Entrepreneurship Basics: What to Know to Start a Business

By JPMorgan Chase
Afro
Reprinted – by Texas Metro News
https://afro.com/

When you’re on the verge of starting a business, entrepreneurship can feel overwhelming. Even if you have a great product idea, you may not know where to begin when it comes to making your dream a reality. 

If you’ve got an eye toward an entrepreneurial future, read on to learn how you can get your footing and launch a successful business.

4 Must-Know Terms

Starting your own business comes with learning a new vocabulary, too. Here are four of the most essential terms an aspiring entrepreneur needs to know from the very beginning — and what to do with them.

• Market research: This is a critical first step in launching a business. Market research analyzes consumer behavior and market trends to determine whether there is reliable demand for your product, what competitors you will be facing, which demographics your business could reach, and more. You can conduct your own research by reaching out to potential customers with surveys and questionnaires, utilizing existing research resources, or blending these two options.
• Business plan: This step can be as detailed as you want it to be, but a business plan at least outlines your business’ purpose and audience, its legal and organizational structure, your plan for making money, and your funding needs. This document is critical not just for your own ability to strategize but also for showing others (from potential partners to investors) that your business fills a need and will be viable.
• Value proposition: This short statement only needs to be a few sentences long, but it has to distill an essential concept — why customers and investors alike should choose your business over your competitors. You can create a value proposition to pitch your business to investors or even to market your product.
• Revenue model: This is your roadmap for how you will make money in the short- and long-term. It can combine multiple possible revenue streams (there are many, from subscriptions to advertising to licensing). This model should be part of your larger business plan.

4 Must-Take Steps

While starting a business comes with an endless to-do list, there are a few core steps you’ll need to take to launch and grow a product with longevity.

Secure the Right Funding

In today’s entrepreneurial landscape, there are a number of ways you can harness the proper support to get your business off the ground. Your funding options may include: 

• Self-funding with your own assets or support from people close to you.
• Crowdfunding support from a larger audience interested in your idea.
• Securing a venture capital or angel investor, either of which will require an equity stake in your business.
• Applying for a small business loan through a bank, credit union, or the Small Business Administration.

Photo: freebird2000 via 123RF

Get Your Legal Affairs in Order

There are a number of legal steps you’ll need to take to create a functional business. First, you’ll want to pick a business structure, a legal label that will impact your business’ taxes, available funding sources, liabilities, and more. Choose your structure carefully — you can’t easily change it.

Next: 

• Register your business with applicable federal and state agencies.
• Secure your tax IDs, including a federal employer identification number and, if required, a state tax ID number.
• Secure the proper licensing and permitting based on your local requirements.
• Purchase the right types of insurance, which may depend on your municipality’s requirements.
• Research to ensure you’re complying with local regulations, from zoning laws to food handling restrictions

The most helpful resource through this entire process is a business attorney. A lawyer can help you take the right steps as you decide on a business structure and form your company, but can also guide you through everyday legal situations — from drawing up contracts to handling taxes — as your business grows.

Set up Your Banking

Regardless of the size of your company, you’ll want to make sure you separate your personal and business finances, both for convenience and for tax purposes. While opening a business bank account is simple, do your research and talk to the professionals at a trusted financial institution to determine which accounts are right for your business structure. 

Put Yourself Out There

Whether networking comes naturally to you or you dread it, it’s essential that you create a community of mentors and industry peers who can answer questions, offer advice, connect you with potential investors, and help you grow your network further. Get involved with your chamber of commerce, go to conferences and trade shows, and get plugged into industry social media groups to create virtual connections. 

Entrepreneurship will always be challenging, but your dream is attainable. Your business idea can become a reality with strategic research and modeling, innovative funding and legal decisions, and the right industry connections.