Making the decision to launch a startup business is a big move. There are a few things you need to do to successfully launch a startup business. Firstly, figure out what kind of business you will start and this will help you figure out a name. Once you’ve determined what the name of the business will be, you should legally register the business in your state (so no one will be able to use the name you came up with). You should also start planning your strategy for success. It isn’t wise to launch a startup business without a plan.
Launching a Startup Business Requires Planning
It’s easy to register the business so you can operate legally, however, there’s much more work that goes into launching a startup business. First things first, you need to have a plan. A detailed business plan. The business plan should be used a guide to operate the business (and to raise capital). You’ll need to research your industry and target market to determine if what you want to do is viable. Researching your industry and target market can take time (and cost money).
Sites like the U.S. Census Bureau’s American FactFinder can be used to research your target market for free. However, this site mainly provides raw data that can be difficult for the average person to interpret. There are also sites like IBISWorld and FirstResearch that can be used to conduct research on your industry. These sites are easier to navigate because the data has been compiled and put into a report for easy reading. However, a fee is required to access both databases.
After you’ve researched your industry and target market, you now have to write the business plan. The business plan should outline how you will operate the business, how you will promote the business, who your customers will be and how you will generate revenue. It can take a few weeks to write a business plan (and even longer if you don’t know how). If you need help writing a business plan, the SBA provides a tool that will help you.
You Will Need Capital to Launch Your Startup
Writing your business plan will help you determine how much capital you need to launch your startup business. The business plan should outline all of your startup and operating expenses. Once you know how you are going to operate the business, generate revenue and how much capital you need to make it a reality, it’s time to go after capital. I strongly suggest using your personal savings as startup capital. In fact, according to Gallup, the majority of startup business owners use their own money to launch their startup business.
What to Do if You Don’t Have Personal Savings
If you don’t have personal savings you have two other options to fund your startup business— debt or equity financing. First, let talk about equity financing. You can go to a family member or friend to ask them to invest in your company for a percentage ownership in return. If you’re not comfortable with that, you can also approach accredited investors to obtain equity financing. However, obtaining financing from accredited investors may be difficult. Accredited investors typically want to invest in startup businesses that will have a high rate of return. That means your business will need to generate millions of dollars within a certain period of time. Accredited investors usually want to see a pretty good return by year five. If you know that isn’t realistic for your business, your only other option for financing may be taking on debt.
Debt Financing for Startup Businesses
Startup business owners can usually obtain debt financing (such as loans or lines of credit). The best way to know what type of debt financing will work for you is to speak with an expert. It doesn’t have to be your local bank either. For example, LeCred consists of a team of small business financing experts that specialize in helping startup businesses get capital, however, it is not a bank. They will speak with you to determine your business funding needs and point you in the right direction. If debt financing is your only option and you’re ready to launch your startup business, contact LenCred for a free consultation.