So you have an amazing idea for a business, but you don’t know where to even begin in order to make it legitimate. Her Campus is familiar with creating a company completely from scratch, so we spoke with Julie Duriga, author of the upcoming book How Do I Pay Myself? and a specialist in advising small businesses, and together came up with a few simple steps for our ambitious and creative readers who want to become entrepreneurs!
Step One: Write a BUSINESS PLAN
When most people plan on starting a business, the reality check sets in when they realize things like how much money they need doesn’t match up with how much money they have. Writing a business plan helps put your abstract ideas in a visual and organized form on paper, and while college students will probably not be able to (or even need to) write a complete business plan, it is helpful to hit the key elements.
- Are you going to be selling your time and ideas or selling products and services?
- Who are your customers going to be and why do they want what you have to offer?
- What will your revenue model look like?
A business plan ensures that your idea is sustainable and will (eventually) be profitable. If you need some help getting your idea off the ground, look into entering business plan competitions—many colleges host ones specifically for undergrads, and you can also research online for business plan competitions in your local area. Most importantly, an effective business plan will help you find financial backers who will help you get started, and if you are like any of the college students I know, the more money the merrier!
Step Two: NAME Your Business
While this may seem obvious, you need to come up with the actual name of your business. If you are the sole member of the business, its legal name is automatically your personal full name. However, if you do not want to use your personal name, this means you need to file a “fictitious name,” which most people do. This is called your “Doing Business As” name, and you should check out the list of the requirements for filing your fictitious name in your state. While it may seem like a creative and unusual name would be the best way to go, you want to make it easy for your customers to understand what exactly it is that your business does. So don’t call your coffee mug decorating business something completely unrelated to coffee mugs, like “Katie’s Cute Company” (and also not something so idiotic). On Duriga’s small business advising blog, UniversityforBusiness, she explains a rather humorous story about a friend who chose a Latin name for her nursery business and ended up changing it to avoid confusion.
Step Three: Register the TYPE OF YOUR BUSINESS
Once you’ve chosen a name, you will need to register the type of your business and become governmentally recognized. Find your state-specific website; for example, in order to register a business in New Jersey, go to www.nj.gov/njbusiness/starting. Each state will have its own unique registering format, but most follow the same basic principles. You will need to decide what type of business it will be, which is usually based on the size of the company: either a sole proprietorship, a general partnership, or an LLC. An LLC stands for a Limited Liability Company, which essentially allows your personal assets to be separate from the company’s assets. Therefore if anything ever happens to your company, only your company’s assets will suffer and your personal money will be safe – sounds good to me! Duriga recommends filing as an LLC if your company has any of these three characteristics: if your company is larger than a few people, if you are likely to be sued, and / or if you have a high net worth. Check out New Jersey’s checklist to help decide the legal form of your business. Here is some exciting news: if you are a woman or a minority business owner (or better yet, both!) your company receives very helpful benefits and opportunities, like having priority in bidding competitions. Don’t worry; it is easy to meet the requirements for a WBE (Women Business Enterprise) or MBE (Minority Business Enterprise) certification.
Step Four: Create a BANK ACCOUNT
Without having a separate bank account for your company, you are not actually a legitimate business, and Duriga says that a bank account distinguishes your business from “a hobby” in the eyes of the IRS. This will separate your personal money from the business’s money, which, as seen in Step Three, is something very important. There are taxes and fees every step of the way when running a business (you even have to pay a small annual fee in order to keep the name of your company!) so keep meticulous notes on income and expenses, and if you can you should hire an accountant.
Step Five: GET THE WORD OUT
Whether it is distributing fliers in your dining hall, creating a Facebook Page, or having a company website, you need to be able to alert your potential consumers about your business. In this day and age, having a website is perhaps the single most effective way to have the curious customer informed and satisfied that your business is what he or she wants. Things like registering a domain name and choosing a web host are made surprisingly easy by resources on the Internet. (Check out domain availability for your idea right now! For example, I just discovered www.joanna.com is already a website – bummer.)
Step Six: SATISFY Your Customers
Once you have gotten your business rolling, continue to follow your initial (or improved!) business plan in order to ensure your company can always perform and that you are satisfying your customers. Duriga says, “It is important to make sure your customer has the same experience every single time, which is something a company like McDonald’s has mastered [and therefore makes it very successful].” If my favorite hair salon always offers me a cappuccino and a magazine while I am waiting, I am very disgruntled if someone forgets to ask me if I would like my tasty pick-me-up. The same is true for any business: the reason someone comes back is because he or she liked what the experience was the first time. It is far easier to get additional business from an existing customer than it is to find new customers.
Step Seven: SATISFY YOURSELF
Remember: it is important to start a business in something you are passionate about, not in something you think will make a lot of money or will look good on a resume. Not only is your happiness far more valuable then the amount of money you make, your passion for the business will keep you determined to succeed whenever you feel stressed or overwhelmed. Good luck future entrepreneurs!