5 Steps To Start Your Small Business in 2021

If 2020 taught us anything, it is to have many eggs in many baskets, right? The COVID-19 pandemic proved to us that the more versatile and flexible a person is, the more they will be able to pivot from one position to another with a fairly easy transition. Because of the pandemic, a lot of people and businesses were negatively affected by way of lost jobs and wages, shuttered venues and forced to find a whole new way to provide for themselves and their families.

There was also a small upside, many people took the leap and decided to start their business and many found success. Turning part time gigs, contract jobs, or side hustles into lucrative businesses has been a recurring theme as many people find their new normal.

You have seen people do it, you may even know people personally, who have done it and now you may want to see if small business ownership is something you can do. Guess what? The good news is that you can do it! You can start your own business.

So many emotions and excitement surrounding this new venture or idea, can easily be overwhelming, especially when you have a great idea and tons of information is constantly bombarding you on how to start.

You could most assuredly benefit from, say, a friend, who has been in your shoes and who could point out pitfalls to avoid. Well, hi. Nice to meet you! I’m JD, your friendly and savvy CPA and as a small business owner and entrepreneur myself, I am here to help you set up the best framework for your potential new business.

So whether you want to start an online business or are looking for a more traditional brick and mortar establishment or a combination of both, there are certain elements that you will need to look into before you make that first sell. The SBA outlines some great steps to help the budding entrepreneur get started and on their way.

Here are my top 5 steps you should take when you are ready to start or are thinking about starting your own business.

You have this great idea, service or product that you want to bring to fruition to the marketplace, but first you will need to see if that product or service can fill a need or test how well it will do. This is called market research. Entrepreneur talks about the types of market research you can conduct as well as how to go about conducting the research.

Market research involves getting to know who your target audience is, that is who you want to sell to, as well as understanding who your potential competitors are. Completing effective market research will help you uncover and understand how successful your business venture will be and allows you to plan accordingly.

Depending on the descriptiveness and detail of your business plan, it can be longer or shorter and both will be great roadmaps to keep you on track. Don’t get caught up in having an ironclad business plan because it should be flexible, but do update it periodically or every so often to ensure that it is still relevant.

Need more help or information on how to develop your business plan? Check out the SBA for tips on how to start a business plan and which type of business plan is best for you.

Now that you have laid out the framework for your soon-to-be business, there is one small thing holding you back… Money! Technically, it’s not a small thing by any means, it’s actually quite big. You will have a few options, when it comes to getting the money needed to start your business. You could finance it yourself, this is also known as bootstrapping. Depending on how your finances are set up, you may be able to leverage your existing savings, or certain applicable 401k accounts in order to start your business. For more information explaining the who, what and where of 401k accounts, I break them down all in this introductory blog.

Another option to consider for financing your business would be to apply for loans from financial institutions. This would be considered a small business loan. Additionally, you can look for people to invest in your business idea and this is where that precious business plan comes into play. If you are willing to share ownership of your business with someone else, then a venture capital investor would be a great option as well.

A more increasingly common and on-traditional way to raise capital for your new business could be to use crowdfunding. There are numerous and legitimate sites that will help you get the money. It’s a win-win because you will not have to pay the money back as it is like a gift from people from all over the world who simply want to give away money or help your cause. Just make sure you do your research on this route as there could be fees associated with the site and certain terms and restrictions, but nonetheless a very viable option for many.

There are many types of business entities to choose from. You have sole proprietorship, partnership, Limited Liability Corporation (LLC), and the various types of Corporations, nonprofits and cooperatives. All come with their own unique advantages and disadvantages.

Due diligence is required here to ensure that you choose the best business structure specifically for your business. It can be very cumbersome to change your business entity once established and the requirements to do so can vary from state to state. In some instances, you may have to completely dissolve the original company beforehand, so be sure that your business entity selection is a sure thing.