From Plan to Profit: How to Start a Small Business

From Plan to Profit: How to Start a Small Business

Small business is booming in the United States — welcome news for local economies, as new startups hold the promise of job creation, as well as wage and productivity growth. According to the U.S. Census Bureau, Americans are starting, on average, 4.7 million businesses annually, with numbers continuing to trend upward. In 2023 alone, nearly 5.5 million businesses were launched, a record high that outpaced 2021, when startups fell just shy of the 5.4 million mark.

Surprising to many economists, the startup boom began with a surge in small business applications in 2020, the year the COVID-19 pandemic plunged the country into economic uncertainty. Leave it to high-spirited, go-getting entrepreneurs to upend conventional wisdom! These visionaries viewed the chaotic effects of the pandemic as an opportunity to enter a dynamic marketplace and perhaps bring their own dreams of building successful businesses to fruition.

And so, today, as small business momentum continues, more and more aspiring entrepreneurs are looking to make their mark. If you are among those considering taking the leap, the following steps can help you prepare to launch your business.

Conduct market research

Market research is integral to starting a business off on the right foot. Gather as much information as you can about your chosen market to learn about potential customers, competitors and economic trends that are influencing the space. Your analysis of current trends, whether supported by utilizing informal measures or bringing in experts to conduct focus groups, surveys and such, will help enable you to refine your product or service ideas, pinpoint your target audience and identify opportunities as well as challenges.

Create a comprehensive business plan

Next create a business plan. As the roadmap for your company’s present and future, your plan should outline not only your long-term vision for the business, but also its day-to-day operations. When the time comes to speak with potential partners, investors and your bank, your comprehensive, detailed business plan will convey your commitment to the endeavor and showcase the projected value of your business. This article explains how a solid business plan supports your entrepreneurial efforts and details what to include in your plan.

Decide how you will structure your business

This step requires some study, as well as consultation with your accountant. Your choice of structuring your business as a sole proprietorship; partnership; limited liability company (LLC); C corp or S corp; benefit, close or nonprofit corporation; or cooperative can affect your business registration requirements, your liability, the amount of taxes you pay and more.

Register your business and obtain licenses/permits

Register your business in compliance with the rules set forth for the type of structure you’ve chosen. As part of that, you will need to register your business with the IRS to obtain an employer identification number (EIN). An EIN is required to carry out many key business activities: paying taxes, hiring employees, applying for any necessary licenses/permits and, importantly, opening business-related banking accounts. Some states require you to register for a state tax ID as well.

Be sure to follow through in applying for any licenses or permits that may be required based on your industry, state, location or other factors.

Get your finances in order

Even if you will be the only employee at your business, it’s smart to open business checking and savings accounts. Keeping your company’s finances separate from your personal finances can help you keep your personal financial health in check — protecting your credit score, for example; enable you to establish business credit, which is critical when you want to apply for a business credit card or small business loan; boost your credibility with customers and suppliers; organize your payables, receivables and expenses; and minimize complications at tax time.

Dollar Bank offers a Free Business Checking account with no monthly fee or balance requirement, as well as Business Relationship Savings, which lets you earn interest on your balance while maintaining full access to your funds. Also, Business Online Banking and Online Bill Payment services provide you with the flexibility to manage your business finances from wherever you are, and a Business Preferred or Corporate credit card can help you buy what your business needs when you need it.

Set up a payments system

Depending on the type of business you establish, you may want to offer a variety of payment options to ensure you can accommodate your customers’ preferences when you make a sale. Merchant services solutions can help you maximize sales by giving you the capability to accept and process a variety of payment types, from credit, debit and gift cards to mobile payments.

Protect yourself with business insurance

Having the right insurance coverage is vital to protecting your company from customer and employee accidents, weather events, lawsuits and more. Talk with a licensed agent about the types of business insurance that are right for you in terms of not only coverage but also your budget.

Go build your business!

With these preliminary steps completed, you will have the foundation to manage the next steps in your business creation, whether that entails securing an office or retail space, branding your products or services, establishing your online store or hiring the employees you need to get started. Wherever you take your business next is up to you!

Starting a small business? Our experts can help. Find a business banker near you. 

This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. Any reliance on the information herein is solely and exclusively at your own risk and you are urged to do your own independent research. To the extent information herein references an outside resource or Internet site, Dollar Bank is not responsible for information, products or services obtained from outside sources and Dollar Bank will not be liable for any damages that may result from your access to outside resources. As always, please consult your own counsel, accountant, or other advisor regarding your specific situation.