What to Do Before Starting a Business

There’s a lot of talk today about young people exploring entrepreneurism, and it’s not a myth. According to a survey covered by the New York Post, nearly 30% of millennials report having some kind of business of their own. By comparison, only about 20% of Gen-Xers responded similarly, and just 11% of Baby Boomers have their own businesses.

These numbers demonstrate clearly that the millennial generation — which makes for much of what we’d currently consider the “young adult” population — is trending toward entrepreneurism more than previous generations. And we might expect Gen-Zers to follow suit.

As popular as the idea of starting up a company is though, a lot of people who might be considering it probably haven’t considered the actual process of doing so. That is to say, you might have a great idea and some plans for how to profit off of it, but the exercise of establishing a real company might still be somewhat foreign to you.

The process may look different for one venture than for another. But here we’ll highlight some of the steps that most every budding entrepreneur will have to address along the way.

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Identify Your Target Audience

Before you really begin to execute on your idea, you need to figure out what your audience is — or, in other words, whom your business is for. This can be a fairly involved process, and the longer you keep at it the clearer of a picture you’ll develop. But it’s not necessarily complicated. Inc.’s guide to defining a target market breaks it down into a handful of smaller efforts, such as checking out your competition, analyzing your product or service, and choosing your own targets, all of which can help you to make real progress. Once you’ve done some research of this sort, you’ll have a better idea of just what sort of business you’re looking to launch.

Evaluate Your Finances

You won’t get very far down the road to launching your own company without a thorough and honest assessment of your financial situation. This means doing a comprehensive evaluation of your own personal finances, as well as those of the business. Consider all debts, any foreseeable expenses, cash on hand, income, and near-future and long-term plans. The more thorough your evaluation, the better you’ll know what you need — financially speaking — to make the business work.

Determine Location & Staffing Needs

For many if not most new entrepreneurs, the idea in the early going is to start a business from home. When you’re just starting out, odds are you’re either on your own or part of a small group. This typically means you can avoid the trouble and expense of securing workspace and staffing up early on. But as part of your larger plan, it’s still a good idea to look ahead and determine what your location and staffing needs might ultimately be. This way, you can begin planning for expansion from day one, as opposed to starting the process from scratch when a need arises.

Learn How To Make The Company Official

The last thing you want is to be all ready to go, and then discover you don’t actually know how to turn your company from an idea into a legitimate Limited Liability Company. Fortunately, it’s not that difficult to do — but you would do well to plan ahead, so that you know how to go about it. The process can differ slightly between locations, but ZenBusiness’s look at how to form an LLC covers the basics. It shows that you really only need to complete a few simple tasks, such as giving your business an official name, filling out some forms, and obtaining the proper tax status. Again, it’s not that difficult, but by looking ahead to these steps you can be sure you aren’t caught off guard.

Write Up a Business Plan

Last but not least, you’ll also need to write up a business plan! This is a part of the process we’ve covered in a guide to ‘Writing Your Real Estate Investing Plan’ before. And while the specifics of a business plan will look different depending on the nature of the company you’re looking to start, the structure of what we outlined previously — a plan including a mission statement, goals, time frames, target market, and strategies — is fairly universal. Your business plan should be thorough, but not so much so as to not be clear.

Address all of these steps, and you’ll be in a better position to join the legions of young people who are starting their own businesses today.