Here in Australia, even though we are so commodity driven, small businesses can be a lifeline for service diversification and some of our Entrepreneurs are doing a pretty good job at it: Just look at Envato who became a global marketplace for digital services, graphic elements and just about every other downloadable type of content. Across the pond in America, it is even more true that small and medium-sized enterprises (SMEs) are the lifeline of the US economy – in 2020 the total number of applications for new business formation was at the highest ever since the data has been available.
There is a catch though, especially for startups that seek to have a global appeal. You need to name your business – and with so many millions of new business formations each year, names are scarce. This is a step that needs to be taken way ahead of any SEO and digital marketing activity.
It is vital that those looking to start a new business are aware of certain things before they begin on this journey. This article outlines the most important considerations prospective business owners should bear in mind before they start their company.
If you’re currently operating in one of the systems, like as a sole proprietorship, and wish to expand and protect your personal assets, it may be natural to explore the process of converting your sole proprietorship to an LLC for better risk management and business growth. In other words, the initial business operation that you choose can be changed depending on the success and growth of your company.
Choose Your Business Name
Often a very early step in the formation of a business, it is very important to choose an appropriate name and yet it is often incredibly challenging to decide on one. Entrepreneurs will want to choose a business name that is in line with their state’s naming regulations and is appropriate for their industry; even better if it can relate with their customers and brand.
Using AI-tools such as the TRUiC Business Name Generator, which takes two keywords associated with your business, its industry and location, hundreds of great results can be generated online for free. Alternative options include Shopify, Wix, Godaddy and Namelix.
More from Starting a Business
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- A Student’s Guide to Starting a Business in 2020
- Interview with Declan Spiro, Co-Founder of Fantasy5 and 20SHOTS
- A Guide to Marketing a New Business
- Interview with Dave Katz, Co-Founder of Intuizi
Choose Your Business Structure
In Australia we love using limited companies or PTY Ltd – see this government guide for more options. Yet many Australians will incorporate offshore for a multitude of reasons. Given our ever closer alliance with America – it is true that Aussies also love states like Wyoming and Delaware to host their businesses.
This brings us onto another important step in the process of starting a new business is deciding on the structure to choose. For the most part, limited liability companies (LLCs) will be ideal for most new startups due to the protection they provide their owners’ personal assets with, the additional credibility their business gains in their customers’ eyes and the tax choices that benefit their bottom line. Another way in which LLCs benefit from this is that this business structure entails very low set-up and maintenance costs.
That being said, other business structures will sometimes be better suited to specific scenarios, so it is useful to research which will work best for your business. Some of the main structures include: C corporations, S corporations, benefit corporations, LLCs, general partnerships, sole proprietorships and non-profits.
If you business is likely to operate out of a hybrid model, then it is certainly worth investigating whether a VPN will support your business. VPNs can help to protect against security leaks and keep confidential data private.
Choose Your State (Especially Where U.S. Incorporations Are Concerned)
For the majority of new business owners the advice will remain the same – form your business in the state in which you plan to live and operate your business in. This is because registering a business in a “foreign” state will mean that you will need to pay filing, registered agent, and maintenance fees in more than one state depending on your business structure.
Those businesses with a physical presence (e.g. shops, offices, other buildings etc.) that spans a number of states will also have to apply for a ‘foreign’ form of their business structure (i.e. a ‘foreign LLC’ if applicable).
Draft Your Business Plan
Planning is a necessary step in order to mitigate the risk of failure and to increase the chance of acquiring business loans. The key is to analyse your business idea so as to create a secure plan that enhances the company’s chances for success.
Analysis is commonly divided into four stages: points of leverage, marketing strategy, financial model and compatibility with personal goals. Carefully considering each of these facets allows for an effective and powerful business plan to be created by oneself. Alternatively, there are paid options available online to get started with business planning.
In conclusion, after you have decided your state of registration, chosen your business entity structure, drafted a business plan, and formed your company, you will need to make sure that you follow all of the steps necessary in order to operate as a legitimate business within your state.
This could relate to your city’s zoning requirements, your industry’s licensing permits, or to the type of business insurance that you will need.