5 Things You Must Do
Many people dream of quitting their day job and starting a business. After all, who doesn't want to be their own boss? As an interior designer myself, I can say that it's not as easy as one might think. There are many things you must do before even considering becoming an entrepreneur. Here are five simple tasks you should complete first: 1) Develop a business plan. 2) Decide on a Business Structure. 3) Register your business. 4) Open a Business Bank account 5) Get a DUNS Number. If you are a new business owner and want to go back to basics or are considering a grassroots effort to starting a business (interior design or otherwise), this blog is for you! This is not going to be your typical "start a website and have a product" advice blog. Instead, I'm going to share with you the 5 things you must do before starting your business the right way.
1 | WRITE A BUSINESS PLAN
A business plan is a document that helps you to create a roadmap for your company that outlines the goals, strategies and financial information for the business. It also includes an analysis of the industry, competition and target market. A well-written business plan can help you evaluate your potential to succeed in both short term and long term goals. There are many sections and parts of a business plan, but the most important ones are an executive summary, marketing strategies, financials and projections, operations overview, and the management team profile. The last section is typically reserved for references from people knowledgeable about your industry or from customers who have used your product/service.
A great way to get started is by beginning with the Executive Summary. This section should be no more than three paragraphs long and it should clearly describe what your company does and why you're qualified to do it better than anyone else, and what product and services you'll be offering. You'll be writing out all of your ideas and thoughts about your future business. You can also include other notes that might seem important at the time such as any competitors that exist or government regulations that may impact your product/service offering.
The next step in your business plan is the Market Analysis. This section will help you define who your potential customers are, where they can be found, and what their needs are so that you can tailor your services accordingly. It's also a great idea to include an overview of any competitors or other companies in the industry with whom yours would share customer base or similar offerings.
Then write a Financials and Projections summary. This section will discuss money matters for your business. Consider all the estimated costs of software, supplies, and any other tools you need to start your business. Also the other important financials such as startup costs for registering your business, leasing an office and insurance. Include your revenue streams and how your business will generate income. This will outline how much money your business needs to raise in order to launch and how much money you think it could make in one year.
Next is to develop your Operations Overview. There are three main components to reviewing your operational plans: Your written operations manual, your operations team members' skill set, and your existing equipment list. The first step is to develop a written operations manual which includes details on how employees should execute tasks or projects based on customer needs, company values/culture, and any other factors that may affect performance (i.e., finances). Then you list your team members' skill set. In a nutshell, this would be their job titles, roles, and skills needed to complete those tasks. And end it with your existing equipment list of items you already own that will get your business going from day one.
"You are the backbone of your company. You are the glue that holds everything together. You are the foundation on which all else is built." - Seth Godin
Lastly, make sure to include information about yourself as well as all members involved with running the day to day operations of your business in the Management Team Profile. Your management team is arguably one of the most important aspects to consider when starting a business. Not only do they help establish organizational culture, but also have an integral role in hiring new employees, implementing company policies and procedures, and setting up systems for day-to-day operations. The management team can be made up of anywhere from two people to 20 people depending on the type of business you're running. Starting with the CEO (typically yourself), describe the role you'll play in your business and the tasks you'll carry out, special skills you have and how it helps the company. Do the same for other managing members (if you have partners) as well as those in leadership roles in your firm.
I've created a blueprint for a business plan and have it easily available to use in a downloadable Word document and it's available in my To-The-Trade online store.
2 | DECIDE ON A BUSINESS STRUCTURE
Deciding on a business structure is one of the first things you need to do when starting your own company. A lot of self-employed entrepreneurs are unsure about what type of business entity they should form. There are many different options for how you can organize your company, but some structures might be better suited for certain types of businesses than others. This is an important question to answer because it could mean the difference between paying taxes on your profits or not. There are three basic types of businesses: sole proprietorship, partnership and corporation.
Sole proprietorship can be beneficial because it is very easy to start and maintain, but the downside is that you are personally liable for any debts or damages. An LLC protects you from these liabilities by shielding your personal assets, also requiring less paperwork than a corporation. In general, LLCs offer more flexibility for those who are self-employed or starting out in their careers - they allow entrepreneurs to write off company expenses against personal income taxes and enjoy limited liability protection so long as they abide by certain regulations. Corporations have stricter requirements and less flexibility than LLCs but typically offer more stability for established companies looking for longevity in their brand.
If you want complete control over all aspects of the company, then a sole proprietorship is for you. If there are partners involved in the decision making process but no board of directors or stockholders, then a partnership is for you. If there are shareholders who share ownership with other people and create buy/sell agreements that govern how shares can be transferred if one shareholder dies or leaves the business before they retire, then a corporation may be best for you. The right choice for your needs will depend on your specific situation so consult with an attorney before making a decision.
3 | REGISTER YOUR BUSINESS
If you're self-employed and haven't registered your company yet, then it's time to do so because: 1) You're not paying taxes on profits 2) Your personal assets are at risk 3) There may be legal consequences if someone gets injured or dies on the job site 4) You could lose clients And 5) if you don't register it might be difficult for customers to find you online. If you are registered as a sole proprietorship, this will make it easier for any customers to claim their warranties under the law. In addition, if someone files a lawsuit against your company, they may need to know how many employees you have in order to determine who is liable under the law. Not to mention, if you are earning profits in your business, you should be paying taxes on those profits to avoid legal consequences.
Registering your company will also allow you to deduct more of your expenses from taxes since some expenses incurred by sole-proprietorships cannot be deducted on tax returns, but can be deductible when filing form 5500 with the IRS. Consult with your lawyer or CPA on the types of taxes and forms you should file for these and other tax advantages based on your business structure. Registration doesn't take very long and can be done online, with your lawyer or your CPA. If you have employees (plan to in the very near future) or are setting up as a corporation, it may be best to have your attorney or CPA help you get your business registered. They are also very helpful with LLCs and ways to prepare yourself as a sole proprietor. If you are easily able to follow online prompts, then registering your business online with a company like LegalZoom.com could be a cost effective option for you. Don't wait until something goes wrong before it becomes a problem for both yourself and others in our industry!
4 | OPEN A BUSINESS BANK ACCOUNT
Why should I open a business bank account? There are many reasons, but my favorite is that it will help you save money. When you have your own business bank account, you can set up automatic transfers from your personal checking account into your savings and investment accounts. This means more of what you make goes towards building wealth instead of paying off debt or doing things like buying coffee! It's also important to know how much cash flow is coming in and out of your business so that there can be a plan for saving and spending money. Those business expenses will come whether you want to or not, therefore having a bank account separate from personal expenses for your business is vital. The last thing about opening a business bank account is taxes- if done properly, they won't eat away at profits as much.
The one thing you don't want to worry about when starting your own business is figuring out how to manage the finances. Opening up an account for your company with a bank or credit union can be just what you need to get started, and it's easier than ever these days with online banking.
Accounts are inexpensive and easy to set up, so there's never been a better time than now! Many people think they can't afford to open an account for their business, but this is entirely false. There are many banks that offer business accounts with no minimum balance and low fees. Some even have incentives like free checks or discounted policies through Visa Signature Card.
By opening a new account you will be able to save money on your banking needs by lowering your monthly expenses and taking advantage of special offers. Opening a business bank account can help your small business grow and prosper. These are just a few examples but there are plenty more ways that opening a new bank account could benefit you and your company. Have a chat with your personal banker and don't wait another day before setting up yours today!
5 | GET A DUNS NUMBER
If you are self-employed or an interior designer running your own business, then it's likely that this article will answer any questions you have about what the DUNS number is and why it's important to your business. First off, what does "DUNS" stand for? Dun & Bradstreet (or just "D&B") stands for Data Universal Numbering System. It's essentially a credit reporting agency that provides businesses with the tools to track financial performance of potential customers. A DUNS number is the official identification for any company that wants to do business with the federal government or receive federal funding. It's what banks and other outside entities use to verify your company as legitimate before they'll provide any services.
Looking to get a business credit card or open vendor accounts? It's possible, but can be more difficult to obtain these things without building business credit. A DUNS number jump starts this and it's free for small businesses to obtain one. There are multiple reasons why you might need a DUNS number: - Businesses with employees need a DUNS number in order to receive tax credits through the Work Opportunity Tax Credit Program. - If your business deals with federal contracts or subcontracts, you'll also want one of these numbers because they're required by the U.S. Small Business Administration (and if you don't have one, it could hurt your chances at winning future bids).
Like with any credit report, you can see which companies are pulling your credit file and you receive a creditworthiness rating. Trade accounts who report to DUNS can also help make it easier for you to qualify for Net 30/60 terms with other trades, which could benefit your buying power as a business as well. These trade references can be the deciding factor on if you can open a trade account at some of your favorite showrooms. If you are looking to truly expand your business in the future, having a DUNS number at the start of your business helps build that solid foundation over the years. A DUNS number can be obtained by completing an online form on their website at https://www.dnb.com/. The process typically takes less than 10 minutes and should take up to 24 hours for approval.
You’ve created a business plan, decided on the best way to structure your company and registered it with the State. Now what? Your next step is to find an accountant who can help you open up a business bank account and get you set up for payroll taxes. Once that has been taken care of, all that remains is getting yourself a DUNS number from Duns & Bradstreet so suppliers know how to send invoices or requests for payment directly into your new company account. Congratulations on starting your own business! It’s a big step, but you are well equipped to take it. You have the information and tools necessary to start out strong with this new venture. Take advantage of our mentorship sessions if you need help getting started or staying motivated along the way. We can offer insight into what has worked for us and others in similar businesses as well as how to avoid common pitfalls that may derail your success before it begins. So don't hesitate- reach out today so we can help get you off on the right foot!
Disclaimer: The DVS editorial team may highlight a curated selection of product recommendations for your consideration; clicking a link to the retailer that sells the product may earn us a small commission.