Simple steps to start a small business the right way
Finance 101
Starting a small business or side hustle can be both liberating and horrifying depending on where you are in life. Some may want the flexibility as they grow a family, others may be looking to bring in some extra cash, and then there’s the group who simply wants the independence of being their own boss. No matter where you are at, or what your reasons are for thinking about starting a small business or side hustle, there are a few important things to organize not only in your mind, but on paper, before you get going.
Here are 7 steps to starting a new side hustle strong:
1. Do some detective work
Do some digging on the industry you are looking to get into. Who are your competitors? How would you make your biz stand out from the competition? Are there special laws in this business that you need to consider or taxes that you may not be aware of? Consulting other small business owners is a great place to start seeking answers, although it will be important to consult professionals for expert advice when it comes to the finer details.
2. Create a plan
All great adventures start with a plan. This could be as simple as one page that outlines your intentions and goals. If you are just looking to make a little cash short-term, make sure you have outlined that in your plan and create a timeline as to when the side hustle ends. If you intend to stick to it for the long run create some goals for yourself along the way so that you have a way to measure what you consider success. Your plan should also include your mission, vision, product/service offering, and target market. If you plan to get investors involved you will need a traditional business plan, but a simple one-pager will help you organize your thoughts and get your mind thinking in the right direction. You can find some great templates online for business plans geared to specific industries.
3. Get right with your finances
A good portion of small businesses and side hustles fail due to cash flow problems. It is a general business standard that you should have 3-6 months of operating costs saved before opening the doors to your business, even if they are virtual. Make a list of all the expenses you will need to take care of each month. For some industries this list may be minimal and your start-up costs may be close to nothing. For others, making sure you have a plan for your finances will be monumental to the long-term success of your business.
4. Choose a business structure
A chat with a local CPA can be really helpful in navigating which business structure is best for your venture. The terms DBA, LLC, INC, etc. might be new to those who don’t have extensive business knowledge. There can also be differing benefits and liabilities to your business dependent on your business structure and industry.
5. Pick a name & make it yours, legally
Once you have decided on a name do some research to make sure it’s not trademarked or being used by another company. Once you have your heart set on one, get in touch with your local and state governments for their business name registration processes. You will also need to clear your name with the federal government, and dependent on which business structure you choose, you may need to register for a unique employer identification number for your business (essentially a social security number for your business).
6. More legal stuff
Dependent on your industry and the area you operate in, there may be requirements on licenses and permits needed to operate your business. If there are, make sure to thoroughly read all paperwork given to you and ask lots of questions before signing or submitting anything. If there aren’t, then all you have left to do is get set up and promote.
7. Set up & promote
Getting to a point in the business opening process where you can create your business space and promote what you offer is so rewarding! Do extensive research on your target market, including which social platforms they use and how they like to be interacted with. Once you’ve found them, meet them there! If appropriate for your audience, promoting in digital spaces is such a great way to gain awareness and spread the good word about your business values and benefits. The best part about using this tactic? It’s usually low cost and leads to word of mouth marketing, which is no cost at all!
Opening a small business or starting a side hustle is not easy. It can be a long journey with many roadblocks that will challenge your patience and commitment. Although the process may be tedious, if you want a chance at success it’s important to do it the right way. And if it truly fulfills your passion and leads to a happy life, it’s more than worth it.
Please note: Financial advice should be tailored to individual circumstances and the content of this article should not be viewed as recommendations. This article is not an endorsement of any particular product, service or organization; nor is it intended to provide financial, tax or legal advice. It is intended to promote awareness and is for educational purposes only. Any specific applications and services noted are not necessarily endorsed by John Hancock or any of its affiliated businesses.
Advisory services offered through John Hancock Personal Financial Services, LLC, an SEC Registered Investment Adviser. Boston, MA 02116. 888-955-5432.
JHA B 6110:1018 542LLO-20181004-1