What Do I Need to Start a New Business?

A networking buddy once emailed me: “I am seriously contemplating the plunge… hanging out my own shingle. If you were me, what is the first thing I should do? After emailing you.”

My first advice? Get a personal email account to do his planning, and stop using his current employer’s email account. After that, here was my list of considerations for someone in the conceptual stage:

Are you under any kind of non-compete, non-disclosure or non-solicitation agreement? If so, we need to make sure you’re released or non-violating.

Business Plan

Come up with a business plan that is as fleshed out as possible. Figure out your start-up costs and ongoing costs. Think about things like software you might need to buy, as well as more mundane things like business cards, website, email, etc. Good resources for this are EntreDot, the NC Small Business & Technology Development Centers

and the Service Corps of Retired Executives (“SCORE”)

Budget and Financing

Figure out a reasonable start-up budget, including where the capital is coming from. How long will it be before the venture is profitable and what will you live on in the meantime? Where will you get the money? Loans? Business partner?

Target Market

Part of the business plan is determining what differentiates you in the marketplace. Is it lower prices, higher quality, better customer service, a killer app? Who will buy your goods or services? How will you get in front of them? The answer to this question will be your target market. Figuring out who that is may be difficult.

Naming

Start brainstorming for names that both identify what you do, and stand out in the marketplace.

Potential names should be screened for availability at the Secretary of State level, and cleared from trademark infringement. I advise doing this early, so that you don’t get “married” to a name that turns out to be unavailable.

Entity

Talk to your business lawyer and CPA about taxing considerations on LLC and S-corp. From a legal perspective, they give the same protections (if properly formed, maintained and capitalized), but there may be significant tax savings in one entity over another. There are also difference in the amount of flexibility and formality required in running the business.