A booming business isn’t born overnight. It takes patience and hard work to lay the right groundwork. Whether you plan to build a mobile app or digital media consulting group, here are eight things to consider as you get ready to launch:
Be realistic about your financial situation
Think about where you are right now in your life. Can you afford to forego a steady paycheck and other perks? Do you have a family to support or a mortgage or student loans to pay?
Depending on your business type, it can take anywhere from six weeks to six years to turn a profit. Determine how long it will take you to make your first sale and figure out if you have enough savings to support you and your business through that time. When it comes to budgeting, be as cautious as possible: things usually take much longer and cost more than you initially planned.
In many cases, the best time to lay the groundwork for your business is when you’re working at another job and have some kind of income coming in. Read “7 tips for keeping your day job” to learn more about balancing a job while getting your startup off the ground.
Brainstorm your business name and branding
Picking a business name marks the official beginning of your new startup and brand. Before you get too attached to any one name, you’ll want to make sure that a suitable URL is available and the name is legally available for you to use.
First, you should perform a business name search (usually free) to make sure your name is available in whatever state you’re launching in. Then, if it’s available, you can do a trademark search (also free) to see if anyone has filed a trademark for that name.
Once you have settled on a proposed business name and know it’s available to use, you can lock up your trademark rights (which you should do as soon as possible) by submitting an intent-to-use trademark application. Read Trademark 101 to learn more.
Refine your business idea
What is the problem you want to solve?
Whose lives are you trying to improve and how?Whose lives are you trying to improve and how? As early in the process as possible, outline what exactly your business will do from the end user’s perspective. Make sure you have a real market, business model, and value proposition…and that you’re not just launching a startup because “you want to be your own boss.”
You don’t need to put together a polished, 100-page business plan at this point, but your outline should be detailed enough to let you identify and address any holes in your initial thinking.
Network, network, network
The more people you know, the better. Anyone you meet could be a potential customer, partner, advisor, or inspiration. Start requesting conversations with professionals in your field and others who have started their own ventures. Ask them for coffee or a phone call to talk about their experiences.
This isn’t the time to be shy: be respectful of people’s time but fearless in making requests to meet. When you do meet, make sure to give others opportunities to talk about themselves, pay for their meal or coffee, and always send a follow-up thank you in appreciation.
Prep your elevator pitch
I’m typically not a fan of canned pitches that sound like they’re coming from a PR machine rather than a human being. But let’s face facts. When you’re starting a business, people will ask you what you are working on, and the quality and thoughtfulness of your answer can mean the difference between seizing an opportunity or letting it slip by.
Write down and practice a brief answer about what you’re doing. You’ll need a few different versions depending on the person you’re talking to and how much time you have (i.e. 15 seconds in line at the coffee shop or 5 minutes at a party). Even though you’re prepping your pitch in advance, you still want it to sound as organic as possible: skip the buzzwords and jargon.
Decide on your business entity
At some point, you will need to decide whether to operate as a sole proprietorship or create a business entity (either an LLC or a corporation). A Sole Prop is the simplest business type, but doesn’t give you any separation between your individual finances and your business, while an LLC or corporation helps shield your personal assets from the business.
It’s smart to schedule a meeting with a CPA or business tax advisor early in the process to determine what business entity is best for your situation and taxes. Then, you can file the business paperwork yourself with the state or have an online site handle it for you. Other legal things you’ll need include an Employer Identification Number (EIN) from the IRS and any permits or business licenses from your local city or county government.
Get your business records in order
Once you have your business name and business structure settled, you can open a business bank account. This is crucial if you have any paid contracts or orders coming in. At this point, your main focus should be building out your product or services, but you also want to keep good financial records. Start saving any expense receipts as early as possible…you may not be able to write every expense off, but you should always give yourself the chance to expense as much as possible.
If you have filed your own taxes in the past, consider meeting with a tax pro to understand the in’s and out’s of business taxes (particularly if you form an LLC or corporation). You want to make sure you are taking as many business deductions as you legally can.
Think about what success means to you
This part is critical to the entrepreneurial journey. We all have different values and priorities. For some, it’s achieving a work-life balance that lets you live well and follow your passion. Others are looking to get filthy rich and retire early.
Take some time to reflect on what success means to you. Then, think about what path will help you get there. If you’re looking for a big cash out or IPO, it is possible, but keep in mind that there are lots more entrepreneurs who get to follow their dreams and enjoy one hell of a ride without raising an eight-figure Series A round.