Starting a business is becoming ever easier. The following guide will take you through the steps of setting up the basics of your new business.
Choose a niche
After doing competitive research, look for a niche where there is a significant demand with not too many competitors. You don’t want to go after a product niche with no competition. That indicates low demand. Competition is also healthy. It guides you in what to do to set yourself apart from the competition. Remember to research reviews and complaints on competitive products to see what you can do better to bring better value to the market.
Registering your business and choosing your business structure
There are three main options available when registering your company, each one has different types of legal rights, and different methods of taxation. Look at the different options available in terms of placing your company in the tax classification that benefits you most. Here are a few options and a breakdown of what they represent.
Sole Proprietorship: If you’re just starting out and you don’t have a lot of money to file for incorporation, this is your cheapest option. However, it can become expensive. Since you are personally liable for any lawsuits filed against you, your personal assets could be at risk if a disgruntled customer ever decided to open a lawsuit. The moment you have the money, it is recommended that you file for an LLC.
An LLC or Limited Liability Company protects your personal assets from cases such as lawsuits, as mentioned above. Another advantage is that you can avoid double taxation. There are also no residency requirements if you happen to be outside of the United States, you can still do business there.
A Corporation is a business that is separate from its owners. Corporations offer the strongest protection in terms of legal liability, but the cost is higher and require extensive record keeping. Corporation could also be subject to double taxation, when the company makes a profit and when dividends get paid to shareholders.
You can name your business whatever you like. It needn’t necessarily represent your brand. Your business name is important because it is how the state and the federal government recognize your business.
Get sorted with the IRS
You need an Employer Identification Number to start a business and report your taxes to the IRS. Check your state laws to see how often you will need to file business taxes. (If you have a Sole Proprietorship, your EIN will be your social security number).
Business licenses and permits
It’s important to talk to your state government about which licenses and permits you’ll require to do business in a state. Some states such as Texas only require that you have a reseller license. In California however, you will need a business license as well as a reseller license. Each state is different.
Choose your brand name
Your brand name does not have to match your company name. Some people like to keep them related, but your brand name is ultimately what you are promoting to your audience. It’ about a name that’s catchy and gets people’s attention, about how they remember you.
It took me weeks to think of a brand name for my company. Take enough time to think of yours. For SEO and branding purposes it helps if your brand name matches your domain name. Make sure to see the domain you want is available before choosing your name.
Logo Creation is a big part of what will make you stand out, as are the colors you use to make your brand recognizable. There are free software tools to help with that, or you can use a freelance graphic designer.
Prepare your marketing strategy
You might expect fanfare when your place your first product on your site. What if nothing happens and you get no traffic or attention from buyers? It’s important to set up your social media accounts, blogs and website. Plan your campaigns to promote your product early to simplify things when you launch. This is about solidifying the brand that you worked so hard to create. Take that passion for your brand and make it shine through in the value your product provides your customers.
How much inventory do I need?
It’s hard to manage inventory when you don’t have any sales history. Carefully follow your competitors’ performance over time. Pay special attention to seasonal buying trends to see if yours is a seasonal product. Several software tools can assist you in getting data from your competitors. Use their sales histories to predict what you would sell, and make sure to err on the side of more rather than less. You don’t want to run out of stock just when things are ramping up.