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Summary:

You’ve decided that now is the time.  You’re ready to try it on your own and start your own business.  Whether you’re going to work for yourself full time or to simply augment your income, there are some basic pointers to getting your new business off […]

OpenYou’ve decided that now is the time.  You’re ready to try it on your own and start your own business.  Whether you’re going to work for yourself full time or to simply augment your income, there are some basic pointers to getting your new business off the ground.

Pick Your Focus

What type of product or service do you plan on offering?  How do you plan on setting your business apart from the rest who are already in this space?  Without research and careful thought, you run the risk of your business plan failing.  Try to research and learn everything about the product and/or industry you plan on entering.  Interview your perspective customers and find out steps you can take to make your business offering unique and attractive.

There are plenty of people to ask for advice.  Start with colleagues, friends, and family.  As another option, when I started my business, I utilized my local Community College’s Business Development Program.  They house our local chapter of Service Corp of Retired Executives (SCORE) which is an organization of local and accomplished business leaders who can offer you advice on your business structure, business model, and anything else related to getting your business set up.  They take a vow of non-competition, so you can feel comfortable talking in detail about your new venture.


Make it Legal

Registering your business with the state you live in is the next important step.  This will reserve your business name and make it possible for you to do business in the state where you live.  Choosing a business name is important.  Where I live, Oregon’s Secretary of State serves as the registration body for businesses.  Most states have a web tool allowing you to enter in a name to see whether it’s available or not.  One important step: be sure to chose a business name that also coincides with a domain name you desire to register, if this is applicable to your situation.

Registering with the state will also require you designate what type of business you plan to have.  There are many types including sole proprietorship, corporation, nonprofit, limited liability company, limited partnership, and more based on what state you live in.  To make the call on which is most applicable to your business, see your CPA and/or lawyer for the best advice.

Finally, get an Employer Identification Number (also called a Tax ID) from the IRS.  This will be required whenever you do business with another business and will enable you to avoid using your social security number.  To apply for an EIN online fill out an SS-4 on the IRS‘ website.

Establish your Finances

Now that you have a bonafide business, it’s time to set up your finances.  Keeping good records is very important.  With your new business, valid business expenses can be a deductible expense.  That is, if you have started a web design business, your new computer equipment can be figured in to your business’ start-up costs.  Be sure to keep records on everything, in case of an audit.

Head down to your bank and set up a business bank account to keep your personal finances separate from your business finances.  If you plan on doing a lot of purchasing, a business credit card may be in order as well.

Figure out your bookkeeping strategy by talking to a certified bookkeeper or CPA.  Paying someone else to manage your books may not sound like a good thing, but it will free you up to do what you know best – making money for your new business.

There are many rules and regulations to establishing and running a successful business that vary from state to state.  For authoritative advice, consult your CPA and/or lawyer.

(Photo credit: Flickr User mRk.Cool)

What pointers do existing small business owners have for the newbies?  Weigh in via the comments.

  1. Thanks Jason! This is just what I needed to make the move.

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  2. Good information! I would add that before you get to these steps, having a clear and compelling reason for starting your own business is the first step. If you aren’t really clear about your “why”, when the road gets rough, which it will at times, staying on track is tougher. Having a vision board you can keep in front of you as a physical reminder, and thinking about how your business will enrich your life on a regular basis, will help anchor your why.

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  3. While these are great points, the biggest problem for most people new to business is their personal qualification — are they ready to run their own business?

    As a business consultant, I’ve met people with the academic qualifications, but lack key skills, which will over time undermine whatever efforts they make, unless those deficiencies are addressed…

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  4. Wayne

    Your right about people having deficiencies, but that can be addressed with the proper team. As long as each person is very capable to deliver within their primary function, other team members can fill in the missing pieces. In fact, a highly skilled team is often better than a single person with all the right skills. This is why VC’s are always focused on building the proper team.

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  5. Well, according to your list – I’m doing absolutely everything wrong! I’m not legal, I co-mingle my finances with my web money, and I’m not focused at all, I have a shotgun approach to blogging in all kinds of different areas and niches.

    Wow – you gave me a lot to think about for such a short post!

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  6. A better way than just applying for a business credit card or business loan, would be going for unsecured credit. A great way to get financing is through unsecured financing, and RandR Finance offers that. Unsecured credit is a way to obtain money for a business that puts no to very little liability on the person, making it less stress full and don’t have to put collateral down. You can with the unsecured credit obtain large amounts, up to $150K, so you can full support the cost of starting a new business and what is nice is that you only pay back what you use, instead of the full amount you qualify for. It is the best way to finance a new business.

    http://www.randrfinance.com

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  7. I want to begin auto classified website. Just don’t know how I can got an auto classified software for free. Thanks

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  8. Having made the decision to start your own business it is recommended that you contact and accountant to determine which business vehicle will be best suited to you. This may depend on your location but whether to be a sole proprietor or a company has significant cost implications and tax savings.

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  9. Why not make your start up legal? An LLC is a good entity to use and the Articles of Organization are available for free on most state websites. Sooner rather than later you will need to get good legal advice and get an Operating Agreement. But why not start with some legal protection?

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