Three Things To Know About Forming a Small Business

It's gratifying to know that I have control over my company and can manage it any way I see appropriate. The process of getting it set up was an interesting learning experience yet it wasn't an easy one. I found myself interacting with the Department of Corporations several times a week to ensure we meet state requirements, getting on my website designer's tail to correct changes on our website (and we were pass our deadline) and also researching the best marketing strategy for our app that's currently in the iTunes and Google Play Store.

The work and dedication isn't easy because you have to be focused and keep your eyes on the goals you have set for your business. But I love every minute of the hard work that I'm putting in and it doesn't stress me at all. Well maybe sometimes. It's been a trial and error for us since the information on the Small Business Administration government website wasn't clear to us and we still had to ask several people for advice.

The following are three most important things to know when starting and running your own business:

1) Write a business plan: You will feel lost if you don't. It's not that hard to write one; there are so many templates on the internet but there is one from the SCORE website that is the best. It's the following: Download Business Plan Template 
Writing a business plan will force you to decide which direction you want your business to go in and what kind of services or products you would like to provide. It definitely sets the tone of your company and you begin to have an accurate focus of your approach. It's also a great way to help you get a loan from a bank or an angel investor who will take you more seriously if you have a business plan. They will be able to see your passion of your business and if convinced, they will more likely invest in you.

Things to Know: You may come across information about angel investors and venture capitalists. Angel investors are more opt to help you fund your business in the early stage and are willing to take the risk. Some will definitely seek repayment when you get more established and others may want a percent of your profits or even some may request a portion of ownership/ stake in your business. Venture capitalist comes in later when they see your business have been established for some time and they see the progress so they will invest even more money into your company. They can invest over a million dollars while angel investors will invest between five hundred to a hundred thousand (or even more).

2) Choose your business name and structure wisely:  My husband and I didn't realize how important this was; we were just excited about starting our company and did it in five minutes. But little did we know that we should've chose our name FIRST. You do that by searching the Business Name Entity search box to make sure no one has the name that you are planning to use. We didn't do this and picked our dream name for our company. We then found out that if a company was using our future name, then our request would be rejected and we have to choose another one (and have to pay another $200 fee again). After more research, we found out more specific information; that if the company was residing in our state with our future, proposed name, we couldn't use it. We discovered a company that had our name but they were located in California so we were stressed a bit. After waiting anxiously, our name was approved. 

Please select your business structure wisely. The SBA website do have detailed, important information that I didn't want to leave out so I enclosed the link here: Types of Business Structures

Things to Know: If you choose to form a LLC, please know that you are required by the New York State to publish a legal notice about the formation of your company into two newspapers, one that is weekly and one that is daily. You can do this yourself (it's cheaper, too) and do not need a third party to do this for you. If you live in the New York State and need more information, please contact me.

3) Do not quit your day job: When forming and running any kind of business, please know that you will not make any money for the next couple of years. If your business is bootstrapped, you will have to personally drive your business using your own hard-earned money so I do not recommend quitting your job so soon. If you decide to look into a small business loan, you may also find out that some banks may not readily give you a loan to help you because of the lack of credibility.To increase your chances of receiving a loan, make sure your personal credit status is up to par (a FICO score of around 750 is really good) and if you have debt, that you are making monthly payments (even if your score is a bit lower). And if you decide to use a loan, you will have to pay it back depending on the terms. So regardless of what you decide to do, it's still smart to have your full time job during this early time in your business.

For more information, please check out the Small Business Administration as they have a wealth of information that can help you when forming your business: Small Business Administration