September 28, 2022

Unitranche

Supportive Business Potential

The basics of starting a business

Making the decision to start a business is often the hardest part about starting one. After you make the decision to go for it, don’t wait to get started. Many businesses often fail if they don’t gain enough early momentum to go from concept to profitable enterprise. 

Throughout school I’ve always had an eye for business ideas. Some of my earliest experience came from running lemonade stands. Since then I have tried my hand at turning hobbies and side projects into businesses. For anyone interested in doing the same or going one step further this is a short article that may help you get started. 

Starting a business is no small feat, but the process is simpler than you may think.

The first step in any business is by starting with an idea, whether you want to create something new or build off an existing skill or hobby.

The most important part about a business is that you need to start with a strong idea. A strong business idea is often subjective, but start by asking friends, family, and other professional connections to share their initial thoughts. Once you are confident that your idea is strong enough to move forward the rest is a matter of time, energy, and paperwork. 

The next step is turning your idea into a concrete business plan, something tangible and written down so that you can track your progress and guide future decisions. There are tons of resources to help you write one, like this resource, or this one, or this one. However you decide to write a business plan, the more time you spend on planning the less time you will need to spend later down the line.

I have tried my hand at writing two business plans and have reviewed many others; the most important thing is to create a business plan that makes sense to you. If you find one that is confusing or a resource that complicates things, find another one or keep looking for an example business plan until you discover one that you like. Keep in mind the purpose of a business plan is to explain and defend the future viability of a business. While it’s near impossible to determine whether a business plan is viable, start by asking yourself if you would invest in a person that presented you with the same plan.

After you have a business plan in place, the next step is to form a legal business entity. Take a look at this guide to help you identify which business structure may be best for you. Forming a business is easier than ever, you can work with a local attorney or use online software like LegalZoom right from your laptop. 

Once you have a plan in place and a company legally formed, it’s time to get the official stuff in order; this means applying for federal and state tax ID numbers and opening a business bank account. By this point you’re more than halfway to starting a business.

While these steps are in no way an all exclusive guide to everything you need to do, they are generally the basics of what it takes to get going. The other side of this is that for some people many of these steps may not apply if they plan to keep their business especially small and report income as an individual rather than for the business. 

Depending on the size of your business, you may need financing or funding to support your venture. Whether you plan to use your money, your friends’ money, or a bank’s money, a business needs capital to start. You could also find funding from the Small Business Administration or from grants. No matter how you decide to raise money, don’t take on more than you need and don’t settle for less than is necessary; finding the right amount is tricky, but a solid business plan should have specific startup costs to guide you. 

At this point your business is nearly ready to get started, but before that happens you need to make sure that your personal finances are kept separate from business finances. This means no using the business account to buy personal things and no using your credit card to buy business supplies. The business should only use a business credit card and business bank account to pay for things and receive money. This separation from the beginning makes taxes and accounting easier in the long run. 

The last step is to start recording expenses and revenue. The importance of keeping all receipts and up to date books is imperative. While Quickbooks is the norm for record keeping, Wave is a top rated free option as well. 

Starting a business is hard, but it’s also rewarding, and there are dozens of organizations and resources dedicated to helping people get started. Start by reaching out to a local chamber of commerce or the Small Business Administration for advice and guidance. 

Whether you want to start a business, are currently in the process, or have already built several don’t forget to enjoy the journey and reflect on lessons learned. 

Max Provencher is a senior at Searsport District High School. He currently serves as the Chapter President and founding member of the Searsport Future Business Leaders of America, Vice President of Maine FBLA, and serves as the FBLA National Treasurer. He helps to promote business education and financial literacy to over 200,000 members across the globe. Max is an avid investor in stocks and bonds, and works hard to promote financial literacy in schools as a member of the Maine DOE Student Cabinet. In his spare time he enjoys playing golf and running with his Airedale terrier, Ginger.