Start Your Business
Starting a business checklist: 5 important actions to take before you open
It takes a lot of hard work—and, sure, a little luck—to be the business leader that launches the next buzzy startup turned commercial giant. But even the most notable entrepreneurs had to start somewhere.
So, while you're picturing yourself winning at the business you've (perhaps quite literally) been dreaming of, make sure you're considering where you're starting.
There are several steps that go into launching a business, and how you handle them can make all the difference in the long term. Before you design a logo or rent a space, consider the items on this checklist to decide if you're really ready to open your doors.
1. Develop a business plan
Every new business should start with a solid business plan. This document provides you with the blueprint for how to build and maintain your company, which is helpful to have on hand once you begin to get into the nitty-gritty of getting your operation off the ground.
A good business plan should include things such as:
- What your company does and your point of difference
- Market analysis that offers an in-depth look at your industry as well as where your business fits in among the competition
- Structure and management information
- Details on how you plan to create and offer your product or service
- How you'll position your company and its products in front of your consumers
- Your budget and financial projections
Your business plan doesn't have to be set in stone, especially when you're in the early stages of launching your company. This document simply lays out a plan for how you intend to launch your business as well as your strategy for long-term success.
2. Register your business entity
Once you have a plan for your business, you may want to consider how your business can register with the proper agencies in your location. There are several options to choose from, and you'll want to consult your tax advisor to find out which you are best suited for. They each have their own unique implications for your financials.
For example, you may have the option to operate as a sole proprietorship if you are working on your own. You may also have the option to consider registering a limited liability company (LLC) to separate your business and personal dealings.
Lastly, you may also want to consider filing for an Employer Identification Number (EIN) with the Internal Revenue Service. An EIN enables you to pay taxes as a business, rather than an individual. It may also be necessary if you plan to set up a Solo 401(k) retirement plan as a self-employed individual, and pay state and local taxes.
3. Get your accounting systems in place
Every great business has to have equally great accounting. You'll need to know where your money comes from, where it goes and what your expenses look like. Without it, you won't be able to understand your cash flow, tell if you're turning a profit or project what your revenue might look like in the future.
There are several excellent options to establish an accounting system depending on your needs and comfort level with business math. You can work with a business accountant to establish your infrastructure with widely used accounting software. If you're comfortable with technology, or you're planning on opening a business that makes use of modern point-of-sale (POS) systems, you can also look into utilizing products that hook directly into your accounting setup.
This is why it's important to get your accounting groundwork in place first—since lots of other decisions may depend on it.
4. Choose a business bank account
Having a dedicated place for your business finances is crucial. Business bank accounts help you keep business and personal finances separate, which is important for a few reasons.
Foremost, having dedicated accounts gives you a better sense of your company's performance since you're not having to pick out any personal transactions. It also makes for easier accounting come tax time.
5. Understand your customers
Make sure you know who your customers are before you open up shop. This helps you understand what products to sell, how to market and promote your new business and the kind of business plan that makes sense for your industry.
You can begin by researching your customers' behaviors and interests by examining overall trends within your market, learning about your competitors and understanding how local customers shop at other stores.
According to the United States Small Business Administration's 2018 Small Business Profile, there are 30.2 million small businesses in the US, including 8 million minority-owned businesses. That's a lot of expertise to tap, so don't be afraid of asking peers for their knowledge, too.
Remember that managing the day-to-day operations of a small business is a full-time job in and of itself, so take advantage of the time you have before you hang up an “Open" sign in your new shop.
JPMorgan Chase and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
Brian O'Connor is a Chase News contributor. His work has appeared in BBC, TIME and Foreign Affairs.