The entrepreneur's ultimatum
- Camden Chen
- Feb 24, 2022
- 4 min read
Camden L. Chen
Do you hate some of your peers? Are you worried that your future job will be with other people that are annoying? Well, owning your own business could be a way to remove those risks. In addition, owning your own business could make far more money than a regular job as well, should it be successful. Here is a step by step guide on how to start your very own empire.
Step 1- solving a need
When starting a business, some people already have an idea in mind that they would like to pursue. If you are one of those people, this step is not necessary. However, many people do not have a clear mindset as to what they should start with. First of all, the most successful businesses solve a need. This is basically realizing a problem somewhere in the world, and creating a solution for it. For example, if your community lacks a burger joint, and you constantly hear the folks in your town pleading for a nearby burger restaurant, then that could be a clear opportunity. Creating a business could be on a larger scale as well, such as a lack of clean water in third world countries. In fact, a group of engineers and scientists have created a possible solution to such a problem by creating a machine that could convert poop into clean water. Whatever the situation is, you think if you would actually enjoy the business.
Step 2 - select a business structure
There are a variety of business models that serve different purposes and have different benefits depending on the type of business you are planning to run. These include: sole proprietorship, partnership. Limited liability corporations (LLC,) S corporation and C corporation.
Here are basic descriptions of each one:
Sole proprietorship- The most simple business structure for sole ownership that is good for young businesses to be tried out. However, this type of business is high risk as you can be personally liable for obligations and debt
Partnership- The most simple business structure for a partnership of two or more people. These partnerships have one partner with unlimited liability. They take on most of the risk, but instead have more control over the company. The other partners are limited liability partners that have a cap on the risk they could take, but also have less control over the business.
LLC- a structure that allows one to have the benefits of a partnership and a corporation that could have the profits and losses transferred to your personal account, They also protect you from liabilities of the corporation bearing upon you. However, they have limited life as members that leave the LLC may have to have the business disband and form a new membership, unless an agreement is in place.
Corporations
C corporation- a corporation that can make a profit, be taxed, and can be held legally liable. While it secures the owners the most, it is expensive to set up and extensive record-keeping, operational processes, and reporting. They pay tax on their profits and may go public to issue out shares for money. When a shareholder leaves, it does not significantly affect the corporation.
S corporation- a corporation that is the same as C corporation, but “avoid the double taxation drawback of regular C corps. S corps allow profits, and some losses, to be passed through directly to owners' personal income without ever being subject to corporate tax rates,” according to the government. S corporations must fit certain criteria to apply to become a S corporation, such as having less than 100 shareholders.
Step 3- get a federal tax ID
Now, it is necessary to file with the IRS and your state’s department of finance to obtain to file taxes, open your bank account, and other secure matters,
Step 4- Financing
Sometimes you may not have the available funds to start your business on your own. For example, let’s say I wanted to start a business called “Honey Bunny” that sells cheap delicious sweets. However, if I only have 1,000 of savings, that would not be enough for the capital expenditures, rent, ingredients, advertising, and everything else. There are a number of ways to obtain funding. For example, you issue out stocks of your company. Here, you are selling small parts of your business in return for money. However, this is not available for partnerships or sole proprietors. In addition, you can obtain a loan or grants (free money) from various resources.
Step 5- Have an online presence
A good way to advertise your business is to have a website and social media. With the growing digitalization in our everyday life, using an online editor to build a website makes you connected to the world outside your verbal reach. In addition, having a social media is a free way to promote your business while also reminding people about you and perhaps promos immediately.
Step 6- Hire employees
Unless you plan to be the sole operator of every aspect of your business, you may want to hire employees. Going back to my imaginary “Honey Bunny,” having a janitor may not be necessary if I could clean the store myself. Having a cashier or baker could be helpful to free my time up to explore more possibilities to expand my business. It is important to determine the need for employees and what role they would play. To find employees, you can advertise online with websites such as Fiverr, or LinkedIn. On these platforms, you can tailor your specific needs for your employees.
Step 7- Running your business
When running your business, there are a number of factors to consider. Here are some pointer as to what you may want to consider:
Advertising- advertising is necessary to make people aware of your new business. Advertising may include online ads, poster boards, flyers, and word of mouth
Pricing- Because you are a new business, it may not be wise to charge top dollar when people are not even sure if it is worth it yet. Instead, start a little lower and raise prices as popularity grows
Coupons- coupons are in essence a form of advertising. Back to the “Honey Bunny” example, I could mail everyone in town a coupon for a free cupcake to lure people in to try my goods. In fact, they may even buy something other than the free cupcake if they are making the trip to your store!
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