Building a business is different than building a brand. Some of that comes in the form of legal compliance and making a “real business” — one that takes payments and pays taxes.
There are fundamental pieces of your business that need to be put into place for you to have a successful business in the long term. Think of your business like building a house. You need a solid foundation for it to be built on. Next comes the blueprint for what type of house it is and how it will be built, then comes time to decorate it and make it your own.
A lot of people start buying furniture and drapes before they even know the size of the room or what it’s going to be used for. This looks like getting a logo designed, starting a website, having merch made — all long before you’ve even figured out who’s buying from you or how you take payments. This is what leads to spinning plates, too much #hustle, and eventual burnout.
But that’s not you.
You’re here to learn how to build without burnout and stay healthy while building the life of your dreams.
So let’s break down the top 10 steps. If you already have a business and you’ve skipped one or two of these, it’s not a bad idea to go back and put some attention here to see if things can’t be tightened up.
- Market Research
- Business Plan
- Business Name
- Business Structure
- Business Location
- Register Your Business
- Tax IDs
- Licenses and Permits
- Business Bank Account
- Startup Cash
1. Let’s Go Hunting – Market Research
Market research is going to let you know if there’s gold in them there hills. It’s a way for you to know if there is an opportunity to turn your idea into a successful business.
It’s also a powerful way to gather information about potential customers and businesses already operating in your space. We’re going to use that info to find a competitive advantage for your business.
How do you know if this is a sound business idea? Has it been done before, who else is doing this and who are your ideal clients?
Word of caution: for those people who are procrastinators or have a fear of failure, this is where a lot of people get stuck. Forever. This is where they use the powers of the Market Research against themselves and validate some deep down beliefs they may be harboring. “There are already so many people out there doing this. I can never stand out” or “I’m hardly unique, what’s the point?” “They are already so far ahead of where I am going to start”
If this is you, right now, before you go on to ANY OTHER STEPS, we must squash this one first and foremost. Why? Because this is the bedrock to your business. The bean dip to your 7 layer bean dip. The underbelly to everything you’re building. And if you have some self-sabotage in you, it’s going to come up again. Head over here and let’s tame this devil before we move on to step 2.
If you’ve tamed this beast and you’ve got your market research in tow, keep going.
2. Write your business plan
Your roadmap for the future for how to structure, run, and grow your business.
I’m a big believer in a business plan. Why? It’s like a manifestation guide. And how does manifestation work? By embedding what you want in your brain like a cleaver. Humans are wired for problem-solving: by writing out WHAT you want to do to, in sequence and with expectations around it, your brain will want to figure out HOW to do that. Say it enough times and it comes true.
I can also speak from experience from having multiple businesses, the one that had the most robust plan was the most successful, the fastest. What brings success is CLARITY.
You’ll also use this business plan to convince people that working with you — or investing in your company — is a smart choice and that you have a plan to get there.
My favorite version of this is the LEAN startup guide, peppered in with some additional financial resources.
3. Choose your business name
You probably already started with your perfect business name. You’ll want one that reflects your brand and captures your spirit, but you’ll also want to make sure your business name isn’t already being used by someone else.
Once you settle on a name you like, you need to protect it. There are four different ways to register your business name. Each way of registering your name serves a different purpose, and some may be legally required depending on your business structure and location.
- Entity name protects you at state level
- Trademark protects you at a federal level
- Doing Business As (DBA) doesn’t give legal protection, but might be legally required
- Domain name protects your business website address
Each of these name registrations are legally independent. Most small businesses try to use the same name for each kind of registration, but you’re not normally required to.
4. Choose a Business Structure
Sole Proprietorship, Partnership, LLC, S-CORP, and more
This is where people usually get overwhelmed and say they’ll deal with it at the end of the year. Not you! You know that the legal structure you choose for your business will impact your business registration requirements, how much you pay in taxes, and your personal liability.
You’ll need to choose a business structure before you register your business with the state. Most businesses will also need to get a tax ID number and file for the appropriate licenses and permits.
Your business structure affects how much you pay in taxes, your ability to raise money, the paperwork you need to file, and your personal liability.
Choose your business structure carefully. While you may convert to a different business structure in the future, there may be restrictions based on your location. Everyone’s situation is different and consulting with business counselors, attorneys, and accountants is highly advised here. This could also result in tax consequences and unintended dissolution, among other fun distractions.
On Note on Partnerships:
Hot tip: The great thing about partnerships is how fast you can move because of the extra hands and minds. However, if anything is unclear in the roles and expectations, things tend to move even slower, working against you. You need to have clear Roles and Responsibilities written out and you are legally obligated to create something called an Operating Agreement.
Roles & Responsibilities are based on who’s responsible for what and the expectations on when those duties will be performed and how they’ll get communicated back. This is not a state or legal requirement, but I can’t stress this enough in business: clear R&R’s will make everyone clear on expectations and avoid bottlenecks, double work and resentment.
An Operating Agreement creates a structure of if/then situations: if someone wants to leave the business, what happens? If someone dies, what happens? Are there rules written into the agreement that are non-negotiables, etc? This is a legal document that gets filed when you register your partnership. You can do this generically, but this is where I suggest you pony up some cash and get a lawyer to help.
5. Pick your business location
Taxes and incentives at play
You’ll need to register your business, pay taxes, and get licenses and permits in the place you choose to locate your business.
Whether you’re a brick-and-mortar or launching an online store, the choices you make could affect your taxes, legal requirements, and revenue.
Consider the tax landscape for the state, county, and city. Income tax, sales tax, property tax, and corporate taxes can vary significantly from place to place.
In fact, some states are well-known for creating tax environments that are very friendly to certain kinds of companies. That’s part of the reason why tech startups, financial institutions, and manufacturing tend to concentrate in certain areas of the country.
Visit state and local government websites to find out what the tax landscape for your area looks like.
6. Register Your Business
Once you’ve picked the perfect business name, it’s time to make it legal and protect your brand. If you’re doing business under a name different than your own, you’ll need to register with the federal government, and maybe your state government, too.
Find out if you need to register your business: Your location and business structure determine how you’ll need to register your business. Determine those factors first, and registration becomes very straightforward.
For most small businesses, registering your business is as simple as registering your business name with state and local governments.
In some cases, you don’t need to register at all. If you conduct business as yourself using your legal name, you won’t need to register anywhere. But remember, if you don’t register your business, you could miss out on personal liability protection, legal benefits, and tax benefits.
7. Get Federal and State Tax IDs
It’s like a social security number for your business.
You apply and get your employer identification number (EIN) for important steps like opening a bank account and paying taxes. Some — but not all — states require you to get a tax ID as well.
Your business needs a federal tax ID number if it does any of the following:
- Pays employees
- Operates as a corporation of partnership
- Files tax returns for employment, excise, or alcohol, tobacco, and firearms
- Withholds taxes on income, other than wages, paid to a non-resident alien
- Uses a Keogh Plan (a tax-deferred pension plan)
- Works with certain types of organizations
It’s free to apply for an EIN, and you should do it right after you register your business.
8. Apply for Licenses and Permits
Staying legally compliant
Yep, you need these documents to be tax compliant in your city, state and in the USA. The licenses and permits you need for your business will vary by industry, state, location, and other factors. Most of them need to be renewed yearly.
9. Open a Business Bank Account
Make it legit
Please, please don’t skip this step. I coach so many people who think that they’ll open an account when they start making money. There are two main problems with this: one is Mindset. That you don’t think you’re going to make money right now is an issue and you need to go back to step number 3 and revisit the money section and your relationship with money. You are in business to make money and have freedom. If you are uncomfortable with taking money, making money or having a separate account, you are running a charity or a hobby—not a business.
The second problem with this is the accounting. At the end of the year, you are responsible for telling Uncle Sam what you made and didn’t make, AKA, your profits and loss statements. If this is tangled into a web of personal finances, some of it may not be able to be accounted for. Not to mention the amount of extra time and attention it’s going to take at the end of the year. Imagine just being able to hand over account records and receipts to a bookkeeper without an explanation for each line item, or forgetting something pivotal that could be a tax write-off for your business.
The good news is it’s easy to set one up if you have the right registrations and paperwork ready. (you can’t open one without the right paperwork.)
10. Startup Cash
Every business needs money to start and sustain itself. This can be done bootstrapped, but even then, your time is your money. Your business plan will help you figure out how much money you’ll need to start your business. If you don’t have that amount on hand, you’ll need to either raise or borrow the money. Fortunately, there are more ways than ever to find the capital you need.
Side note: if you have a job now, or are just starting out, I highly recommend you apply for a business line of credit to have “just in case.” This usually costs about $200/ year to have open, but should you need it, you already have access to it. When you need money, and in a hurry, that’s usually the time you start hearing “no” and have to resort to other means.
I’d like to bring it back to Mindset for a moment. A great question to ask yourself here is, how do I feel about money? And what is my relationship with it? Because if it’s poor, guess what your business is going to be? How we do one thing is how we do everything. So let’s not skip this very important piece of the puzzle. If you’re not aligned with making money or asking for money, sabotage will come in small forms ultimately making your business life that much harder, or even ruins you.
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So, how do you feel after these 10 steps? Overwhelmed? Relieved? Ready to slay the day?
The important thing to remember is YOU GOT THIS. You have a brilliant idea and a gift to give to the world and without you being successful in bringing that vision forward, people will be robbed of it.
Hit me where you need help and let’s get this party rolling on to the next step, your FAVORITE one where you get to start putting the furniture and drapes into your newly built house: Branding and Positioning.
