Now you've decided you want to start a business, you'll need to get started. To ensure you don't get over your head in the entrepreneur world, you should make sure you have the right info and a plan of action. Here are a few things you can do to prepare:

Do market research

Before you really delve into your goals, doing market research is vital to the process. Now that you have an idea, you'll need to see if it is viable. In other words, you'll need to look at market data and decide whether people will pay for your idea. This includes both funding and potential customers.

When doing research, the Small Business Administration (SBA) recommends paying attention to these points:²

Demand – As mentioned above, you need to be certain there will be an interest for whatever you're selling.
Market Size – There are many markets out there, both small and large. What market size are you aiming for? How large is the market for your product or service?
Economy – What's the normal income and employment rates for your industry?
Location – Now that you have an idea about your potential customers, where are they located? How do you plan to reach them?
Saturation – See how many similar products or services are already in the market. You'll want a good idea of how much competition you'll have. Also, you will want your business to stand out in some way, whether that's by offering a product or service that isn't widely available or by having options or features that set you apart.
Pricing – Simply put, what are your potential customers willing to pay for your products or services?

Create a business plan

Now that you have idea and research under your belt, it's time to put it to paper. This is a valuable step, because you will be translating dreams into concrete tasks and goals. Some ideas sound great and work great on paper; others, not so much. In this step, you'll be discovering how you are going to make your business a reality. This helps demystify the process by giving you an actual set of achievable goals. It helps you decide how realistic your original idea is, and whether you need to change your approach to make it work.¹

So, how do you write a business plan, anyway? Before you start, know that there are a few different formats you can use. Note: there's no right or wrong; simply use the format that best suits your business' needs.

According to the SBA, most business plans are either traditional or lean startup type. In short, a traditional business plan is very long and detailed, and requires a lot of time. Lean startup plans, on the other hand, use the same structure, but are much less complex.³ You can read more about each type in detail, and see a template, in the SBA's business guide.

You will also need to choose an ownership structure for your business. Here are a few examples of the different types you can choose from:⁴

Sole Proprietorship – A company owned and ran by one person. In this case, there's no legal difference between the person and the company he or she owns.
General Partnership – In business, a partnership is a group of people or entities united to further a similar interest. General partnerships work like sole proprietorships, but they're made of two or more people. Taxes are applied to each member instead of the company as a whole.
Limited Partnership – Limited partnerships are made of both general partners and those who have limited liability.
Limited Liability Partnership (LLP) – Limited liability simply means a partnership is protected from being responsible (liable) from certain damages.
Limited Liability Company (LLC) – An LLC is similar to an LLP, but is a company rather than a partnership. This structure is commonly used by small businesses. It is a sort of halfway point between a partnership and a corporation, sharing elements of both.⁵
Corporation – A corporation is a business that is treated as one "person" by the law. It is the most complex form of business but has advantages. Corporations must be run with a certain structure and other requirements. Read more about corporations in this article from Entrepreneur.com.

Look into funding

In many cases, you'll need funding to get your business off the ground. When looking for funding, remember your idea, and have clear steps to make it happen (i.e.: make S.M.A.R.T. Goals). You will need to find someone who trusts your idea and is willing to invest. A lender can choose whether or not to lend you money, and they will only do so if they feel their investment will have a good return. Having a clear plan is very important because it helps make your idea less abstract and more attainable.

Before you explore funding, it's important to gauge your costs. An important part of starting a business is knowing how much it will actually cost to start. This can vary from business to business, so go over your business plan to evaluate how much it will cost. The total money you'll need to start is often called capital. It's mostly unheard of for someone to fund your business 100%. If you're starting a business, expect to pay for at least part of it yourself.¹

To get you started, here are a few examples of funding methods:

Small business loans

This funding method is probably the most common. In fact, you can get a loan to start your business through the Small Business Administration (SBA), which offers a microloan program for small businesses. These loans can go up to $50,000, but the average is about $13,000. While they relatively aren't a huge amount of money, these loans may help give your business the initial push it needs.

If you're interested, use the SBA lender match.

Crowdfunding

In some cases, your investor can be the public itself, through a method called crowdfunding. In this method, members of the public can choose to invest their money in your product, service, etc. in order to make them a reality. Two popular crowdfunding platforms are Kickstarter and Indiegogo. Some of these sites even have a section specifically for small business funding.

However, if you use crowdfunding, you are still responsible for promoting yourself, especially because tons of campaigns are started there every day. You want to stand out so that people will pay attention to your campaign instead of just seeing it as another face in the crowd. Crowdfunding sites are mainly a platform for your campaign, not advertising services. They do not promote you, and it is unlikely that people will just "discover" your campaign due to the volume of campaigns on these sites.

Find a good way to get people behind your project. For example, you can offer a unique product or service; something different that catches people's interest. Your business could also have an interesting "story" behind it. Here's an example: "My grandmother had a restaurant in Greece, and I want to bring her recipes here." No matter what you do, you'll have to go beyond simply telling people about it, because that alone won't always interest them. With crowdfunding, you'll have to put in the work necessary for promoting yourself.¹

Small business grants

Yes, grants are somewhat infamous for being hard to find, but they exist. In most cases, they'll come from private foundations. However, you should note that small business grants are very rare. It's a good idea to look into other funding options before you go down this road.¹

Grants are usually only given to non-commercial organizations like nonprofits, educational institutions, and government entities. While grants might be difficult to get, it's money you don't have to pay back if you do manage to get one.⁶ Looking never hurts. Sometimes you'll even find grants for specific groups of people, such as veterans and women.

Next steps

If you need more guidance, visit your local Small Business Development Center (SBDC). You can also look into business incubators such as Innovate Springfield. Additionally, you may want to speak to some local business owners to get an "inside scoop."

Also, you should know that counseling services are available to those wanting to start a new business. Here are several organizations that can help. Find other Business Counseling and Business Advocacy resources listed below.

Small Business Administration is dedicated to helping you and your small business succeed. There are a variety of online trainings which cover many business topics for you to learn.
Small Business Development Centers are local offices with staff and resources available to small business start-ups and existing businesses.
Small Business Advocacy Council is an organization that advocates with elected officials on behalf of small businesses in Illinois.
Service Corps of Retired Executives is a group of retired business people who serve as mentors to individuals in business.
Career, Wages and Trends* information on our website can help you prepare job descriptions and find out other trends in employment when you are ready to hire employees.

*Source: Illinois Career Information System (CIS) brought to you by Illinois Department of Employment Security.

Once you feel you're ready to move on to the next step, read about how to get going in the next article.

Sources

¹Kevin Lust, Director, SBDC (Springfield, IL)

²https://www.sba.gov/business-guide/plan/market-research-competitive-analysis

³https://www.sba.gov/business-guide/plan/write-your-business-plan-template

⁴https://dceo.illinois.gov/smallbizassistance/beginhere/stepbystepguide.html

⁵http://smallbusiness.chron.com/limited-liability-partnership-vs-limited-liability-company-3736.html

⁶https://www.usa.gov/

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