Each week I will be answering the most frequently asked questions I receive. This week's questions pertain to the very beginning stages of starting your business.
Don't forget to send me your questions so I can answer them for you and the rest of the small business community.
1. Where should I incorporate?
Some states are notoriously recommended as the best places to incorporate (Ex. Delaware and Nevada), but these days states are working on making their state more desirable to incorporate and before you decide to incorporate in another state you need to weigh the pros and cons. If you incorporate in Delaware, for example, you are still required to file as a foreign entity in the state in which you reside and if your state has sales tax, you are still required to pay that sales tax by residing in that state. With just those two examples, you are already doing double the work and not necessarily saving any money if you still have to pay sales tax in your home state. Be sure to always do your due diligence when making this decision and seek advice from a qualified business consultant (hi!), lawyer or accountant.
2. Do I really need a business plan?
Of course! Even if you are not seeking capital, an angel investor or anything of that nature, it is important to get your thoughts, goals, dreams, and priorities written down in black and white. We have so much information, to-do lists, bookkeeping, sales, marketing....Okay, I'll stop there, following through our minds almost 24/7 and writing it down gives you a 42% better chance of reaching those goals. Don't worry if you don't know what to write, just start writing. No goal is too small or too large.
You can grab a free business plan template on our freebies page.
3. But, I don't have the money to start my business.
I have not put a lot of money into my business and did not start with any money. I know that not all businesses can realistically do this, but a good portion of us can. There are countless free resources, platforms, applications and so much more that you can start with. I started out using the free subscription with ClickUp for my project management, started with the free version of Wix for my website, I use Wave Apps for payment processing and account which is another free platform (minus payment processing fees) and I used the free version of Canva to create my first logo. And, have you heard of YouTube? Is there anything you can't learn on that platform? Doubtful.
Small steps are better than no steps. Start small, write your business plan, goals, desires and map out a plan. If you already know what you want your business name to be, start by becoming a sole-proprietor (the cheapest entity) with your state. 99% of the states, if not 100%, you can become a sole-prop for under $30. Small wins quickly add up to big wins. You just have to start somewhere!
If your business is something that does require funds to start, look into the Small Business Administration, angel investors, scholarships, women and minority resources and your local agencies. There are a lot more resources out there that you may not have realized.
4. Do I really need a contract if I am partnering with a friend, hiring a friend or will be working for a friend as a freelancer?
Yes, yes, yes and yes, and one more yes. I know you've known Carol since you both were 7 weeks old and trust her with your life, but at the end of the day, you need to protect yourself. Truly take a moment and think about what would happen to you if something did go wrong. Could you and your business survive default on invoices, could you survive if they cleaned out your business bank accounts and went MIA? Really take a few minutes and think of all the possibilities that could go wrong. When someone is desperate, you have no idea what they are capable of. And in my open, having a contract shows how much you respect and value that friendship.
You can grab a free customizable contract on our freebies page.