Okay, so you have made the decision to become an entrepreneur. You have the idea, product or service in mind, and you have a strong feeling there is a market for your goods. Now where do you start?
Well, if you’re reading this, please do not accept my advice over the advice of a business accountant or attorney. But do understand that I personally have launched four companies in Arizona, some of them successfully, and overseen the launch of a half dozen of my clients’ companies through my current company Phoenix AZ Ad Agency.
Like many of you when I was on my journey on how to get started, I fell for a lot of Facebook gurus, business consultants and email funnels and all of the nonsense that goes along with marketers who are just trying to take advantage of young entrepreneurial knowledge seekers. So, now that I am in a position where I can speak intelligently on exactly what you need to do in order to start a business without fear of screwing up or having to pay thousands to a business consultant, please take a look at the 12 steps you as a young professional need to take when making the switch from employee to entrepreneur.
1. Defining Your Product or Service Offering, Market Research and Competition Overview
To effectively attract clients, it’s essential to offer a well-defined product or service that includes a clear and concise value proposition. This means being able to clearly articulate what you offer and how it stands out from competitors, which is crucial for successful marketing and advertising. Clients need to easily grasp the benefits of choosing your company over others in the market.
Moreover, it’s vital to have other foundational elements of your business clearly outlined:
Sales Process: Define each step of your sales process from initial contact to closing a sale. This helps in training your team and providing consistent customer experiences.
Customer Service Policies: Clear policies ensure that both your team and your customers know what to expect in terms of service delivery, response times, and conflict resolution.
Terms of Service: These are essential for legal clarity and to let customers know what the rules are for using your services or products.
Privacy Policy: This is crucial in today’s digital age to assure customers how their data is collected, used, and protected.
SWOT Analysis: Analyzing your Strengths, Weaknesses, Opportunities, and Threats gives you a strategic overview of where your business stands and helps identify areas for improvement.
Competitive Analysis: Knowing your competitors’ names, prices, and services helps in crafting strategies that highlight what makes your offerings unique or superior.
If you cannot effectively differentiate your business from competitors, then your prospects won’t be able to either. Thus, having these elements well-defined not only strengthens your business internally but also enhances how it’s perceived externally, boosting your competitive edge.
2. Domain Name and Email Address
Securing your domain name early is crucial when you have a business idea to prevent missing out due to the fast-paced nature of the internet. If you delay, someone else might register your desired domain, leading to potential costly negotiations later. For instance, in my experience building websites for startups and construction companies, I’ve seen numerous businesses regret not securing their domain name early, as they later had to pay high fees to domain brokers or squatters. Something as simple as registering a domain for about $13 could save you a lot of hassle and expense.
Once you’ve secured your domain name, the next important step is to establish a professional email address associated with it. Avoid using generic or informal email accounts; instead, create a domain-based email like [email protected]. This enhances your credibility and ensures your communications are taken seriously. Also, consider setting up a catch-all email address for your domain to capture any emails sent to misspelled addresses, preventing potential communication issues and ensuring you don’t miss important messages. These steps are fundamental in establishing a strong, professional foundation for your business online.
3. Set Up Your Corporation
When setting up your company, it’s essential not to cut corners. Whether you’re well-versed in business setup through personal study or you choose to hire an online legal service to assist you, doing it correctly from the start is crucial. In choosing the type of corporation to establish, consider your projected revenue. For instance, if you anticipate making $40,000 or more in your first year, starting as an S corporation might be beneficial. This decision should be discussed with a Certified Public Accountant (CPA), as they can explain the specific tax benefits. Generally, the tax advantages of an S corp can outweigh those of an LLC once you hit around $40,000 in annual revenue.
In Arizona, the regulations for maintaining a corporate entity are more lenient compared to some other states. For example, while other states might require LLCs to document quarterly meetings to maintain their active status, Arizona does not have such a requirement. This flexibility can be advantageous initially, but keep in mind that certain business advancements might require detailed records. For instance, if you aim to have your business recognized as minority or female-owned by the city of Phoenix, you will need to submit three years of quarterly meeting minutes. Thus, even in a state with lax rules, keeping thorough documentation can be important for future opportunities and compliance.
4. Apply For Your EIN
In the United States, corporations are treated as separate legal entities, almost like individual people. This means they have their own unique identification numbers, which are crucial for applying for various privileges and services, distinguishing them from actual individuals. One key identifier for businesses is the Employer Identification Number (EIN), which functions similarly to a Social Security number for individuals.
It’s important to set up your business structure, like an LLC (Limited Liability Company), before applying for an EIN. This order is crucial because if you get an EIN before establishing your LLC, you might accidentally link the EIN to your personal identity. This error can lead to complications and might even jeopardize some of the asset protections that an LLC provides. Essentially, the combination of your LLC and your EIN solidifies your business as a separate entity, enhancing your ability to manage finances, taxes, and legal matters distinctly from your personal affairs.
5. Establish Your Business Bank Account
Keeping your business bank account separate from your personal one is crucial for protecting your assets. If your company is ever sued, having separate accounts helps maintain a clear distinction between your personal and business finances. This separation is essential because it can prevent personal assets from being targeted in legal disputes. Many business owners, like contractors, often overlook this and manage their finances through one account, which can be risky.
For example, let’s consider a contractor named Mark T. Smith who owns “Mark T. Smith General Contracting.” If he uses just one personal bank account for both his business and personal finances, a lawsuit could potentially access his personal assets as well because the business isn’t financially distinguished from him personally. This is a scenario that any lawyer would use to their advantage.
To safeguard yourself and your business, make sure to set up a dedicated business bank account. Additionally, if possible, consider obtaining a business credit card that offers rewards such as miles, cash back, or points. The benefits might seem small—like 2.5 percent cash back—but they can significantly add up, especially for a business that incurs expenses like advertising, materials, content creation, and web development. This cash back can eventually help cover the costs of hiring staff or other business growth opportunities. Remember, using a debit card for these purchases means missing out on these potential rewards, so prioritize getting a business credit card to make the most of every transaction.
6. Hook Your Bank Account up to Quickbooks or Hire a CPA
Just do it.
7. Get Your Logo and Brand Guide Designed
Your logo and color scheme are more than just visual elements; they are fundamental to shaping the future of your organization. While it’s possible to run a successful business based on personal relationships alone—as many baby boomers in Maricopa County have proven with their handshake-only, multi-million dollar operations—this approach is becoming less common. In today’s digital age, a compelling and recognizable brand is essential.
A brand is essentially how customers perceive your business. It’s one of your most valuable assets. Whether your brand voice speaks in the first or third person can significantly influence how it resonates with your audience. The emotions your brand evokes are crucial; they play a key role in driving sales and distinguishing your business in a crowded market.
Effective branding combines a memorable story with clear messaging that your audience can believe in and recognize. This combination is a powerful tool in winning customer loyalty and enhancing business growth. If you’re looking to develop a robust brand guide and want to ensure it’s both high-quality and cost-effective, consider reaching out to my company at www.phoenixazadagency.com. I founded this agency to offer valuable branding services without the exorbitant costs some competitors impose—believing that a great brand guide and website should be accessible and priced fairly, not exceed $20,000.
8. Get Your Arizona Trademark
It’s smart business practice to secure your intellectual property, even if it’s not strictly necessary. Think of intellectual property protections like having tools in a safe—they’re there to help protect your ideas and business identity. For example, if you come up with a great business name or logo, what happens if another company tries to use something very similar? Without a trademark, you might find yourself paying high fees to an intellectual property attorney to sort out who officially “owns” the name or logo.
Having a trademark simplifies these issues significantly. Once you have a trademark, it’s an official recognition of your claim to your business’s name or logo, helping to prevent others from using them without permission. Registering a trademark in Arizona can help protect a business name (also known as “Doing Business As” or DBA) and logo within the state. However, this doesn’t replace the need for a national trademark through the U.S. Patent and Trademark Office if you’re looking at protection beyond state borders. The national trademark process can be costly and take time, but it’s generally seen as a necessary step for broader business protection. While I haven’t included this in the checklist, it’s a step that should be considered as part of scaling your business.
9. Apply for Your Reseller’s License
10. Get Your Liability, Professional and/or Speciality Insurance
While you might not be a fan of the insurance industry, having the right insurance coverage is essential for protecting your business—it’s simply a part of today’s business environment. Insurance can cover various risks, such as professional misconduct, theft, injury, and fire damage. Additionally, specialized insurance is crucial to be taken seriously in certain fields.
Take, for example, the competitive landscape in Arizona. Many have launched web design or marketing firms, but not all have professional liability insurance. This type of insurance is critical because it can protect a business from financial ruin in the event of a lawsuit, such as missing a client’s website launch deadline. Although not mandatory, offering significant coverage, like up to $1,000,000 per occurrence, can provide a competitive edge by giving clients peace of mind that many competitors might not offer.
Another instance is a friend who plans to start a swim lesson business in her backyard. Before she can even take on her first client, she’ll need several types of insurance: general liability to cover accidents, property insurance for potential damage to her home, and specialized swim school insurance.
No matter the industry, understanding and investing in the appropriate insurance coverage is crucial. It’s about providing the best protection for both your business and your clients, ensuring that you are prepared for any eventualities.
11. Work on Your Policies and Procedures
Every business, whether it realizes it or not, operates on a set of policies and procedures. It’s crucial to articulate these clearly for various aspects of your business. For instance, have you spelled out the conditions for issuing refunds? Do you have a contract designed for your transactions, and has it been reviewed by a legal professional? Consider also the necessity of a contract in your specific business context. Furthermore, it’s important to address how your website handles data collection through its privacy policy. What happens to the data once it’s collected? How do you manage it within your domain’s database? What are the terms of use for your products or services?
Taking the time to meticulously define these elements is akin to preparing a thorough term paper. It’s essential to personalize any templates you find online to avoid penalties from search engines like Google for duplicated content, which could harm your search engine optimization (SEO).
Moreover, having a well-defined sales funnel and a clear understanding of the responsibilities across different departments—sales, marketing, accounting, fulfillment, and customer service—is vital. This should be laid out in your company’s operations binder before things get too hectic. Many business owners initially take on multiple roles, and without these clear definitions, it’s easy to get overwhelmed. This lack of preparation is a common reason many businesses struggle. Dedicate the necessary time to establish these guidelines, ensuring your business model is robust and clear from the start.
12. Build Your Website
Building a website involves much more than just securing a domain name. It’s about creating a space that perfectly encapsulates your business’s story, visuals, and voice. Your website should effectively combine elements like your brand’s logo, voice, guide, and graphics with customer testimonials, detailed service offerings, videos, pricing, and a portfolio. All these components are crafted to align with your sales and marketing objectives, presenting a unified digital presence that represents your brand.
For businesses starting in Arizona, where there’s a significant Spanish-speaking population, adapting your website to be fully bilingual can be crucial. Consider having your site professionally translated into Spanish and include a simple toggle switch for changing between Spanish and English. This feature not only enhances user experience but also broadens your market reach. Underestimating the importance of catering to native Spanish speakers might mean overlooking a key demographic, potentially requiring a reassessment of your business strategy.
While I could delve deep into the specifics of website design, from aesthetics to functionality—topics that could easily fill a detailed blog post—I’ll keep it brief here and focus on these foundational ideas.
13. Setup Your Social Media
Here’s a straightforward guide to some key social media platforms and why they might be useful for your business:
Facebook: This platform helps you establish a strong online presence, which is great for enhancing your visibility in search results (SEO). It’s also useful for demographic research and offers a robust advertising platform that generates about $25 billion a year.
Instagram: Currently the most critical social media channel, especially as it pivots more towards product sales.
X: Ideal for sharing company news and updates about your services, acting as a real-time reporting platform.
Pinterest: If your business has a lot of product images or branded visuals, Pinterest is an excellent place to build a visual channel and engage users.
YouTube: This platform goes beyond traditional commercials. Use it for everything from company updates and product demonstrations to customer testimonials. It’s also linked with AdSense and Google Video Ads, making it a leading space for video advertising in the U.S.
Google My Business: Essential for any business. It not only helps in managing your online presence but also integrates easily with Google AdWords, the world’s largest advertising network. Make sure to use its blogging feature.
TikTok: Embrace creativity here. Create a mascot, tell your brand’s story your way, and don’t worry about high production costs — simpler, authentic content often resonates well on this platform. TikTok also boasts a rapidly growing advertising network.
14. Join the BBB
15. Setup Your Payment Processing
16. Get an Office
So there you go! Sure there are MBA’s out there that might have more input on this and you can go to any book store on Amazon and find tons of how to start a business books in the state you live in, but most of it is just fluff.
If you stick to these 16 clearly laid out items before you get too deep into your sales and fulfillment, you can find yourself on a path to success, which has been duplicated many times over by not only myself, but thousands of other successful Arizona businesses.