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How to Setup a Business the Right Way to Start Building Business Credit

How to Setup a Business the Best Way for Building Business Credit

Are you looking to setup a business? Your business can be much more likely to get funding from the jump – if you set it up the right way. Here’s how.

Setup a Business the Right Way from the Start

Setting up a business is a task that can take a while. There are a lot of moving parts. It’s a lot more than just hanging out a shingle. And the way your business is set up can directly affect the ability of your business to succeed.

Fundability

What is it? Fundability is as a business’s ability to get funding. You can make it harder or easier for your business to get money. A lot of the power is in your hands. Yes, you have some control over this.

Setup a Business For Fundability

A business starts with no credit profile. Therefore, what’s on an application is all that’s reviewed for approvals. So your application must be very strong. Nearly half of all companies fail in their first 5 years, and about 2/3 in the first ten. As a result, new businesses don’t seem fundable to lenders. You can change that by building for fundability from the very start.

Industry and Risk

An early step to fundability is the industry your business is in. Some industries are considered to be riskier than others. When it comes to traditional funding sources, added risk can mean stricter underwriting guidelines or even no funding at all

Risky industries tend to be places where chances of personal injury or property damage are high, or a lot of cash is used, or the revenue stream is unstable. Weapons manufacturing, pawn shops, and the political campaigns all fill the bill.

Business Name

Check with your Secretary of State – they might require that a business name be unique. While checking your name with your Secretary of State, also ensure they have all the necessary information for your company. Make sure that you are in good standing with them, and that your entity is active. You will have to file annual reports and pay a fee each year to stay active.

Keep the name of a high-risk or restricted industry out of your business name. There is nothing underhanded about this – it is above board and honest. And it can help prevent an automatic or nearly automatic denial from a lender. A common reason for loan and credit card application denials is the lender can’t easily locate a business online. The business name on your application should be the exact same as what’s listed online and with your Secretary of State.

Business Names and DBA Filings

A full business name should include any recorded DBA filing in use. But consider a DBA only a short stop on the way to incorporating. Make sure the business name is exactly the same on corporation papers, licenses, utility statements, and bank statements. Also make sure the business name and all other information is the same on as many online listings you can find.

Business Address

A business address must be a real brick and mortar building. It must be deliverable physical address. This can never be a UPS box or a PO Box. Some lenders will not approve and fund unless you meet this criterion. Lenders check with USPS and places like Google Maps to see if you’re using a home address. If you are, you may get a decline.

In particular, retail establishments like clothing boutiques need their own address. If your business is a retail establishment like this, do not use a home address on your application! Not even if your company is just you . You can use a virtual address. We like Regus, Davinci, and Alliance Virtual Offices. But keep in mind that there are credit providers that will not accept virtual addresses.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Setup a Business Entity and EIN

You can get a free EIN for your business at IRS.gov. Just like you have a Social Security Number, your business has an EIN. Your EIN is used to open a bank account and to build a business credit profile. To truly separate business credit from personal credit your business must be a separate legal entity, not a sole proprietor or partnership. Only incorporating creates a new, separate entity.

A corporation or LLC business entity gives you more credibility in many cases. These entities by default reduce your personal liability. Other entities don’t. File this with the Secretary of State for your state. Make sure your entity is set up in the same state as your business address. Verify all listings show the same name, address, phone numbers, etc. as in state and other records. Also make sure your address with the IRS matches everywhere else.

Business Licenses

Contact State, County, and City Government offices to see if there are any required licenses and permits to operate your type of business. Licensing requirements differ. Differences depend on state, town, and industry. Always make sure you have the proper licensing for your corporation.

Do not apply for funding if you are unlicensed. Verify that all main agencies (State, IRS, Bank, and 411 national directory) have your business listed the same way and with your exact legal name. And make sure the address on your licenses is the same as all other documents. Being licensed also builds credibility in your business, and that can help you get more customers.

SIC and NAICS Codes

The IRS website is also where you choose SIC and NAICS codes. Industries are classified by 2 kinds of codes. They are SIC (Standard Industrial Classification) and NAICS (North American Industry Classification System). You chose these codes. Be honest when you choose your codes.

There’s no reason to choose the riskiest code if a less risky one might apply. The NAICS system is phasing out the SIC system. But that’s taking years.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Business Phone and 411 Listing

Toll-free phone numbers are best. Lenders see them as a sign of business credibility. Even if you’re a single owner with a home-based business, a toll-free number provides the perception that you are an even bigger company. It’s very easy and inexpensive to set up a virtual local phone number or a toll free 800 number. A cell or home phone number as your main business line could get you flagged as un-established – but VOIP is okay.

If you don’t want customers and prospects calling you all day long, do not use a personal cell phone or residential phone as the business phone number. It also helps with fundability if you have a dedicated business phone number. Your phone number must be listed with 411 for most credit issuers and lenders to approve you. Check for your record to see if you’re listed. Make sure your information is accurate. No record? Then use ListYourself.net to get a listing.

Web Domain and Professional Website

Credit providers will research your corporation on the internet. It is best if they learned everything directly from your corporate website. Not having a company website can hurt your chances of getting corporate credit. You need it to be a professional website.

Use places like TemplateMonster.com and Upwork.com and get a site up cheap and fast. Get a professional logo from Fiverr. Buy web hosting from a company like GoDaddy. Do not use Weebly or Wix. This is because you want it to be your domain, not domain.wix.com. Your domain should be your business name, if possible

Web Domain and Professional Website: Details

You need a company email address for your business. This email must be on the same domain as your website. Use a professional email address such as yourname@yoursite.com. It often comes with a website domain provider such as GoDaddy. This is not just professional; it also greatly helps your chances of getting approval from a credit provider. Do not use Yahoo, AOL, Gmail, Hotmail, or similar kinds of email.

Business Bank Account in the Business’s Name

You must have a bank account devoted strictly to your business. The IRS does not want you commingling funds. Make accounting easier and reduce the risk of audit at tax time. Keep personal and business funds separate. The simplest way to do this is with a separate account.

Your business banking history is vital to your future success of being able to secure larger business loans. The date you open your business bank account is the day that lenders consider your business to have started. So if you incorporated your business 10 years ago, but just opened the business bank account yesterday, then your business started yesterday. The longer your business banking history, the better your borrowing potential is.

Business Bank Accounts and Business Financials

Look to the future. It’s bank (and other) loans, and other kinds of funding. Set your business up for bank loan approval success. Keep a balance of $10,000 or more, for at least three months. This gives you a Low 5 Bank Rating.

With a Low 5 Bank Rating, most conventional banks see your corporation as fundable. Less than $10,000 in your account gives you lower than a Low 5 bank rating. If you don’t have a Low 5, you can still get corporate credit and alternative loans, but you would not be able to get a conventional loan. Bank ratings measure how responsible the account owner is with funds.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Setup a Business Merchant Account

Getting a business merchant account is a smart way to help out your business. Now your business will be able to accept credit and debit cards. Studies show that customers will spend more if they can pay by card. This also increases your finance options. It’s generally more secure, too.

Get Set Up With the Business Credit Reporting Agencies

Go to D&B’s website and look for your business. Can’t find it? Then get a free D-U-N-S number. A D-U-N-S number plus payment experiences leads to a PAYDEX score. Once you are in D&B’s system, search Experian and Equifax’s sites for your business. Another ID number is the BIN (Business Identification Number) number from Experian. Experian’s BizSource assigns a BIN.

Your Business Credit History

You  can get the most favorable funding by paying all bills on time. This will get your business:

  • A PAYDEX score of 80
  • Equifax Credit Risk Score of 90 or better
  • And a good FICO SBSS score, which is driven (in part) by on-time payments and business credit history
  • For Experian, historical behavior (payment history) is 5-10% of the total score

Keeping Congruent Business Information

Keep all records consistent! CRAs and creditors are going to look at everything. So it had better match, or you’ll get a denial due to fraud. That’s how lenders interpret inconsistencies.

Your business name, address, and phone number – all your business information – must look the same in these places and more:

  • IRS and Secretary of State records
  • Business records with Dun & Bradstreet, Equifax, and Experian
  • Incorporation documents
  • All online listings
  • Copy and paste this information; do not chance it with retyping

Personal Financials and Personal Credit History

Let’s not forget about your personal credit. Personal credit quality is often helpful for getting funding. So if your personal credit is not in order, get it straightened out and improve it. This generally means paying your bills on time and curbing your usage. For a business loan at a conventional bank you need good personal, business, and bank credit. While you want to build good business credit, having good personal credit can get you started.

Good personal credit will open doors, and it will open them earlier. Do you eventually want to try for an SBA loan? Then you will need to have good personal credit.

Setup a Business the Right Way: Takeaways

The way your business is set up can directly affect whether your business survives. Details such as business name, address, phone number, and email address all play a part. When you setup a business smartly, you can also help assure prospects that your business is on the up and up. It also means getting set up with D&B and other business CRAs, so you can start building business credit.

The post How to Setup a Business the Right Way to Start Building Business Credit appeared first on Credit Suite.

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How to Setup a Business the Right Way to Start Building Business Credit

How to Setup a Business the Best Way for Building Business Credit

Are you looking to setup a business? Your business can be much more likely to get funding from the jump – if you set it up the right way. Here’s how.

Setup a Business the Right Way from the Start

Setting up a business is a task that can take a while. There are a lot of moving parts. It’s a lot more than just hanging out a shingle. And the way your business is set up can directly affect the ability of your business to succeed.

Fundability

What is it? Fundability is as a business’s ability to get funding. You can make it harder or easier for your business to get money. A lot of the power is in your hands. Yes, you have some control over this.

Setup a Business For Fundability

A business starts with no credit profile. Therefore, what’s on an application is all that’s reviewed for approvals. So your application must be very strong. Nearly half of all companies fail in their first 5 years, and about 2/3 in the first ten. As a result, new businesses don’t seem fundable to lenders. You can change that by building for fundability from the very start.

Industry and Risk

An early step to fundability is the industry your business is in. Some industries are considered to be riskier than others. When it comes to traditional funding sources, added risk can mean stricter underwriting guidelines or even no funding at all

Risky industries tend to be places where chances of personal injury or property damage are high, or a lot of cash is used, or the revenue stream is unstable. Weapons manufacturing, pawn shops, and the political campaigns all fill the bill.

Business Name

Check with your Secretary of State – they might require that a business name be unique. While checking your name with your Secretary of State, also ensure they have all the necessary information for your company. Make sure that you are in good standing with them, and that your entity is active. You will have to file annual reports and pay a fee each year to stay active.

Keep the name of a high-risk or restricted industry out of your business name. There is nothing underhanded about this – it is above board and honest. And it can help prevent an automatic or nearly automatic denial from a lender. A common reason for loan and credit card application denials is the lender can’t easily locate a business online. The business name on your application should be the exact same as what’s listed online and with your Secretary of State.

Business Names and DBA Filings

A full business name should include any recorded DBA filing in use. But consider a DBA only a short stop on the way to incorporating. Make sure the business name is exactly the same on corporation papers, licenses, utility statements, and bank statements. Also make sure the business name and all other information is the same on as many online listings you can find.

Business Address

A business address must be a real brick and mortar building. It must be deliverable physical address. This can never be a UPS box or a PO Box. Some lenders will not approve and fund unless you meet this criterion. Lenders check with USPS and places like Google Maps to see if you’re using a home address. If you are, you may get a decline.

In particular, retail establishments like clothing boutiques need their own address. If your business is a retail establishment like this, do not use a home address on your application! Not even if your company is just you . You can use a virtual address. We like Regus, Davinci, and Alliance Virtual Offices. But keep in mind that there are credit providers that will not accept virtual addresses.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Setup a Business Entity and EIN

You can get a free EIN for your business at IRS.gov. Just like you have a Social Security Number, your business has an EIN. Your EIN is used to open a bank account and to build a business credit profile. To truly separate business credit from personal credit your business must be a separate legal entity, not a sole proprietor or partnership. Only incorporating creates a new, separate entity.

A corporation or LLC business entity gives you more credibility in many cases. These entities by default reduce your personal liability. Other entities don’t. File this with the Secretary of State for your state. Make sure your entity is set up in the same state as your business address. Verify all listings show the same name, address, phone numbers, etc. as in state and other records. Also make sure your address with the IRS matches everywhere else.

Business Licenses

Contact State, County, and City Government offices to see if there are any required licenses and permits to operate your type of business. Licensing requirements differ. Differences depend on state, town, and industry. Always make sure you have the proper licensing for your corporation.

Do not apply for funding if you are unlicensed. Verify that all main agencies (State, IRS, Bank, and 411 national directory) have your business listed the same way and with your exact legal name. And make sure the address on your licenses is the same as all other documents. Being licensed also builds credibility in your business, and that can help you get more customers.

SIC and NAICS Codes

The IRS website is also where you choose SIC and NAICS codes. Industries are classified by 2 kinds of codes. They are SIC (Standard Industrial Classification) and NAICS (North American Industry Classification System). You chose these codes. Be honest when you choose your codes.

There’s no reason to choose the riskiest code if a less risky one might apply. The NAICS system is phasing out the SIC system. But that’s taking years.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Business Phone and 411 Listing

Toll-free phone numbers are best. Lenders see them as a sign of business credibility. Even if you’re a single owner with a home-based business, a toll-free number provides the perception that you are an even bigger company. It’s very easy and inexpensive to set up a virtual local phone number or a toll free 800 number. A cell or home phone number as your main business line could get you flagged as un-established – but VOIP is okay.

If you don’t want customers and prospects calling you all day long, do not use a personal cell phone or residential phone as the business phone number. It also helps with fundability if you have a dedicated business phone number. Your phone number must be listed with 411 for most credit issuers and lenders to approve you. Check for your record to see if you’re listed. Make sure your information is accurate. No record? Then use ListYourself.net to get a listing.

Web Domain and Professional Website

Credit providers will research your corporation on the internet. It is best if they learned everything directly from your corporate website. Not having a company website can hurt your chances of getting corporate credit. You need it to be a professional website.

Use places like TemplateMonster.com and Upwork.com and get a site up cheap and fast. Get a professional logo from Fiverr. Buy web hosting from a company like GoDaddy. Do not use Weebly or Wix. This is because you want it to be your domain, not domain.wix.com. Your domain should be your business name, if possible

Web Domain and Professional Website: Details

You need a company email address for your business. This email must be on the same domain as your website. Use a professional email address such as yourname@yoursite.com. It often comes with a website domain provider such as GoDaddy. This is not just professional; it also greatly helps your chances of getting approval from a credit provider. Do not use Yahoo, AOL, Gmail, Hotmail, or similar kinds of email.

Business Bank Account in the Business’s Name

You must have a bank account devoted strictly to your business. The IRS does not want you commingling funds. Make accounting easier and reduce the risk of audit at tax time. Keep personal and business funds separate. The simplest way to do this is with a separate account.

Your business banking history is vital to your future success of being able to secure larger business loans. The date you open your business bank account is the day that lenders consider your business to have started. So if you incorporated your business 10 years ago, but just opened the business bank account yesterday, then your business started yesterday. The longer your business banking history, the better your borrowing potential is.

Business Bank Accounts and Business Financials

Look to the future. It’s bank (and other) loans, and other kinds of funding. Set your business up for bank loan approval success. Keep a balance of $10,000 or more, for at least three months. This gives you a Low 5 Bank Rating.

With a Low 5 Bank Rating, most conventional banks see your corporation as fundable. Less than $10,000 in your account gives you lower than a Low 5 bank rating. If you don’t have a Low 5, you can still get corporate credit and alternative loans, but you would not be able to get a conventional loan. Bank ratings measure how responsible the account owner is with funds.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Setup a Business Merchant Account

Getting a business merchant account is a smart way to help out your business. Now your business will be able to accept credit and debit cards. Studies show that customers will spend more if they can pay by card. This also increases your finance options. It’s generally more secure, too.

Get Set Up With the Business Credit Reporting Agencies

Go to D&B’s website and look for your business. Can’t find it? Then get a free D-U-N-S number. A D-U-N-S number plus payment experiences leads to a PAYDEX score. Once you are in D&B’s system, search Experian and Equifax’s sites for your business. Another ID number is the BIN (Business Identification Number) number from Experian. Experian’s BizSource assigns a BIN.

Your Business Credit History

You  can get the most favorable funding by paying all bills on time. This will get your business:

  • A PAYDEX score of 80
  • Equifax Credit Risk Score of 90 or better
  • And a good FICO SBSS score, which is driven (in part) by on-time payments and business credit history
  • For Experian, historical behavior (payment history) is 5-10% of the total score

Keeping Congruent Business Information

Keep all records consistent! CRAs and creditors are going to look at everything. So it had better match, or you’ll get a denial due to fraud. That’s how lenders interpret inconsistencies.

Your business name, address, and phone number – all your business information – must look the same in these places and more:

  • IRS and Secretary of State records
  • Business records with Dun & Bradstreet, Equifax, and Experian
  • Incorporation documents
  • All online listings
  • Copy and paste this information; do not chance it with retyping

Personal Financials and Personal Credit History

Let’s not forget about your personal credit. Personal credit quality is often helpful for getting funding. So if your personal credit is not in order, get it straightened out and improve it. This generally means paying your bills on time and curbing your usage. For a business loan at a conventional bank you need good personal, business, and bank credit. While you want to build good business credit, having good personal credit can get you started.

Good personal credit will open doors, and it will open them earlier. Do you eventually want to try for an SBA loan? Then you will need to have good personal credit.

Setup a Business the Right Way: Takeaways

The way your business is set up can directly affect whether your business survives. Details such as business name, address, phone number, and email address all play a part. When you setup a business smartly, you can also help assure prospects that your business is on the up and up. It also means getting set up with D&B and other business CRAs, so you can start building business credit.

The post How to Setup a Business the Right Way to Start Building Business Credit appeared first on Credit Suite.

5 Reasons to Start Adding Tradelines to Your Credit Reports

Your business credit report needs tradelines.  Not just one or two either. The truth is, you need to start adding tradelines to your business credit reports, and here’s why.

Top 5 Reasons for Adding Tradelines to Your Credit Report

Your business credit report reflects the creditworthiness of your business. It is not connected to you personally.  As a result it needs to have business tradelines reporting to it. Why?

1. It can help establish a business credit score. 

Your business credit is separate from your personal credit. For one, you have to be intentional about building it. Not all vendors will report payments to your business credit report.  That means, you need to add tradelines that do.   You’ll likely need help with this from a business credit expert, as most vendors do not make publicly known whether they report or not. 

2. It establishes a PAYDEX score with D&B.

You need tradelines on your business credit report to establish a PAYDEX with Dun & Bradstreet. They are the largest and most commonly used business credit company. So obviously, having a PAYDEX is important. D&B says you only need two.  However, many report that in their experience it took 3 tradelines reporting to establish a PAYDEX.  

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit, even in a recession. 

3. It can help raise your business credit score.  

Remember, this only works if you pay on-time. However, if you do, the more the merrier.  When you add tradelines to your business credit report, and handle them responsibly, you are only helping your business credit score grow.

4. Adding tradelines to your credit report is a way to build business credit without good credit.

Tradelines break the vicious cycle of “you have to have credit to get credit.”  They typically do not take credit into account for approval. Rather, they look at other things to determine credit worthiness like time in business,  business revenue, and business bank account balance. 

5. Strong business credit is essential to running a strong business and protecting your personal credit.

And as we said, you need tradelines to establish business credit, let alone build it. Business credit allows you to fund your business without jeopardizing your personal credit.  

Bonus: Buying Business Tradelines Won’t Help You

Buying tradelines basically involves buying tradelines someone else has been using and putting it on your credit report. While it is not technically illegal, it is definitely frowned upon.  If a lender figures out that you may be using business credit that you did not actually build yourself, you could be blackballed and lose any advantage you thought you were getting by buying tradelines. So don’t do it.

Adding tradelines to your business credit report is necessary. It is how you establish business credit in the first place. Then, it’s how you continue to grow it to a point that you can apply for other types of accounts. For example store cards, fleet cards, and business credit cards that can be used anywhere for anything require strong business credit. A strong business credit score will help you get better terms and rates on business loans and lines of credit as well.  This is true even though they will check personal credit also.  So, the sooner you work on this the better. Get started now.

The post 5 Reasons to Start Adding Tradelines to Your Credit Reports appeared first on Credit Suite.

How to Start a Franchise Business

Starting a business is a major endeavor. You need to perform market research, file for a license, create a marketing plan, and build your brand. One way to shorten the process is to become a franchise business owner.

As a franchise business owner, you can tap into the resources and branding of a large brand—while still maintaining the autonomy to run your own business.

If you’re considering starting a franchise business, there are a few things you should know. First, let’s talk about what a franchise business is.

How Does a Franchise Business Work?

In a franchise business, a franchise owner pays a fee to essentially “rent” a brand name. The franchisee runs the business themselves (or hires someone to run it) and must follow the rules and regulations related to how the brand is used.

For example, many McDonald’s restaurants are franchises, meaning an owner (or group of owners, in some cases) pays McDonald’s to use their brand name, menus, logos, and other business assets.

They run their location, pay McDonald’s to use the name, and keep the remaining profits.

A franchise business is a popular business model because it offers owners the best of both worlds: the support of a large brand and the benefits of owning a business.

A few businesses that offer franchising options include:

  • 7-Eleven
  • Taco Bell
  • Great Clips
  • Ace Hardware

Starting a franchise business should not be taken lightly. There are pros and cons to consider before deciding whether to become a franchisee.

4 Benefits of Starting a Franchise Business

Starting a business gives you more control over your life and income. Unlike starting your own business, however, there are specific benefits to buying into a franchise.

More Support

Starting a franchise business is sort of like playing video games on easy mode. The franchisor offers support in the form of training, materials, process flows, and branding to make it easier to get your business off the ground.

For example, starting a taco shop could require months for menu development, taste testing, logo design, product sourcing, etc. As a Taco Bell franchise owner, however, much of that work is already completed.

Lower Failure Rate

Franchise businesses often have a lower failure rate. When you buy into a franchise, you join a proven business model that works. You also have additional support and business resources that can make a difference in your success.

Built-In Brand Awareness

Building a brand is one of the best things you can do for your business. However, it often takes time and resources. When you buy into a franchise, the branding is already complete. People already know who your brand is and what it represents. This saves you time and creates a built-in customer base you can tap into.

Better Buying Power

In some cases, you may purchase goods at a lower rate. Many franchisors negotiate contracts with vendors for the entire network, allowing you to spend less on goods and services by purchasing in bulk. However, the flip side of these benefits is you may not choose your vendors, and sometimes the costs are higher.

While there are many benefits to starting a franchise business, there are some drawbacks to keep in mind. You’ll pay licensing fees to corporations, which can eat into profits. You’ll also have less control over some aspects of your business. For example, if you own a franchise restaurant, you may have little to say on the menu or which vendors you use.

How to Start a Franchise Business

Now that you understand the pros (and the cons) of starting a franchise business, let’s get down to the details. How do you get started? Here’s what you need to know.

1. Identify a Business Opportunity

The first step in starting a franchise business is deciding which business you want to join. Hundreds of companies offer franchise opportunities: which one is right for you? Here are a few questions to ask yourself.

  • Do you want an online or in-person business?
  • What industry are you interested in? There are franchise businesses in travel, restaurant, convenience stores, websites, health and wellness, business, and much more.
  • How much money do you have to invest? Before selecting a business, consider the cost.

Once you answer those questions, start looking for franchise opportunities. For example, if I am interested in a restaurant franchise and like sports bars, I might Google “best sports bar franchises.” As you can see, there’s plenty of options.

Here are a few other searches you can try. Feel free to swap out key terms to find an opportunity that works for you.

  • online franchise businesses
  • travel franchise businesses
  • senior care franchise
  • cheap franchise businesses

Make a list of your top five franchise businesses, then compare what they offer. How much are licensing fees? Is it a flat fee or a portion of your sales? What resources do they offer? Do they offer financing? What happens if you don’t end up keeping the franchise?

Compare all the features and consider all the drawbacks before making a decision.

2. Research Current Owners and Potential Competitors

By now, you should have one or two top franchise choices. It’s time to dig deeper. How many current franchise owners are there? What are their annual revenue and profits?

What competition will you face? Consider both online and in-person competition. For example, suppose you want to franchise a tax company. In that case, you need to consider how you’ll stand out from online companies like TurboTax and in-person accounting firms in your physical location.

3. Determine Market Interest

Sometimes buying into a franchise provides a false sense of security. You see how much other franchise owners make and think that is the norm. Keep in mind markets can vary by location and the franchisor has a vested interest in highlighting their most successful franchisees.

Whether you are looking to purchase an online or in-person franchise, make sure there is enough room in the market for additional businesses. If the market is saturated, you may struggle to make sales no matter how much people trust the brand.

4. Research Startup Costs

The cost to start a franchise business can range drastically from a few hundred bucks to set up a website to millions to pay franchise fees and build a store. Usually, franchisors will list the average cost on their website.

However, sometimes there are hidden fees you’ll need to keep in mind:

  • Travel costs: Most companies require you to come to their headquarters and learn more about their brand and company culture. Generally, you’ll foot this bill.
  • Training costs: You may be required to train on location in a store for several weeks. This can cost time and money, since you won’t have a paycheck.
  • Local fees and taxes: Your city or state might charge fees to start a business, get approvals, acquire building permits, etc.
  • The initial fee: Most franchisees pay a yearly fee (called the royalty fee) based on sales. However, there is likely a one-time initial fee that might range from $500 to $50,000.

5. Create a Business Plan

You’ve researched all your options and have decided on a business to join. Congrats! Now it’s time to create a business plan. This is one of the most crucial steps, so take the time to create a solid business plan that covers all the bases.

According to the Small Business Association, a business plan should include:

  • Executive summary: What your company is and what makes it different.
  • Company description: Provide detailed information about the problem your company solves and who you plan to serve.
  • Market analysis: Who your target audience is and how your business stands out from the competition.
  • Management plan: How your business will be structured and who will be in charge of what facets of the business.
  • What you offer: Are you offering products or services? What is your product life cycle and how will you handle things like intellectual property?
  • Funding: How will you pay for the franchise fees, labor costs, and the equipment or products you need to get started?
  • Financial projections: Estimate the revenue for your business. Include a prospective outlook for the next five years. If you plan to take out loans, how will you pay them off?
  • Marketing and sales plans: How will you market your business? Do you have a website? How will you increase sales over time? You can also get help from a digital marketing agency like NP Digital.

6. Form an LLC or Corporation

The next step is to create your business entity. The type of business you create might depend on the franchisor you work with. Some might require an LLC or corporation. An LLC protects your personal assets from liability, while a corporation is a tax structure.

You might also choose sole proprietorship; however, that can leave your home and other assets at risk. This guide will walk you through the different options, but I suggest meeting with a tax or legal professional to decide if the structure is right for you.

Keep in mind city and state laws may impact which structure is right for you.

7. Choose an Initial Location

The final step is to find a location for your franchise business. If you are online, the location will likely be a website, but you might elect to have office space as well. If your franchise business has a physical location, make sure to compare sites to find an affordable one that gets plenty of foot traffic.

Don’t just consider the location’s current pros and cons. Research future developments as well. An ideal location today might not be if a bypass is installed right next to you directing traffic away.

On the other hand, a location that is just OK today might gain attention if a large shopping center is built next door. (Just remember that sometimes development plans fall through, so don’t choose a terrible location based on possible plans.)

Frequently Asked Questions About Starting a Franchise

How much money do I need to start a franchise business?

The cost to start a franchise business varies by business. Some only cost a few hundred dollars, while starting a McDonald’s franchise costs between $1 and $2 million.

How much do franchise owners make per year?

It varies by business. The average is usually between $50,000 and $70,000 per year.

Can I start a franchise business for free?

Not entirely, no. The franchisor generally requires an initial payment before you can open your business. If you don’t have capital, consider bringing in an investment partner.

How do you start a franchise business?

1) Identify a business you want to work with. 2) Research current owners and the competition. 3) Determine market interest. 4) Research startup costs 5) Create a business plan. 6) Form an LLC or corporation. 7) Choose a location. 8) Create a marketing plan.

What is the most profitable franchise?

According to Entrepreneur, the most profitable franchises are Taco Bell, Dunkin’, and The UPS Store.

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Summary of Franchise Business Guide

Starting a franchise business is not without risks. However, the added support and access to a built-in customer base make it a tempting model for many business owners.

If you are comfortable working with a team and appreciate the support and other benefits of being a franchise owner, it can be an ideal way to build your own business.

Remember online marketing is crucial to the success of any business in 2021. Understand the benefits of SEO and social media. Study up on practices like paid advertising that can help you reach a wider customer base.

Finally, don’t be afraid to hire a professional to handle your marketing. They can put their expertise to work while you focus on building your franchise business.

Are you considering starting a franchise? What challenges are you facing?

The post How to Start a Franchise Business appeared first on #1 SEO FOR SMALL BUSINESSES.

The post How to Start a Franchise Business appeared first on Buy It At A Bargain – Deals And Reviews.

How to Start a Franchise Business

Starting a business is a major endeavor. You need to perform market research, file for a license, create a marketing plan, and build your brand. One way to shorten the process is to become a franchise business owner.

As a franchise business owner, you can tap into the resources and branding of a large brand—while still maintaining the autonomy to run your own business.

If you’re considering starting a franchise business, there are a few things you should know. First, let’s talk about what a franchise business is.

How Does a Franchise Business Work?

In a franchise business, a franchise owner pays a fee to essentially “rent” a brand name. The franchisee runs the business themselves (or hires someone to run it) and must follow the rules and regulations related to how the brand is used.

For example, many McDonald’s restaurants are franchises, meaning an owner (or group of owners, in some cases) pays McDonald’s to use their brand name, menus, logos, and other business assets.

They run their location, pay McDonald’s to use the name, and keep the remaining profits.

mcdonald's franchise options

A franchise business is a popular business model because it offers owners the best of both worlds: the support of a large brand and the benefits of owning a business.

A few businesses that offer franchising options include:

  • 7-Eleven
  • Taco Bell
  • Great Clips
  • Ace Hardware

Starting a franchise business should not be taken lightly. There are pros and cons to consider before deciding whether to become a franchisee.

4 Benefits of Starting a Franchise Business

Starting a business gives you more control over your life and income. Unlike starting your own business, however, there are specific benefits to buying into a franchise.

More Support

Starting a franchise business is sort of like playing video games on easy mode. The franchisor offers support in the form of training, materials, process flows, and branding to make it easier to get your business off the ground.

For example, starting a taco shop could require months for menu development, taste testing, logo design, product sourcing, etc. As a Taco Bell franchise owner, however, much of that work is already completed.

Lower Failure Rate

Franchise businesses often have a lower failure rate. When you buy into a franchise, you join a proven business model that works. You also have additional support and business resources that can make a difference in your success.

Built-In Brand Awareness

Building a brand is one of the best things you can do for your business. However, it often takes time and resources. When you buy into a franchise, the branding is already complete. People already know who your brand is and what it represents. This saves you time and creates a built-in customer base you can tap into.

Better Buying Power

In some cases, you may purchase goods at a lower rate. Many franchisors negotiate contracts with vendors for the entire network, allowing you to spend less on goods and services by purchasing in bulk. However, the flip side of these benefits is you may not choose your vendors, and sometimes the costs are higher.

While there are many benefits to starting a franchise business, there are some drawbacks to keep in mind. You’ll pay licensing fees to corporations, which can eat into profits. You’ll also have less control over some aspects of your business. For example, if you own a franchise restaurant, you may have little to say on the menu or which vendors you use.

How to Start a Franchise Business

Now that you understand the pros (and the cons) of starting a franchise business, let’s get down to the details. How do you get started? Here’s what you need to know.

1. Identify a Business Opportunity

The first step in starting a franchise business is deciding which business you want to join. Hundreds of companies offer franchise opportunities: which one is right for you? Here are a few questions to ask yourself.

  • Do you want an online or in-person business?
  • What industry are you interested in? There are franchise businesses in travel, restaurant, convenience stores, websites, health and wellness, business, and much more.
  • How much money do you have to invest? Before selecting a business, consider the cost.

Once you answer those questions, start looking for franchise opportunities. For example, if I am interested in a restaurant franchise and like sports bars, I might Google “best sports bar franchises.” As you can see, there’s plenty of options.

How to Start a Franchise Business - Start looking for franchise opportunities

Here are a few other searches you can try. Feel free to swap out key terms to find an opportunity that works for you.

  • online franchise businesses
  • travel franchise businesses
  • senior care franchise
  • cheap franchise businesses

Make a list of your top five franchise businesses, then compare what they offer. How much are licensing fees? Is it a flat fee or a portion of your sales? What resources do they offer? Do they offer financing? What happens if you don’t end up keeping the franchise?

Compare all the features and consider all the drawbacks before making a decision.

2. Research Current Owners and Potential Competitors

By now, you should have one or two top franchise choices. It’s time to dig deeper. How many current franchise owners are there? What are their annual revenue and profits?

What competition will you face? Consider both online and in-person competition. For example, suppose you want to franchise a tax company. In that case, you need to consider how you’ll stand out from online companies like TurboTax and in-person accounting firms in your physical location.

3. Determine Market Interest

Sometimes buying into a franchise provides a false sense of security. You see how much other franchise owners make and think that is the norm. Keep in mind markets can vary by location and the franchisor has a vested interest in highlighting their most successful franchisees.

Whether you are looking to purchase an online or in-person franchise, make sure there is enough room in the market for additional businesses. If the market is saturated, you may struggle to make sales no matter how much people trust the brand.

4. Research Startup Costs

The cost to start a franchise business can range drastically from a few hundred bucks to set up a website to millions to pay franchise fees and build a store. Usually, franchisors will list the average cost on their website.

However, sometimes there are hidden fees you’ll need to keep in mind:

  • Travel costs: Most companies require you to come to their headquarters and learn more about their brand and company culture. Generally, you’ll foot this bill.
  • Training costs: You may be required to train on location in a store for several weeks. This can cost time and money, since you won’t have a paycheck.
  • Local fees and taxes: Your city or state might charge fees to start a business, get approvals, acquire building permits, etc.
  • The initial fee: Most franchisees pay a yearly fee (called the royalty fee) based on sales. However, there is likely a one-time initial fee that might range from $500 to $50,000.

5. Create a Business Plan

You’ve researched all your options and have decided on a business to join. Congrats! Now it’s time to create a business plan. This is one of the most crucial steps, so take the time to create a solid business plan that covers all the bases.

According to the Small Business Association, a business plan should include:

  • Executive summary: What your company is and what makes it different.
  • Company description: Provide detailed information about the problem your company solves and who you plan to serve.
  • Market analysis: Who your target audience is and how your business stands out from the competition.
  • Management plan: How your business will be structured and who will be in charge of what facets of the business.
  • What you offer: Are you offering products or services? What is your product life cycle and how will you handle things like intellectual property?
  • Funding: How will you pay for the franchise fees, labor costs, and the equipment or products you need to get started?
  • Financial projections: Estimate the revenue for your business. Include a prospective outlook for the next five years. If you plan to take out loans, how will you pay them off?
  • Marketing and sales plans: How will you market your business? Do you have a website? How will you increase sales over time? You can also get help from a digital marketing agency like NP Digital.

6. Form an LLC or Corporation

The next step is to create your business entity. The type of business you create might depend on the franchisor you work with. Some might require an LLC or corporation. An LLC protects your personal assets from liability, while a corporation is a tax structure.

You might also choose sole proprietorship; however, that can leave your home and other assets at risk. This guide will walk you through the different options, but I suggest meeting with a tax or legal professional to decide if the structure is right for you.

Keep in mind city and state laws may impact which structure is right for you.

7. Choose an Initial Location

The final step is to find a location for your franchise business. If you are online, the location will likely be a website, but you might elect to have office space as well. If your franchise business has a physical location, make sure to compare sites to find an affordable one that gets plenty of foot traffic.

Don’t just consider the location’s current pros and cons. Research future developments as well. An ideal location today might not be if a bypass is installed right next to you directing traffic away.

On the other hand, a location that is just OK today might gain attention if a large shopping center is built next door. (Just remember that sometimes development plans fall through, so don’t choose a terrible location based on possible plans.)

Frequently Asked Questions About Starting a Franchise

How much money do I need to start a franchise business?

The cost to start a franchise business varies by business. Some only cost a few hundred dollars, while starting a McDonald’s franchise costs between $1 and $2 million.

How much do franchise owners make per year?

It varies by business. The average is usually between $50,000 and $70,000 per year.

Can I start a franchise business for free?

Not entirely, no. The franchisor generally requires an initial payment before you can open your business. If you don’t have capital, consider bringing in an investment partner.

How do you start a franchise business?

1) Identify a business you want to work with. 2) Research current owners and the competition. 3) Determine market interest. 4) Research startup costs 5) Create a business plan. 6) Form an LLC or corporation. 7) Choose a location. 8) Create a marketing plan.

What is the most profitable franchise?

According to Entrepreneur, the most profitable franchises are Taco Bell, Dunkin’, and The UPS Store.

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Summary of Franchise Business Guide

Starting a franchise business is not without risks. However, the added support and access to a built-in customer base make it a tempting model for many business owners.

If you are comfortable working with a team and appreciate the support and other benefits of being a franchise owner, it can be an ideal way to build your own business.

Remember online marketing is crucial to the success of any business in 2021. Understand the benefits of SEO and social media. Study up on practices like paid advertising that can help you reach a wider customer base.

Finally, don’t be afraid to hire a professional to handle your marketing. They can put their expertise to work while you focus on building your franchise business.

Are you considering starting a franchise? What challenges are you facing?

Ditch the Boss…Here’s How to Start a Small Business With No Money

Do you dream of starting your own small business but have no clue how to finance it? The number one thing that stands in the way of those who want to start a business, assuming they already have an idea of the type of business they want to start, is that they have no money. A general rule of life is it takes money to make money. While in a way this is true, it’s not always as cut and dry as it seems. Find out how to start a small business with no money.

No Money? No Problem! Try These Tried and True Tips for How to Start a Business with No Money

Ok, so let’s be real.  It actually does take money to start a business.  However, it doesn’t have to be money you already have. In fact, it doesn’t even have to be your money at all!  Here are some creative ideas for how to start a small business with no money, or rather, how to get the money you need to make your small business dreams come true.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

How to Start a Business With No Money

So, you do need money to start and grow a business, and we are going to show you how to get it. Yet, you don’t have to wait to start.  Start your business now, and grow it from the ground up.

1. Start Small

Facebook was started by college roommates in their dorm room, Microsoft was birthed in a garage by a college drop out, and Hewlett- Packard got started with less than $600. These are just a few of the many major companies that started out very small and with little capital.  After all, how many people actually remember that Amazon used to be an online bookstore?

Starting small is essential, especially if you are wondering how to start a small business with no money. Cut out as much overhead as you can and focus on getting your product to the customers.

2. Keep Your Day Job…For Now

It will be a challenge for sure, but working your business outside of your regular working hours, while keeping your current job if you have one, will allow you to put any profit from your business back into your business.  In essence, your business will be funding itself.

3. Keep Early Marketing Simple

In the early stages, simple is best. Offer free samples, leverage word of mouth, and start a Facebook page. As you build funds, you can increase your marketing strategy as well.

Be strategice as well. There is no need to market to the masses initially.  Keep it narrowed down to the market that you know will be interested.

How to Start a Small Business With No Money: Leverage Your Assets

Now, you do need to figure out how to get the funding you need.  If you have no money, you may struggle to get a small business loan.  As you are starting small and building revenue, consider what  assets you can leverage to get the cash you need.

There is always the option to use  your home or land as collateral for a loan.  Pretty much any bank will do that.  Yet, that understandably makes many uncomfortable. There are some better options.

401K Financing

401K financing is a flexible and powerful way to leverage assets that are in a 401(k) plan or IRA.  In as little as 3 weeks you can actually invest a portion of these funds into your own business. Then, you not only have more control over the performance of your retirement plan assets, but you also have the working capital you need.

This type of program even has the blessing of the IRS. In fact, they  have their own term for it. It’s called a Rollover for Business Startups (ROBS).

You do not have to submit financials or have good credit to get approval. In fact, all the lender will ask for is a copy of your two most recent 401(k) statements.

If the plan has a value of more than $35,000,  you can get approval. This is true even if you have bad personal credit. You can get however much of your 401(k) is “rollable.”

The plan you use cannot be from a business where you currently work. It will have to be from previous employment. Also, you can’t still be contributing to it.

Equipment Financing

This is a great option if you need equipment for your business and have no money to purchase it.  Equipment financing allows you to purchase or borrow hard assets for your business using said asset as security for the loan. You can use it to buy or lease any physical asset. This can include items like an industrial freezer in a restaurant or an oven or a company car.  You name it.

How to Start a Small Business With No Money: Use a Guarantor

What if you have no money and no assets? What then? You still have options. The easiest way to get funding for a business if you can’t do it on your own is to use a guarantor. Many entrepreneurs have friends or family that will sign a loan with them. Doing so tells the lender that, if you default, your guarantor will be responsible for the payments.

This is a better option for many, because the guarantor isn’t out any money up front, and they only have to pay if you do not.  Keep reading for one of our favorite options for guarantor funding.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

Credit Line Hybrid

What if there were a way to fund your business with 0% interest? The Credit Line Hybrid allows you to fund your business without putting up collateral, and you only pay back what you use.  Generally, you do need a personal credit score of 680 or above, and you can’t have any liens, judgments, bankruptcies or late payments.  However, if you do not meet the requirements, you have the option to take on a credit partner, which is in essence a guarantor. And yes, you can often get 0% interest for up to 18 months!

The great part is, this program reports payment to your business credit profile, meaning you build your business credit score regardless of whether you have a guarantor or not.

How to Start a Small Business With No Money: Other Options

If you do not have assets, your personal credit is not great, and you can’t find a guarantor, all is not lost. Here are some other possibilities.

Crowdfunding

Crowdfunding allows you to access tons of investors at once, and test the market at the same time. You market your business on the platform, and anyone who wants to can invest in the company.  Some platforms will even accept donations as low as $5 or $10 dollars, though most do require more.  With rewards-based crowdfunding, you get a trinket of thanks for your donation.  This may be anything from a thank you note to a free product.  With equity-based crowdfunding, which almost always requires $500 or more, investors get a piece of the company. There are a ton of crowdfunding sites to choose from, you just have to pick the one that will work best for your business.

One unique program is Kiva.  The money you get has to be repaid, but the loan is crowdfunded.  The interest rate is 0%, so even though you do pay it back, it’s free money.  You have to get at least five of your family and friends on board to donate to your business, and then you have to lend $25 to another company on the Kiva platform.

After that, submit a thorough business plan and you could be well on your way to a 0% interest loan.

Angel Investors

Now, an angel investor from an angel firm is going to want to know you have some money already, likely. But you don’t need to go through an angel firm, because anyone can be an angel investor. That includes friends and family, even your mom!  So, this is definitely an option if needed.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

Is it Even Possible to Start a Small Business Without Money?

In the strictest terms, no.  You have to have funds to start a business. However, there are ways to fund your business without having money in the first place. While knowing how to start a small business with no money is important, it is always important to understand how to set your business up to get the funding it needs into the future as well.

The key to that is to start building business fundability from the beginning. As you consider funding options for your small business startup, look for those that will help you build fundability.  As you set up, set your business up in a way that will help it become more fundable.  These things are best done at the beginning.

You can discover what funding options are available to you right now, and get a head start on fundability by speaking with one of our business credit experts.  Try a free consultation now!

The post Ditch the Boss…Here’s How to Start a Small Business With No Money appeared first on Credit Suite.

How to Start a Business

Disclosure: This content is reader-supported, which means if you click on some of our links that we may earn a commission.

Anyone can start up a business. No college degree, huge bank balance, or corporate experience necessary.

All you need is a great idea, the right systems, and the drive to see it through. 

Since you’re already searching for ways to learn about how to start a business, odds are you already have an idea and the drive. What you need to know is how to start building your future empire. 

In this article, I’m going to discuss the exact steps to start a business so that you can put the right systems in place.

Your 2-Minute Cheat Sheet

I’ll walk through each step in much greater detail below. Here, I want to give you the bare-bones cheat sheet for how to start a business now.

First, refine your idea based on the needs and demands of your target customers, along with your preferences. 

Next, you’ll create a business plan. This is a crucial part of the whole process, so you have to get this right. 

After sketching out your business’s entire framework, do market research, and collect feedback from friends, mentors, and family.

Then you need to tackle the legal side of things. Get started early in case there are any snags. This includes deciding your business structure, registering your business, getting the necessary license and permits, and setting up bank accounts.

At this point, you have your idea and a plan to make it come to life. You can then use it to arrange for the required capital to launch your product or service. Follow this up by building your team and finding a location if you’re opening a physical store.

Finally, focus your efforts on generating more sales and growing your business, which is also what you’ll find yourself doing for most of your career.

That’s a few years of business distilled to a couple paragraphs. Let’s take a closer look at each step. Of course you should feel free to skip steps if you have already locked down the basics.

  1. Come Up With a Business Idea
  2. Conduct Market Research
  3. Lock Down the Legal Stuff
  4. Write Your Business Plan
  5. Raise Capital for Your Business
  6. Develop Your Product or Service
  7. Build a Reliable and Responsible Team
  8. Find a Business Location
  9. Work On Generating Sales
  10. Expand Your Business

Step 1: Come Up With a Business Idea

Every business begins with an idea. If you already have one, congratulations! You can proceed to the next step. If not, you need to start brainstorming.

Here are a few tips to come up with a great business idea (I made a list of over 25 home-based businesses as well):

  • Think of ways to get ahead of the curve. Think of how your product or service can change the business landscape, especially with the constant technological advancements.
  • Solve a problem you identify. After all, your customers would prefer more of a good thing and less of a bad thing.
  • Try to bring a fresh perspective that helps you gain a competitive edge over your competitors.
  • Think of ways to make your approach better, cheaper, and faster if your business idea isn’t new.

At this stage, you can also conduct surveys and collect perspectives by meeting people and asking for advice. Researching ideas online is another excellent way to come up with business ideas.

Step 2: Conduct Market Research

The whole point of conducting market research is to understand typical consumer behavior, pain points, and relevant market trends in your chosen niche. This is a sure way to determine how your potential startup might fit into the existing industry landscape.

Try to find the answers to the following questions while doing market research:

  1. What product or service is currently in demand in your given market?
  2. What is the market size, or how many clients make up your target audience?
  3. How many competitors share a similar concept to your business idea?
  4. What is the price that customers are willing to pay for products and services in your market?
  5. What’s the typical consumer engagement in your market? Did your competitors move online during the pandemic? Can you replicate their sales process or do it better?

One of the best ways to gain genuine insights is to speak with consumers directly. Take surveys, make questionnaires, and do one-on-one interviews.

Another free resource you should absolutely use is Google. Say you are starting a business that sells shampoo to men. I’d search “shampoo for men”, “men’s hair care”, along with other terms and phrases in the space. Then I’d take a hard look at the first page of results for each keyword.

What are the top websites (not paid ads) doing? Who are they speaking to? How do they position their products and services?

Asking simple questions like these can give you a ton of insight into the market. You can also plug keywords into tools like Ubersuggest to find out how many people are searching for these terms each month.

Researching your market is an ongoing process. What you find out today may change tomorrow.

I put this as Step 2 because you want to get started early, but you should be constantly trying to understand the trends in your space.

Step 3: Lock Down the Legal Stuff

I always make sure to get the legal stuff out of the way early. This way, I don’t have to worry about anybody else taking my big idea, ending up in a bad partnership, or getting sued because of misinformation.

Determine your business structure first, as it’ll dictate the legal and tax requirements you will have to meet. Your options include sole proprietorship, partnership, limited liability company (LLC), and corporation. 

Enlist a tax professional’s services, as every structure has its own set of tax requirements, or use an online business formation service.

At this stage, you’ll also have to choose a business name and register your business. Find out whether your chosen name is available for registration in your state and within the digital space. You want availability as a:

  • Business name in your state
  • Domain name
  • Social media platform usernames

If a specific name isn’t available, you can always consider permutations of the name. Make sure your domain name and business name aren’t impinging on any registered trademarks.

There is a quick checklist of other things that you’ll need:

  • Federal tax ID
  • State tax ID
  • Permits and licenses (as needed)
  • Business bank accounts
  • Trademarks, patents, and copyrights (as needed)

It’s best to consult a lawyer to cover everything you need. You can always work out things on your own, but sometimes it’s best to ask an expert.

Step 4: Write Your Business Plan

Many people question the purpose of creating a business plan. After all, if you already have a vision for your business, why write it down?

When you create a business plan, you describe every aspect of your business in a formal document. You put everything into words. 

In the words of Benjamin Franklin, “There never was a good knife made of bad steel.” 

It’s precisely why a business plan is such a crucial part of any business. It defines your thoughts and research and exactly what you need to do to make a business a success. 

This helps put things into perspective and allows you to identify areas to streamline future processes.

Let me clarify: Your business plan doesn’t need to be 100 pages long. It only needs to be readable and include the main components. Such as:

  • Pain points your business solves
  • An elevator pitch about what your business does
  • A list of your target audiences
  • An idea list of how you’ll promote your business (your marketing strategy)
  • The financial plan of how you’ll raise money to pay and how your business will make money
  • Financial documents

Do a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) of your business, too, to gain insights and identify ways to achieve your goals.

As the industry and market are always changing, you’ll find yourself revising your plan frequently. Periodic revisions and refinement of your business plan ensure that your business remains competitive in the long run.

Step 5: Raise Capital for Your Business

There are many ways you can get the resources to start your business. Below, I’ve discussed some of the best ways I found raising capital is easy and effective. You can choose one or more that work best for you.

Start at Home

Bootstrapping your business is a long process, but it gives you full control over your business. You can also leverage personal relationships by asking friends and family for a loan or to invest in your business.

Online Crowdfunding 

There’s no disputing the power in numbers, especially when it comes to raising capital. Crowdfunding gives you direct access to small investments that can add up to something massive.

Check out Kickstarter or Indiegogo, or Google a list of the most popular crowdfunding websites. Crowdfunding is more for a physical product than a service.

Reach Out to Venture Capital Investors or Local Angel Investors 

Venture capitalist investors look for proven teams that require a capital investment of $1 million or more, which is why you need some traction before approaching them.

If you feel you don’t have such traction right now, you can instead apply to online platforms like AngelList and Gust to find potential investors who would be interested in your project.

Apply for a Small Business Grant

Grants.gov is an online directory of more than 1000 federal grant programs that can supply you with the capital to kickstart your project. Although the process is long, you don’t have to give away any equity.

Get a Bank Loan or a Line of Credit 

Applying for a bank loan is easy, but you should do so only if you really need a bank loan and if you’re eligible. You can head over to the Small Business Administration to look for loan opportunities.

Step 6: Develop Your Product or Service

Nothing feels better than seeing your idea come to life. The only problem is creating a product takes a village–if not a city.

You’ll have a different set of requirements based on your product or service. For instance, if you want to develop an app, you want someone with the technical know-how, whereas if you’re going to mass-produce an item, you’ll need a manufacturer.

Product simplicity and quality should be your top priority. Rather than creating the cheapest product, focus on developing something that catches someone’s attention. You can further streamline the process by keeping in mind the following tips:

  1. Avoid handing over product development to someone else or another firm, and if you do, make sure you supervise constantly.
  2. Implement regular checks and balances to reduce the level of risk involved. For example, if you decide to hire freelancers, hire multiple people so that you don’t put all your eggs in one basket.
  3. Enlist specialists instead of generalists. A jack-of-all-trades isn’t what you need right now.
  4. Always operate within your budget.

For service-focused entrepreneurs, the game is slightly different. 

Your primary focus should be to have the necessary certificates and educational requirements. Search online job portals and freelance working platforms to find opportunities. Upwork and ProBlogger could be great places to start.

Step 7: Build a Reliable and Responsible Team

What’s the best way to scale your business and achieve all your organizational goals?

Have a good team.

One of the critical aspects of a growing business is delegating responsibilities to other people, whether a partner, employee, or freelancer. Here are a few tips to help you find the right team members:

State Your Goals Clearly 

When your team members understand your vision and their role in helping you achieve it, they’ll make fewer errors.

If you are just starting out, you’ll probably be interested in the some of the really great free project management software out there. These aren’t free trials, and you’ll be able to make sure everyone is on the same page–no extra cost to you.

Establish and Follow Hiring Protocols

Welcoming people to your team involves several processes, ranging from screening people, carrying out interviews, and having proper forms. This will help you create a more competent team.

Create a Strong Company Culture 

Great company culture is all about respecting and empowering employees through training and mentorship.

You don’t need futuristic decor or ping-pong tables (if you can afford that, that’s great!) but you do need a positive atmosphere where everybody feels welcomed and appreciated.

Step 8: Find a Business Location

One in four businesses that starts within the next 12 months will have a 100% remote workforce. But if you decide to open a brick-and-mortar retail business, you need to focus on getting the right location.

Here are a few things you should keep in mind:

  • Demographics: Think about your customers and how they interact with your location. Does your target clientele frequent the potential location? Does your location reflect the image you’re trying to project?
  • Foot Traffic: Monitor the foot traffic outside a potential location throughout the day. Do you see a couple of passers-by throughout the day? Or is it away from the public eye? Is there parking available?
  • Business Community: The business community refers to the other businesses nearby that can bring you foot traffic. Is there a mall nearby? Are there restaurants where customers can go after shopping at your store?
  • Competition: Contrary to popular belief, having competitors nearby isn’t always bad. Whatever your stand, you should be aware of whether or not you have competitors nearby before deciding on a location.

Research the history of the location as well. If other businesses have tried and failed in the space, find out why. And of course, always keep the cost in mind. Expenses like rent, cleaning services, insurance, and parking fees need to be considered.

Step 9: Work On Generating Sales

Start by listening to your potential customers to know their wants, needs, likes, and dislikes. Next, learn the art of asking for a commitment without being too pushy. In other words, don’t force your customers into buying goods from you, or they won’t return.

Moreover, you have to prepare yourself for hearing “NO“ too. Sad, I know. 

People listen to your elevator pitch despite having no intention to buy simply because they’re polite. If they don’t end up buying from you, don’t get disheartened.

Grow your customer base and put out advertisements to find an audience to fit your business. At this point, you’ll also have to figure out the right sales funnel and strategy to generate leads and convert them into paying customers.

Sales and marketing are critical to building a successful business. Check out some of these free customer relationship management tools that help you stay organized as you grow your contact list.

Step 10: Expand Your Business

You must have a growth plan if you want to earn and scale your business. Luckily, there are about a million ways to grow your company.

I’d highly recommend utilizing the power of social media through organic, influencer, and paid campaigns. Email marketing works equally well to create and nurture a dedicated customer base.

One of the key aspects of long-term growth is to have a dedicated customer base and reduce customer churn. All the efforts you put into nurturing your existing customers can be useful in the long run when they act as your repeat customers, ensuring revenue in the long run.

Conclusion

We’ve covered everything you need to know to start a business. Now you can prepare for the exciting adventure in front of you.

Taking the first step can feel a bit scary, but don’t fear. Take the plunge and launch your business–it’s a lot of fun! 

Of course, you’ll find challenges and roadblocks along the way, but as long as you remain dedicated and driven, you can learn from your mistakes and climb higher up the ladder.

Don’t wait any longer! 

How to Start an Online Store

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Online shopping is hotter than it has ever been, and I don’t think it’s going to slow down. If you’re planning to start an online store, your timing couldn’t be better.

Yes, a lot of people are trying to get into ecommerce right now, but that shouldn’t stop you. Many of the most successful online stores were only founded a few years ago.

The sooner you take the initial step, the faster you can build your brand and grow your business.

In this post, I’ll give you a step-by-step guide that shows you how to start an online store. You can go from zero to your first sale with as few mistakes as possible.

Your 2-Minute Cheat Sheet

Want to skip the details and get a quick cheat sheet? Here you go.

You have to decide what you want to sell and how you’re going to get the products. And while you’re at it, you must also consider the product’s prices, your target audience, and whether or not there is an audience for your product.

After all, why would you want to sell a product nobody wants to buy?

You can choose a product that metaphorically “scratches your own itch.” Or you can also consider buying a product that already exists, improving it, and then doing a better job of marketing it. This is sometimes known as dropshipping.

I would personally recommend the second option for first-time entrepreneurs as it considerably lowers the risk out of selling.

If you agree, head over to Alibaba.com to find suppliers for your chosen product. While Alibaba is one of the more popular marketplaces, it doesn’t mean that there aren’t frauds on the platform.

To make sure you deal with genuine suppliers only, look for the Gold Supplier icon. This indicates that a particular supplier has signed up for a paid membership. Therefore, it’s less likely for any fraud to have the Gold Supplier icon on their profile.

If you decide to go forward with the supplier, make sure you order sample products to determine the quality you should expect. Don’t forget to discuss payment terms and other details so that you and the supplier are on the same page.

With the products in place, you’ll have to figure out a good name for your brand and check whether a domain name is available.

Buying a domain name is easy. Getting the domain name of your dreams can take more time.

Consider your domain name as a long-term investment, and try to come up with the best you can. Here are some strategies to use if the domain name you want is unavailable.

Next up, you have to set up your online store platform. Consider selling your products on either Shopify or Amazon—both are equally good.

Finally, work on optimizing your site by including targeted keywords in your product descriptions. This is an excellent way to drive more organic traffic to your website rather than partaking in more cumbersome marketing strategies.

If I’m honest, though, you’ll still need to look for other ways to promote your shop, such as on social media platforms like Facebook and Twitter.

Okay, let’s run through each step in more detail. Feel free to skip ahead if you’ve completed the early steps:

  1. Figure Out Your Niche
  2. Source Products From Alibaba
  3. Pick a Name for Your Brand and Get a Domain
  4. Set up Your Online Store Platform
  5. Optimize Your Site

Step 1: Figure Out Your Niche

Since you’re going to set up an online store, you’ll need a product. The very first thing you should do is decide what you’re going to sell and who you’re selling it to. 

Many first-time entrepreneurs make the mistake of not putting enough thought into deciding their niche, which includes the product’s price, the audience to whom the product is aimed, and the market opportunity.

Don’t make this mistake. 

Always remember your product matters the most—both in terms of quality and relevance. You have two options here: you can either create something you need or source something from elsewhere, make it better, and then market it.

I’ll recommend choosing a niche that isn’t already dominated by a few brands. 

Let me explain this with the help of two scenarios.

  • Scenario 1: Your headphones stop working. You want to replace it, so what do you do?

You‘ll either place an order online from sites like Sony, Bose, or Beats. Or maybe visit the physical stores of these brands.

  • Scenario 2: You’ve moved into a new house when you realize that you want decorative lights for your bedroom.

You’ll likely Google “decorative lights for bedrooms“ or “buy decorative lights with free shipping.” 

Do you see the difference in your behavior?

Niches dominated by a few brands aren’t really profitable for first-timers. Trust me, customers don’t even think about alternatives as their brand loyalty kicks in almost immediately. 

Instead, it’s much better to stick with niches and products that don’t have a couple of specific brand names associated with them.

You can also use Amazon to check out the competitors in your niche. Try to identify common features that could help you improve your product.

For instance, you can have thick paper notebooks or reinforced steel for bottles. Basically, stuff that will help improve the quality of effectiveness of your products.

Next, you’ll need to work on sourcing the products.

Step 2: Source Products From Alibaba 

Alibaba.com is one of the most popular marketplaces when it comes to sourcing products. Many people in the ecommerce industry already use this site, so it makes perfect sense for you to source your products on this platform, too.

But how do you go about this? Let’s assume you want to sell steel bottles.

Search for “steel bottles.” You’ll now see a list of suppliers selling all kinds of steel bottles at different prices.

Next, you’ll have to contact a few of them to see whether they would be a good match for you. You first need to figure out your requirements before you get in touch with them. Otherwise, you’ll be wasting everyone’s time.

The way to distinguish genuine sellers from frauds is to look for the Gold Supplier mark. Gold Supplier is a paid membership for suppliers on Alibaba.com, which indicates that the business is serious about trading with other international companies. 

Take a look at this screenshot:

It shows that this particular supplier has been a Gold Supplier for three years. Since they have to pay for this recognition, you can be sure that they will be serious when negotiating with you.

You must discuss payment terms and minimums and other things so that every detail is explicitly clear to avoid misunderstandings in the future. I’d also recommend ordering sample products before you place a big order to get a better idea of what you’re going to get and the shipping times.

Step 3: Pick a Name for Your Brand and Get a Domain 

Now comes the exciting—and at times frustrating—part of starting an online store: Choosing an appropriate name.

Once you start looking for options, you’ll realize how the best names have already been trademarked and website domains already registered. 

It’s like hitting one dead end after another!

But don’t give in just yet, as finding a good name is an effort well worth the pain (and tears).

Here’s a quick checklist you should follow:

  • It should be easy to spell and concise – three words or shorter.
  • It should have a .com domain
  • It must reflect your chosen niche
  • It cannot be already trademarked by other people—the legal hassle is costly and very troubling.

Take my domain as an example. NeilPatel.com is short, concise, and reflects my brand. You do not have to use your name. That was just a choice that was right for me.

The good news is there’s an option for you to get a domain without having to pay the registration fee. Most web hosting services offer users a free domain—provided you choose a company that provides this feature like Bluehost or Wix.

I highly recommend this method, as you get free .com domains with full ownership that’ll make you look more professional and credible to your visitors. Plus, if you’re already going to purchase a web hosting plan, why not select an option that offers you a free domain?

Purchasing a web hosting plan, typically as a one, two, or three-year contract, is necessary. Think of the free domain as a bonus to your investment.

The next crucial step is setting up your ecommerce store on a platform that’s easy to use and offers good customer support. 

Step 4: Set up Your Online Store Platform

Shopify and Amazon are two of the most popular and user-friendly e-commerce sites.

You can also use WordPress + WooCommerce if you want. But that’s best for times when you already have a blog with a large audience. This way, you won’t have to put in an extra effort to drive traffic to your ecommerce store. 

Option #1 Setting Up Your Shopify Account

Shopify has over 218 million buyers from 175 countries. So you can imagine the number of people who trust this ecommerce site.

You can start the 14-day free trial to get a feel of Shopify’s features. If you decide to move forward with it, you’ll upgrade to the paid plan.

The first step is to enter a store name, which will also become the default URL to start your trial. For example, if you want your Shopify’s store name to be JoshBeans, your URL will be joshbeans.myshopify.com.

If you buy a custom domain (joshbeans.com), you’ll be able to get rid of the ‘myshopify’ part.

Complete further instructions as asked. Then you have your own Shopify account.

To customize your store further, visit the Shopify themes page and select an option that’s on-brand with what you sell.

What’s more, you can talk to a Shopify Expert if you need help with the technical aspects of setting up your store or find yourself stuck at a specific place.

Option #2 Setting Up an Amazon Account

 You also have the option to display your products on Amazon. 

Go to Amazon and scroll down to the bottom of the homepage. Select Sell on Amazon.

Sign up to become an Amazon seller. You can sign up as an individual seller or a professional seller. In my opinion, it would be better to become a professional seller if you’re in for the long haul.

After setting up and verifying your identity, you can start with listing your products. Before this, make sure you go through the details of the selling process on Amazon.

Then click on Inventory followed by Add a Product. This will open up Amazon‘s catalog, where you’ll have to search for the product you want to sell. 

You can also create a new product listing if you can’t find a suitable option. 

And that’s it! You can now start selling your product on Amazon.

Before you can start listing your products, make sure you have high-quality photos of them, preferably on a white background. Similar to this:

Step 5: Optimize Your Site

If you think customers will come to you just after you launch the website, we have news for you: Not going to happen.

Instead, you need to optimize your website to attract traffic through search engines by targeting SEO keywords in your product descriptions.

Write good copy for every listed product, taking care to mention their USPs and describing them explicitly. 

This will involve you focusing on two primary areas:

  • You have to target your product pages to specific terms that are typically searching for within the platform
  • Work on getting as many five-star reviews you can on your products as possible

The above two tips are instrumental in improving your search terms and reviews, enabling more people to see your products on the platform. This will translate into more sales and revenue for you, which is exactly what we want.

Conclusion

Congratulations! You now have your online store up and running. 

From figuring out what you want to sell and sourcing it to choosing a reliable ecommerce site to display your products, you are now an expert when it comes to launching an online store.

But don’t celebrate too hard—you have to next work on spreading the word about your store to get customers to purchase your product or service. When the money starts rolling in, I’ll be expecting a party.

Here’s wishing you all the luck!