ones that sell agricultural goods require a federal license or permit. Since I plan on selling flowers, which is an agricultural product, I need to check if I need a federal license or not (especially since I may ship the flowers to a different state).

• Some states have licensing requirements for specific businesses as well, I need to check with the state of California.

• I don't plan to sell flowers from my home, but if I did, I would need to get a local license from my town as well.

Step 10: Understand Employer Responsibilities

• I have several responsibilities as a business owner.

• Some of these are to the government, others to my workers or employees

• To the government, I am expected to

• Keep a record of the money I make and how much taxes I owe

• Pay my taxes on time

• Pay any taxes I need to on behalf of my workers

• Keep insurance to protect me and/or my workers

• To my workers, I am expected to

• Pay them on time

• Make sure they are legally allowed to work in this country

• Make sure I maintain a safe environment

• Make sure I hang a poster that tells them of their rights as employees

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