Six steps to starting your own business

Considering starting a business? Already dipping your toes in the water with a startup? Learn how to lay a foundation for success.

Starting a business is an exciting milestone. Yet it's also a complicated, multistep process that involves legal, financial and practical considerations. By following these basic steps, you can make sure your startup has the right footing for success.

1. Create a business plan

A strong business plan serves as the foundation of a successful startup. It provides direction, identity and focus. When properly prepared, it will shape the many other decisions you must make along the road to making your business a reality.

A business plan should be detailed and realistic. It should address key issues such as:

  • What product or service will the business provide?
  • What market will the business target?
  • What strategies will be necessary for the business's success in terms of marketing, finance and operations?
  • What risks might the business face?
  • Is there a demonstrated need for the product or service?
  • Is there significant competition?

Developing a thorough business plan may require conducting market research through surveys, interviews, focus groups and the like. The more analysis and information-gathering you put into the business idea on the front end, the fewer surprises you will face down the road.

2. Make an informed choice about the right business entity

Business owners in North Carolina may choose from a wide range of business entities. Selecting the right organization is key to laying the groundwork for your startup. This single choice will affect your business's governance, financing options, legal liability, tax liability and countless other aspects of your enterprise.

The primary types of business entities include:

  • Sole proprietorship
  • Partnership
  • General partnership (GP)
  • Limited partnership (LP)
  • Limited liability partnership (LLP)
  • Limited liability limited partnership (LLLP)
  • Corporation (S or C)
  • Limited liability company (LLC)

Each type of entity has pros and cons. It's important to weigh these factors in light of your business objectives.

3. Decide what type of financing to pursue

Virtually all new businesses require startup capital. Without sufficient funds, your business idea may remain just that - an idea that never came to fruition.

Pursuing financing, however, presents another set of complicated choices. You may opt for equity financing, debt financing or both. Your options for funding may include:

  • Investing your own capital
  • Taking out a small business loan
  • Recruiting family members and friends as investors
  • Seeking venture capital funding

Your choice of business entity will also impact the financing options available - particularly with regard to equity interests.

4. Determine whether you need licenses and permits

Depending on the type of business you're starting, you may need to secure licenses as a precondition to doing business. Some industries are heavily regulated - for example, food and liquor establishments, health care services and day care facilities. Yet even more obscure industries may require licensure at the state or local level. Because the licensing process can be lengthy and convoluted, it's important to identify license issues as soon as possible.

Businesses with brick-and-mortar locations may also face challenges when it comes to land use and zoning. You may need to seek a variance, zoning adjustment or permit. The sooner you get started on this process, the better.

5. Assess what type of business insurance you need

Insurance is essential for many types of businesses. In fact, some lenders require proof of insurance as a condition of small business loans.

Just as there are many types of personal insurance, so, too, there is a confusing array of options for business insurance. You may need to look into:

  • Business property and casualty insurance
  • Business interruption insurance
  • Business liability insurance
  • Auto insurance for any business vehicles

If you have employees - or anticipate having employees in the future - you may also need to address workers' compensation and disability insurance.

6. Before getting too far down the road, seek professional guidance

Getting a new business off the ground requires making numerous smart decisions. The best way to prepare your business for success is to be informed. By seeking help from a business lawyer familiar with North Carolina law, you can gain peace of mind knowing you're making the right choices for your enterprise.

Keywords: business, startups, business organizations, business entity, business law