Starting a business is a blessing a lot of people try to go into but many fail. So much goes into what makes a business successful, so failing to deeply consider the path forward puts any startup at risk of failing to ever take off.
At Pence Law Firm, we want to support the dreams of our clients and make sure they have all the resources they need to find success in life. We believe the following five aspects of starting a business must be considered and committed to before ever trying to make that first dollar.
1. Research your market
Where do you plan for your business to operate? Where are you selling and/or shipping goods and services to? What is the need in this market? What are competitors doing and can I compete with them?
These are all questions to consider right upfront. The best way to prepare yourself for success is to educate yourself about the market. This includes an understanding of the location(s) you plan to operate in, the demand for your goods and services, the customers you will be selling to, and what you will need to do to ensure your brand stands out among the competition.
This all applies to local businesses, too. A lot of people think they understand their own community and launch a business there just to find out there’s a lot they never knew. Don’t assume you understand the market without first doing the legwork to learn more about it.
2. Find a problem you can solve
Every consumer sets out to make purchase decisions based on the deficiencies in their life. This could mean they need to make a first-time purchase or replenish the supply of something or they need to get work done on a part of their life that’s missing. In the end, people want solutions.
So, what problem are you solving for your customers? You should be able to readily answer this question, but it should be more robust than just “they want X, and I’m selling X.” WHY do they want X and WHY are you selling X?
3. Open a business bank account
“Don’t mix business with pleasure.” It’s an age-old saying, and you should take it to heart when it comes to starting your own business.
Your business will need to be financially independent of your own personal financial accounts. This means starting a business account. The money coming in and out of your business should go directly through this account. This will not only provide you clarity about how much funding your business does or doesn’t have, but it will also make it much easier to file your taxes with the IRS.
We don’t want to push you in one direction or the other when it comes to starting a business bank account. Shop around with different financial institutions and find out which one offers the best perks for your specific situation. It will be important to find a bank that operates and accepts transactions wherever you plan to do business.
4. Choose a legal structure for your business
The legal structure for your business dictates a lot of future financial decisions for you. This will impact what taxes apply to your business, what kind of business dealings you can or can’t partake in, and more.
This can be tricky because there are a lot of options:
- Sole Proprietorship
- General Partnership
- Limited Partnership (LP)
- Limited Liability Partnership (LLP)
- Limited Liability Company (LLC)
- Corporation (C-Corporations and S-Corporations fall under this)
Each of these structures has pros and cons. While it may already be obvious to you what structure your business should take, we at Pence Law Firm can help you with the all-important decision.
5. Understand local, state, and federal laws
This one is crucial, but it gets neglected too often. We hear from clients who regret not being more thorough in understanding the laws that apply to their business. It’s the perfect way to not only derail your business plan, but it can also get you into some major trouble.
Laws are complicated and there are different regulations to consider at the local, state, and national levels. Some seem contradictory to each other and can be confusing (sometimes that feels intentional). That’s why having the right attorney by your side can make all the difference.
At Pence Law Firm, we will always keep you on track and make sure you don’t find yourself in any legal trouble when trying to make a living. We pride ourselves on helping people protect what they’ve grown. Contact us today for all your business legal solutions.