You have a great idea for a new product or service. It’s something people need, and you think you can make money with it. Now, how do you turn your inspiration into an organized, well-run business?
Every start-up takes its own path, but there are a few boxes most entrepreneurs have to check before they open their doors. Use this new business checklist to help you get started.
1. Find your “why”
Why do you want to start this business? What will get you excited to come to work every day? The question is about not only motivation but also business strategy — uncovering for yourself what’s special about your business and then thinking about how your purpose translates into delight for your customers.
Our recent article discusses how your “why” can unlock big opportunities for you and your business.
2. Write a business plan
A business plan offers a roadmap for you as you begin your business journey. It typically includes:
- An executive summary that outlines the problem your business solves and how it solves it.
- A company description with basic information about your business.
- Market analysis that shows how you expect your new business to compete.
- A summary of your products and services.
- Your sales and marketing strategy.
- The company’s organizational and management structure.
- Financial analysis.
As a new business, there’s a good chance you won’t have everything figured out. Writing your first business plan is a great exercise that can help you ask yourself hard questions and think through important details for running a successful business.
Read our article “7 Steps to Writing a Winning Business Plan” for tips and insights to help you get started.
3. Decide on a business structure
There are five basic business structures in the U.S. Many entrepreneurs consider liability, taxes, flexibility, control and their ability to raise capital before choosing one of these structures:
- Sole proprietorship: You are the business — there’s no legal distinction between you (the proprietor) and the proprietorship. That means you’re personally responsible for all business liabilities, and all business profits and losses must be accounted for when you file your personal income taxes. A sole proprietorship is an easy way to get a business off the ground, but the downside is that you’re not shielded if someone decides to sue your business.
- General partnership: Like a sole proprietorship, you and your partners are personally responsible for all business liabilities. While there are many successful general partnership businesses, this structure may be complicated and could require a business advisor.
- Limited liability company (LLC): LLCs are relatively simple and inexpensive to create. They offer owners protection against their personal assets if their business is sued or suffers losses. Profits and losses are typically passed through to owners, enabling them to claim business income on their personal tax returns.
- S corporation: Also a pass-through entity, business owners can enjoy many of the benefits of a corporation: the ability to issue stock to raise capital, have a board of directors to make operational decisions and present limited liability for shareholders. An S corporation is limited to 100 shareholders.
- C corporation: In this structure, an unlimited number of shareholders are the owners, and the corporation is managed by a board of directors, giving each shareholder limited liability for business debts. C corporations offer unlimited ability to raise capital and have access to tax deductions that are not available to businesses of other structures. However, owners of C corporations also face what is commonly known as “double taxation.” C corporations pay taxes on their profits as a business. Dividends are typically after-tax payments to shareholders who will then need to pay taxes on this income, which results in the same profits being taxed twice.
If you’re not sure how to decide on a business structure, try this guided questionnaire to help you narrow down your options.
4. File your paperwork
Depending on the structure of your business and the state you will be operating in, there are a few different things you’ll have to file for, including:
- Employment identification number (EIN): Also known as your federal tax ID number, your EIN is like a Social Security number for your business. You’ll need it for payroll, many tax filings, and more.
- Federal registration: Most businesses don’t need to register with the federal government. However, to create an S corporation, you’ll need to file form 2553 with the IRS. If you want to trademark your business name or any other intellectual property, you can file with the United States Patent and Trademark office.
- State registration: Your business will likely need to register with a state if it’s a partnership, LLC, S corporation or C corporation. The Small Business Administration has a webpage where you can look up your state’s requirements.
5. Open a bank account
Business banking comes with many benefits. Your business bank account can help you stay legally compliant, provide some financial security and help you appear more professional to customers and vendors. Plus, having one account for the sole purpose of getting paid by customers and paying your vendors makes it easier to log transactions and manage your business. Online banking can make many of these benefits even more accessible.
When you open your business bank account, you might also consider a business credit card. With a business credit card, you can gain flexibility to make payments and manage cash flow while also receiving rewards such as cash back or airline miles.
6. Apply for licenses and permits
Certain types of businesses will need special licenses or permits to operate. The Small Business Administration lists business activities regulated at the national level and the federal agencies that issue the licenses or permits. For local licensing and permitting, you may need to contact your city, county or state for more information.
7. Establish your brand
To register your business, you’ll need a business name. But your brand is more than a name. It’s what people think and feel about your company. Your business logo, the colors you use and the messages in your sales and marketing help establish and affirm your brand identity. The personality of your business, how you and your employees interact with people and the momentum you create in your industry also inform your brand.
As you establish your brand identity:
- Think about who your ideal customers are and what appeals to them. How does your business deliver what they want or need?
- Develop a unique brand proposition that communicates clearly how you’re going to solve a problem for your customers.
- Design a logo that makes your brand instantly identifiable and communicates something important about your business.
- Consider the language and tone in your communications and look for ways to craft a distinct voice and personality for your business.
- Be willing to adapt to your customers. Brands are not static. They’re relationships that evolve constantly.
8. Fund your business
Many business owners start out bootstrapping — funding their businesses from their own pockets. However, there are sources of capital available for businesses of all sizes and stages.
Start-ups may have trouble getting loans because banks want to see evidence that you and your business will be a good investment. SBA-backed loans can help lower the burden of proof for some businesses. Many businesses may also be eligible to pursue loans from Community Development Financial Institutions.
However, there are also grants available for many different kinds of small businesses. And investors can provide needed capital in exchange for an ownership share in your business.
The Small Business Administration offers an online tool to help you calculate start-up costs so that you have a better sense of how much funding you’ll need to get going.
9. Decide where to do business
Do you need a location, or will you work out of your home? If your business requires you to have an office or store, carefully calculate how much space you’ll need and make a list of other requirements before looking at real estate. Rent and other location-related costs are often a big chunk of a business’s expenses, so you want to make sure you’re not overspending by getting too much space or paying for amenities you don’t really need. At the same time, it can be time-consuming and expensive to move, so make sure your space can also accommodate growth.
Once you’re in business, you need to make sure everyone knows about it. Contact family, friends and colleagues. Create a website. Open social media accounts. Consider taking out ads in local media. Put a “Grand Opening” banner above the front door. There are many ways to announce your business to the world. Have fun with it and make people take notice. Your customers can’t do business with you if they don’t know you exist.
For more ideas on how to drum up interest in your business, check out our recent article “12 tips to promote your business.”
Talk to a Chase banker
A Chase business banker can help you set up your accounts and answer questions. Contact us today to find out how we can help you take your business to the next level. And be sure to visit your state’s secretary of state’s office for information about creating a business.
For informational/educational purposes only: The views expressed in this article may differ from those of other employees and departments of JPMorgan Chase & Co. Views and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. Information has been obtained from sources believed to be reliable, but JPMorgan Chase & Co. or its affiliates and/or subsidiaries do not warrant its completeness or accuracy. You should carefully consider your needs and objectives before making any decisions and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results.
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