Wednesday, March 9, 2011

11 Steps/Lessons to Starting Your Own Business

In this post, I decided to go over the first steps a founder should take (in my humble opinion) to start his or her own business. What should come next, after you get an idea for a business? Well, you would most likely want to run it by your friends and family to gauge their reaction. Then, follow these steps, not necessarily in this order…

1. Study the market. Research your business idea on the Internet to see whether you have competition. Most likely, you do. This doesn’t mean that the business idea is not viable. If somebody else is doing it, it probably means that there is market for it, all you would need to do is to figure out how to differentiate yourself from the competitors.

2. Prioritize. You probably feel overwhelmed with all the things you need to get done to get the idea implemented. This is where a business plan and a timeline become important. Write down the business idea, how you want to implement it, the steps, the tasks, the funds needed. Where do you want your business to be in the first three months? One year? Three years? There are many free resources available to start-ups in this area. NYC Small Business Solutions, SCORE, Small Business Development Clinic all have seminars and experienced counselors available to you for free to help you design the business plan, marketing plan and identify potential sources of funding.

3. Meet other entrepreneurs. I work a lot with small business owners and start-up founders. To better understand their problems and needs, I started going to meetups and presentations for and by business founders, where they discuss their mistakes, challenges and how they overcame them. The three I groups I would recommend in NYC are Ultra Light Startups, the Hatchery Meetup and the Entrepreneur Roundtable. You can learn from presentations and pitches by start-ups founders as well as from panel discussions by VCs or successful serial entrepreneurs. I personally fully believe in preferably learning from the mistakes of the others rather than my own. There are also many other groups on that may be specializing in your industry or technology.

4. Think ahead of time about your brand. Choose a unique name for your business or line of products/services. Make sure that it is available, i.e., no one is using it for the same type of products/services (do a google search); it is available as a business name in your state of incorporation (if you decide to build your brand around your business name); and that a federal trademark is available as well. To be sure, you can order a federal, state and common law trademark search (or ask your attorney to do this for you) to reveal any potential conflicts. In some cases, it makes sense filing federal trademark applications for your business or products/services name even before you file your incorporation papers.

5. Register a domain name for your business before you send in your incorporation papers to the State Department of Corporations.

6. Find a good lawyer and a good accountant. Discuss with both advisors which form of business entity you should choose for your business. The most obvious choice is between an LLC and an S Corporation. I always describe to my clients the legal advantages and disadvantages of both forms, and then refer them to an accountant for a consultation regarding the tax aspects of each business form for this particular client.

7. Be careful what you say and to whom. Ideas get stolen all the time. Beware of this fact when you are talking to other entrepreneurs. On one hand, you want to run your idea by as many people as you can before starting to implement it. On the other hand, there is no guarantee that one of them will not steal it. So, what can you do to protect it? There are several options. First, talk about it just in general terms, no specifics. Second, consider asking them to sign a confidentiality agreement. Third, implement as much of your idea as you can before you start talking about it in details.

8. Learn all you can about the social media networking and marketing. Build your online community, optimize your website, create a blog, start tweeting, join various groups on LinkedIn and create a company profile on Facebook. It is amazing how much you can advertise your business (for free!) using the social media tools. It is like a revolution, and we need to take part in it in order not to be left behind.

9. Join a business referral group/alumni club/special interests club or organization. Expanding your network with meaningful connections is the key to success.

10. If you have partners, please consider entering into a detailed operating or shareholders agreement that would cover all buy sell situations (early exits, disability and death, admission of new shareholders), splitting of profits and losses, corporate governance and decision making mechanism, record keeping and other similar items.

11. Enter into employment or freelancer agreements with each person you hire. I can’t even begin to tell you about all the bad things that can happen if you do not. Please refer to some of my earlier posts.

By now, your business is well underway. Good luck, and do not get discouraged by all the challenges that you may encounter on the way. Dealing with obstacles is an important part of the learning process. Rely on your advisors and please, delegate!

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