Starting your own business can feel overwhelming. But don’t worry! You don’t need to be a financial expert to get your business started. With a little planning and a step-by-step approach, you can set yourself up for success from the beginning.
Here are four simple steps to get you started:
1. Define your Service and Ideal Client
Before you launch a new business, you need to be clear on what you offer and who you want to work with. Having a defined service helps you market effectively and attract the right clients. Consider what makes your service unique and how you stand out from your competition.
Next, think about your ideal client. Who are they? What problems do they face that you can solve? Understanding your ideal client will help you with your messaging and marketing efforts. You want to speak to the right people.
Example: If you are starting a construction company, your ideal clients might be homeowners within a specific geographical area who are looking to remodel their kitchens. Your unique value might be that you work with the best-skilled subcontractors and vendors in the area.
2. Take Care of the Legal Stuff
Getting your business structure and finances in order early will save you headaches later.
Action Steps:
- Choose a business structure. Most service-based businesses start as a sole proprietorship or as an S-Corp.
- Register your business name with your state or county (if required)
- Get an Employer Identification Number (EIN) from the IRS
- Get any required business licenses or permits for your area
- If you are a contractor, make sure you have the right contractor’s license for the service you want to provide
Tip: Open separate business bank and credit card accounts right away to keep your personal and business finances separate. This makes tracking income and expenses at tax time much easier.
3. Setup Simple Bookkeeping and Tax Planning
Keeping track of your finances does not have to be complicated. If you start tracking at the start of your business, things will go much easier for you.
Many small businesses use cash basis accounting, at least initially. With cash basis accounting, you recognize income when it is received and expenses when they are paid.
Use accounting software to track your income and expenses. QuickBooks Online (QBO) and Xero are both great options to help you organize your finances. Both allow you to connect your bank accounts, categorize transactions, and generate reports.
Plan for taxes early. Set aside a portion of your income in a separate savings account to cover self-employment and other tax obligations. You could start with moving 15% of your gross income to your tax savings account. This habit from the beginning will help you be able to pay your taxes without stress.
4. Start Marketing and Getting Clients
Now that you are set up legally and financially, it is time to find your first clients and get things rolling!
Action Steps:
- Create an online presence with a simple website and social media accounts
- Network with friends, family, and others you know in the community. They may need your services, or know someone who does.
- Offer a special promotion to attract your first clients and build testimonials
Tip: Focus on building relationships. Word-of-mouth referrals are one of the best ways to grow a service business.
Starting a new business doesn’t have to be overwhelming. By breaking it down to these four steps: defining your service offering, handling legal matters, setting up your finances, and getting clients, you will soon be on your way to running a successful business.
Remember to focus on progress over perfection! Take one step at a time and don’t be afraid to ask for help when you need it.
Learn how our services can benefit you and your new business by reading another one of our blogs here.