If you could draw inspiration for a business idea from the recent pandemic or any of the chaotic events in the world right now, you are certainly not alone.
Surprisingly, one of the few positives from the COVID19 pandemic was the number of registered businesses in the United States reaching a record high, as analyzed by the Economic Innovative Group. EIG showed from the data of the U.S Census Bureau that by the third quarter of 2021, nearly 1.4 million new businesses applied for incorporation. This value is over 300 thousand more than the same time in the previous year, which was in its own right an unexpected record.
If you consider a business idea as the next big thing, the right thing to do is position the idea for success. Here are five simple steps for setting up a new company in 2022.
Register Your Business
Incorporating your business reserves your business identity protects you from liability risks and makes getting loans easier. Likewise, it allows you to carry out your business activities per state laws.
You may register a business in your state of residence or other states–Alaska, South Dakota, and Wyoming are popular targets because there are no state income taxes imposed. Registering in states other than your area of residence requires understanding the specific state law. For Further details on Alaska, South Dakota, and Wyoming, check the states’ official website.
Registered businesses receive identification numbers to be eligible to employ workers full-time and channel taxes from their earnings to the government. Registering a business may be done online or with the state bureau in person, and companies decide to get registered as a sole trader, corporation, limited liability company, or a partnership.
If your business will operate with a lot of funds, and the risk of liability is significant, with regards to state laws, insurance, or finance, an LLC or a corporation is often the go-to choice. The process to register a limited company requires more documents than sole-proprietorship or partnership, but it is not necessarily daunting. It is easy because it allows for a more hands-on approach to running a business.
To register a limited company or corporation, the business must present its board of directors, its bylaws of duties designation, documents for incorporation, and appropriate proof of payment for fees. A registered agent, 18 years old or above, has to follow the proceedings.
You may also check the U.S Government database for resources to assist small businesses in registering a business here.
Understand Your Unique Selling Proposition
It is an excellent start to have an idea, but refining it to provide unique solutions is the goal. Knowing what makes your business special is key to surviving, whether you’re in a new niche or a crowded one. Discuss with people you trust to gather constructive criticism. The result from these exercises helps you focus your marketing effort on what highlights your strengths. When your idea passes this stage, you can research your market and competitors.
Know Your Market
In an existing industry, learn how business works, from demand and sales process to customer satisfaction. Refining your business idea to the needs of your potential market is best done when you understand the exact want they hope to fulfill. Online surveys and meeting potential buyers in person can be crucial at this stage because it helps you know which directions to focus resources. Knowledge of your market reduces risk, helps during outreach, enhances product and services development, and prepares your business for the competition.
Make a Formal Business Plan
A business plan is crucial when you require sourcing funds, whether internally or externally. Having a well-written plan can help you relate your ideas to investors more efficiently, even if they are family. A business plan does even more than help to convince potential investors. It provides a roadmap to keep track of progress for achieving your goals.
Developing a business plan helps discover and assess issues that were previously not considered or taken seriously. A good business planning process can also help evaluate the revenue model, so you know what is feasible and not.
A common mistake for startups is underestimating the importance of insurance for their new business. In the United States, getting the right insurance is crucial, especially before launch, because of the protection it can offer. Startups that undermine the importance of insurance may find themselves in lawsuit situations. Examples include having no coverage for employees involved in incidents while on duty, an important machine that could stop production breaks down, or a customer deciding to make a case against the business.
The year 2022 is a great year to start a business in the United States, based on statistics. To set your business up for a good start, understand what gives your business the edge over competitors in your industry and what your customer base most desires. Aside from these, the most important thing when starting a business is ensuring the legal foundation is solid. The safest way to register your business is to get an experienced agent involved in the process, so you don’t fall short of state laws and fail in your obligations to the state.