You Have A Business Idea, Now What?
The hardest part of becoming an entrepreneur is translating an idea into an actual business. Trying to tackle everything at once is cumbersome and entirely unrealistic, so you just need to take those first steps to start the process of turning your dream into reality. Here are some tips to help you do just that.
Write a Business Plan
The first thing an aspiring entrepreneur should do with their idea is to write it down. Your business plan serves as an internal guide for every step of the business development process so that you thoroughly think through how to turn your idea into a profitable enterprise. A business plan should be as detailed as possible so you chew through every angle and identify all the moving parts. By working through all aspects of your business idea in minute detail, you’ll have enough information to know that you can be successful and, by the time you launch, you’ll feel prepared.
Turn the Business Plan into a Pitch Deck
Once you’re happy with your business plan it’s time to think about financing your dream. Are you bankrolling the whole thing? Do you need a loan from the bank? From family? Will you pursue equity investors?
Most first time entrepreneurs will need to raise some money in return for partial ownership of the company. This means you’ll need to sell your idea to the right people, and the best way to do this is in a pitch deck – or a much shorter version of the business plan. The purpose of the pitch deck is to convince investors that your idea is good, that you are the person to execute it, and that you will provide a return on their investment.
If you have enough funding to start a company, it’s critical that you get your legal structure in place. New businesses can take multiple forms, including a DBA (Doing Business As), Sole Proprietorship, Partnership, Limited Liability Company and a Corporation. Forming an LLC or a Corporation can help you separate your personal property from that of your business, as well as provide tax benefits for the business expenses you are about to incur.
It may be worth getting the guidance of a corporate lawyer to help you decide which structure is best for you, or you can go on Legalzoom and decide for yourself. If you plan on being a high growth tech company, websites like Clerky can guide you through the entire process of incorporating and raising money.
Depending on how you get your seed money, you may need to draft notes (loans), equity agreements (ownership) or convertible notes (hybrid). Many start-ups like convertible notes because they start off as traditional debt (which gets paid out before equity in case of bankruptcy, and is therefore less risky) and gets converted to equity when both the founder and the investor have a better idea of a) what the company is worth, b) what percentage of ownership the investment should count for, and c) whether the company is poised for success.
Set up Bank Accounts
With the proper incorporation document, and newly issued tax-payer ID, you can open a bank account at any local retail bank. Without business history it’s difficult to get credit, but by placing investor deposits into this bank account and establishing some operating history, the credit will come. Having a bank account will allow you to pay vendors, accept payments, and embark on regular business operations.