More people than any generation before are ditching their 9 to 5 jobs and going it alone in the world of business. While some people are born with that entrepreneurial flair, others simply just have a business idea that they believe in. No matter what your motivations are, starting up a small business of your own is one of the most difficult but rewarding challenges your career will ever face. Therefore, going it alone isn’t a decision you should rush into. Instead, there are many different factors and aspects you should consider before going ahead and starting up your own business.
Therefore, we have put together this complete guide to starting up a small business that will cover everything that you will need to know. From marketing ideas to a definition of what exactly a small business is, all the information you need is here!
What is a Small Business?
A small business is defined in the UK by EU law and refers to a business that has less than 50 members of staff and a turnover that is less than £10 million. While this may sound like a lot if you are just starting out, you will be surprised at how quickly successful businesses grow and how a good business idea can soon lead to an increase in demand. Small businesses are often referred to as SMEs, which stands for Small and Medium-sized Enterprises, and out of the current 5.7 billion businesses that were in the UK in 2018, 99 percent of them are SMEs. SMEs usually have less than 250 employees, but they still make up a considerable portion of the UK economy.
It is likely that if you are considering starting up a small business of your own, then it will be classed as an SME. Nearly all businesses start small and get bigger in time, so don’t expect to have 30 employees and a £6 million yearly turnover overnight. Businesses take time and even the most successful companies had to start somewhere.
In the U.S., the definition of a small business varies slightly yet still remains the same in terms of size and number of employees. Within the U.S., a small business is defined by the SBA (Small Business Administration), who set a certain criterion that must be met for them to make small business determinations. A whopping 99.7% of U.S. businesses are classed as small businesses according to the SBA.
These criteria include annual receipts as well as the number included in the workforce. For those in manufacturing, a small business may range from 500 – 1500 employees, wholesaling is generally 100 – 500 employees, retailing cannot exceed $5 – $21 million to be classed as a small business, and those in agriculture must have an annual receipt that does not exceed $9 million. When you think of your own small business, you may be shocked to discover what the SBA still classes as a small business when making an exceptional amount of money.
Small businesses are classed this way even when they have a large number of employees or a large income, due to the fact the government and banks have special measures in place which assist small businesses competing with the larger corporations. This gives many small businesses the chance to grow and for innovation to occur. Almost 75% of all small businesses in the U.S. are sole proprietors, with 52% of small businesses being solely home based.
Understanding U.S. Law
One of the most important things to consider before starting a small business is U.S. law. Failure to understand and comply with any laws means that your business will fall at the first hurdle and this is something many new business owners struggle with. Firstly, you need to check both state and federal laws, as depending on the state you live in, you may have to follow a different process. When you first begin your journey as a small business, you will need to register your business name to ensure that it is not already taken.
Your small business name needs to be registered under a DBA (Doing Business As). You do not need to register this if you choose to open your business alone and want your small business to run under your own name. If you plan in the future to reach out to other states or perhaps go international in your business, trademarking your small business will provide you with better protection of your brand.
For tax reasons and in order to open a bank account with your business, you will need to apply for an EIN (Employer Identification Number), and this is done via the IRS online. Make sure you also brush up on state and local taxes. If you need help with this, it may be worth hiring an accountant to ensure all of your taxes remain in order for the year. Many small businesses also need to apply for certain licenses and permits, and this also varies depending on the state you live. For more information on small business regulations and laws, check out the SBA’s website.
Choose an Idea
The most important thing about your business is the idea behind it. Whether you plan to sell products or services isn’t important. Instead, what is important is that you have a good business idea that will be in demand. Therefore, you should spend some time seriously considering your business idea and spend time adapting it. Very few people go ahead and make a business with the first idea that comes to mind, so allow yourself a period of time to perfect your business idea and ensure that you are fully confident in it before you go ahead with setting up a small business.
Think about Marketing
Without an effective marketing strategy, your small business might never get up and running properly. As you are a new company in the industry, it is essential that you make yourself known and get your business idea out there. How will your potential customers know that they need what you have to offer if they don’t know that you exist?
Here are three of the best marketing strategies that are successful for small businesses.
Firstly, you should ensure that you set up your own company website and fill it with content. Most people nowadays will search for you online before they buy from you, so make sure that any information about what you have to offer is readily available. It is also important that your website is linked to your social media account. Social media is essential in marketing in the business industry so make sure that your small business embraces everything that social media has to offer.
Another essential marketing strategy for a small business is by utilizing email marketing. If you are a small business, then you are unlikely to have a lot of spare money to put into a marketing budget, therefore, you should plan to do a lot of the marketing yourself. Email marketing is often referred to as the cornerstone of digital marketing and is a great way to stay connected to potential customers.
Content marketing is also a very popular technique for small businesses as it is low cost but very effective. By adding content to your business’s website that is both useful and helpful to potential customers, you are driving more traffic to your site and increasing your chance of additional revenue. Content marketing is a crucial part of SEO marketing, which is a great way to market your small business. If you want to use SEO techniques, then you should consider hiring a company to help you with this. You can get SEO techniques that focus on local areas, such as SEO Belfast, for example, which is beneficial to small businesses who want to attract more customers in their local area.
Once you have refined your business idea and considered how you will make your amazing idea known to potential customers, you need to compile all of this into a detailed business plan. While sometimes business plans are disregarded as unnecessary, they are a great way to get all aspects of your business down on paper. They also are an essential part of a business loan application if you are thinking of borrowing some money to help you pay for the start-up costs associated with starting up a small business by yourself.
Think About Finances
While you will have to consider how you are going to be able to afford the costs of setting up a small business, you will also have to learn about the financial aspect of running your own business. You will be classed as self-employed, which means you will be responsible for your own tax returns and failure to do this correctly can land you with a hefty bill; you may even find yourself in trouble.
There is a lot to think about when it comes to starting up a small business, but if you do your research and ensure that you are fully prepared then the getting started process should be smooth and successful.