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Starting a business is an exciting and ambitious endeavor, particularly for young entrepreneurs who are full of fresh ideas and eager to make their mark. However, the path to success is often filled with unique challenges, from limited financial resources to a lack of experience. This guide provides a comprehensive roadmap to help you navigate the startup journey. By understanding the essential steps and leveraging the right resources, you can build a thriving business that stands the test of time.
The first step in starting a business is identifying a viable business idea. This involves more than just a flash of inspiration; it requires a deep understanding of the market and the problems that need solving.
According to the Bureau of Labor Statistics, 20% of businesses close in their first year, and only 50% make it through year five. One of the keys to a successful business is making sure there is a place for you in the market before you go all-in on your investment and launch.
Begin by conducting thorough market research to identify gaps in the market. This could involve analyzing industry trends, studying competitors and understanding consumer behavior. Use tools like Google Trends; industry reports; and strengths, weaknesses, opportunities and threats (SWOT) analysis to gather the data you need.
Engaging with your target audience early on is critical. You can also conduct surveys and interviews with potential customers to validate your business idea. Ask them about their pain points, what solutions they currently use and what improvements they would like to see. This feedback is invaluable in refining your idea and ensuring that it resonates with your target market.
A business plan is more than just a document; it's a strategic blueprint that outlines your company’s path to success. Here are the inputs needed to write a comprehensive business plan:
To help you get started, there are business plan templates available through Small Business Administration (SBA) resources, including the Small Business Development Centers and SCORE. Small Business Development Centers, located nationwide, have individuals available to help you create your business plan.
Selecting a business structure can be one of the more complex decisions you will make when starting a new business. The structure not only determines your tax liability; it can also have an impact on your ability to raise capital.
Here’s a breakdown of the most common business structures:
Funding your business in the startup phase can be challenging. Thankfully, there are a lot of options to consider. To determine the right funding path, look at your estimated startup costs.
Answering these questions will help you decide which resources to tap into for funding. Not sure what funding options are available? We’ve compiled a list of funding resources available to young entrepreneurs.
Many entrepreneurs start by investing their own money into the business. While this option doesn’t involve debt, it also means you’re risking your personal savings.
Borrowing money from family and friends can be a quick way to get funding, but it’s important to formalize the agreement with clear terms to avoid potential conflicts. As you prepare for these conversations, think about how much money you want to ask for. It’s not a bad idea to start small. Instead of asking for the whole amount you need, maybe ask for enough funding to get you through the first three or four months of business. If you are planning to pay back the financial support you receive, it’s important to explain the potential risk involved and agree on a payment plan.
Traditional bank loans are a common way to finance a business, but they can be difficult to obtain for young entrepreneurs with limited credit history. At Northwest Bank, we offer loan options for startups, including SBA loans, which are backed by the government and designed to help new businesses get off the ground.
Small business grants are issued by government and nonprofit organizations and do not require repayment. Eligibility requirements are strict and the applicant pool is competitive for small business grants. That said, if you are well qualified for a grant and are selected, it can be a dream come true for your business.
There are many grants available for different types of business and groups of people. Examples include businesses that are:
There are government small business grants available through the Small Business Administration. Another way to find potential grant opportunities is the search tool on Grants.gov.
Venture capitalists and angel investors can provide significant funding in exchange for equity in your business. This option is ideal for startups with high growth potential, but it often involves giving up some control over the business.
Platforms like Kickstarter and Indiegogo allow you to raise small amounts of money from a large number of people. Crowdfunding is a great way to test the market and build a community around your product before launching.
The right banking services are an essential part of running a successful business. As a startup, you’ll need to establish a solid financial foundation to manage your business’s cash flow and ensure long-term success. There are many bank services available to small business owners; here are some to consider:
Opening a separate business bank account is crucial for keeping your personal and business finances separate. This not only simplifies bookkeeping but also provides a clear financial picture of your business. Look for business checking and savings accounts with features tailored to startups, including low fees, easy online access and integration with accounting software.
In order to accept credit card payments, you’ll need merchant services. These services enable you to process payments securely and efficiently, both in-person and online. They can also help streamline your payment processing, improve cash flow and enhance the customer experience.
A business credit card can be a valuable tool for managing day-to-day expenses and building your business credit score. In fact, credit cards currently rank as a top source of equity for small business owners. Look for cards that offer rewards, low-interest rates and expense tracking features. Using a business credit card responsibly will help you build credit and access better financing options in the future.
Managing your business finances on the go is essential in today’s fast-paced world. Work with a bank that offers online and mobile banking tools that give you real-time access to your accounts, allowing you to monitor transactions, transfer funds and pay bills from anywhere. These tools should also integrate with your accounting software, making it easier to track your business’s financial health.
Navigating the complexities of starting and growing a business can be challenging, especially for first-time entrepreneurs. Building a network of trusted advisors is essential for making informed decisions and avoiding costly mistakes. Here are the people you want to include in your inner circle.
Starting a business is a rewarding journey that requires careful planning, dedication and the right support. By following the steps outlined in this guide, asking the right questions and leveraging the expertise of Northwest Bank, you can confidently launch your business and set it on the path to success.
We invite you to connect with one of our commercial bankers to learn more about how we can support your entrepreneurial journey.
