A couple of weeks ago, we looked at ways to make money fast. This week, I’ll dive into how you can set up a business to make money. It’s not a fast solution though. However, it’s a great way to earn some more money. In fact, setting up a business is two out of four ways to reach financial independence, as I have previously made a post on. You can either set up a lifestyle or a growth business.
Wondering how to start your own business? Setting up and starting your own business may seem intimidating. But it’s actually not that complicated. Just about anyone can do it. The scary part is taking the leap, and quitting your full-time job or investing your own money into your business.
But doing so can be extremely rewarding. In addition, running your own business can be very lucrative. If you are successful, you will make more money than you would while working for someone else. In addition, you own the business and its assets, and may eventually be able to sell it in the future.
In short, running your own business is a great option if you want to work toward financial independence. Still wondering how to start your own business? Here’s a basic, 8-step guide that you can follow to get started.
1. Start With Research & Identify An Opportunity
First things first, you need to do some research and identify a strong business opportunity that you’re poised to take advantage of.
For example, if you notice a storefront that’s up for rent in a part of the city with no coffee shops, you may be able to start a coffee shop there and quickly gain market share.
But before you do, you need to do more research. How much will the rental cost be? How long does it take coffee shops to become profitable? How much will you have to pay your employees? How long will it take to open your shop?
Doing the groundwork and initial research will make sure that you’re aware of the strengths – and weaknesses – of your business plan. You’ll be able to plan accordingly. Speaking of business plans…
2. Create A Business Plan
A business plan is exactly what it sounds like. It will outline the detailed plans that your small business will use to grow. It’s typically intended to cover a time period of about 3-5 years and details:
- Your business goals
- The products/services you sell
- The structure of your business
- Paths to profitability
- Financial projections
- Marketing/sales plans
- Expected monthly expenses
If you’ve never created a business plan before, there are a few guides you can use to do it on your own. This guide from NerdWallet is pretty comprehensive, and a good place to start if you want to build a DIY business plan.
However, if you can afford it, it may be a good idea to hire a business consultant to help you develop the plan. An accurate business plan is essential for your business to succeed.
3. Secure Funding & Plan Your Finances
The amount of funding you’ll need will, of course, vary depending on your business. If you’re opening a coffee shop like in our above example, you’ll need money for renting a storefront, hiring workers, purchasing equipment, buying coffee, and other such costs.
But if you’re setting up a software startup, your costs will be much lower. You may only need to invest in a few computers and an office in a shared workspace, and need money to spend on contractors, or perhaps a few full-time developers.
Based on your business plan, you can decide how much funding you need. If your costs will be low, you can probably cover them yourself, and invest some of your savings. However, it’s often a better idea to get a small business loan.
Using this loan, you can cover your initial startup costs without going out-of-pocket. This is usually a much safer option if you are starting a business that will have relatively high operating expenses. Learn more about small business loans and your funding options here.
4. Structure & Incorporate Your Business
You will need to create a business structure and legally incorporate your business. The process of doing this will vary based on your country. However, if you’re in the US, it’s usually best to incorporate as an “LLC” or “Limited Liability Company.”
LLCs are legally independent entities. What this means is that your personal finances and responsibilities are separate from the company. This is very useful for minimizing your liability. Investopedia has a great article about LLCs and business incorporation which you can read here. Most countries have an equivalent to an LLC, though the name may differ.
5. Obtain Necessary Licensing And Insurance
Again, this may not be necessary depending on your line of business. If you open a coffee shop, for example, you will need to get a food service license and all other licenses required by your local municipality so that you can serve food and drinks legally.
In the same vein, you should also get business insurance. Business insurance policies help protect you from liability if something is wrong with your products or services, an injury occurs on your premises, and in many other situations.
Proper insurance is invaluable – and could save you hundreds of thousands of dollars if an unforeseen situation results in your business being held legally liable for damages.
6. Set Up Your Business Location
No matter what kind of business you have, you’ll need to set up a business location – such as a retail or foodservice storefront, an office, or even your home office if you’re a solopreneur.
This process could take just a day, or multiple weeks, depending on how much equipment and supplies you’ll need to start running your business.
7. Put Your Team Together
Everyone needs a team. If you are running a retail shop or a cafe, you’ll need workers like cashiers, servers, dishwashers, cooks and so on. You’ll need to take the time to carefully hire the right people for the job to make sure you provide great service.
If you’re running a smaller company and looking to hire independent contractors, this is a good time to start looking for qualified individuals to work with. And even if you’re a solopreneur, it’s a good idea to take some time to find mentors and small business coaches who have worked in your field and can give you input and advice as your business grows.
8. Start Attracting Clients Or Customers
Finally, you’ll need to start bringing in clients and customers – through things like marketing and advertising, spreading word-of-mouth, and asking for referrals from colleagues.
The exact method by which you’ll attract your client or customer base will vary based on your business – but it’s important to try to ramp up and attract customers quickly. The sooner your customers or clients start making use of your products or services, the faster your business will start to become profitable!
Stop Wondering How To Start Your Own Business – Get Started Now!
This is not a totally comprehensive guide – but it’s still a great starting point. As you can see, even an intimidating task like starting your own business is not as scary when you break down each step of the process.
Looking for more information before you take the plunge, and start your own business? I don’t blame you. It’s a big step! Taking your time and doing your research is a good idea. I recommend that you take a look at this guide from Entrepreneur.com – 5 Books to Read Before Starting Your Business.
I’ve only read two of the titles on the list, but they all look very interesting and are sure to help you as you begin to consider starting your own small business. Thanks for reading – and as always, I hope this guide has been helpful and inspirational!