What to Consider When Starting Your Own Business

For people who are tired of working the standard 9-to-5 job, starting a business can be an appealing alternative. If you’re thinking of starting a business, you’ve likely spent a lot of time daydreaming about the freedom that comes with owning a company. Imagine being able to say goodbye to working eight or nine hours a day in a cubicle or confined office. Imagine not having to answer to anyone. Picture the possibility of limitless income.

But you may be asking yourself — am I ready to start a business? While starting a business may be a good decision, it’s not as simple as it may seem, and it can be a stressful and challenging journey. Those who are considering becoming an entrepreneur should understand the steps to starting a business.

If you are a new business owner or want to begin your own company, David Pope Insurance Services, LLC has developed this guide to starting a business that can help you through every step of the process.

 

Do You Understand Your Market?

Before you start a business, you should ensure you understand your market. To do so, you’ll need to do some research. If you don’t do market research beforehand, this could doom your business before you even get it off the ground. Determine the exact nature of your business and your target demographic. The following are some ways you can perform your market research before starting your company:

What to Consider When Starting Your Own Business
  • Work with a research firm: You can hire a research firm that can provide you with market research data, along with information that comes directly from your target demographic. A research firm will provide you with a sophisticated market analysis. It will also interview consumers to help determine the purchase decisions and shopping behaviors of your target demographic.
  • Perform the research yourself: Before spending on advertising, you will want to analyze your market and target audience. One of the simplest ways to start doing so is by looking at companies that offer similar services or products. After you start your business, these companies will likely be your competitors. By studying what your future competitors do, you can determine what works and what doesn’t without going through this trial-and-error process yourself.
  • Obtain customer data: You can discover what potential customers would think about your services or products by conducting focus group sessions or online surveys. To find consumers from whom you can obtain data, you can place an ad online through which you offer a small compensation in return for their participation. Be sure the participants belong to your target demographic. If you want to outsource this task, you may want to find qualified graduate students who can conduct this research for you at their local university.

 

What Do You Know About Your Customers?

Beyond basic demographics, you should know as much about your customers as possible. Before you start your business, ask yourself the following questions about your target audience:

  • Who are they? Demographic information lets you define your target buyer and home in on the all-important persona. Is this target buyer male or female? Are they young or old? Are they a parent or are they child-free? Are they educated? Understanding the basics about your customers will give you the framework you need to build upon later when you start your business.
  • How old are they? A customer’s age and generation are important considerations for your business. A single man in his 30s who loves video games and fan conventions may identify more with a youthful demographic than his 60-year-old business-owner father.
  • What are they worried about? Stressors, problems and fears are powerful motivators. If your service or product can solve a significant worry that consumers have, you may be able to successfully reach your target market.
  • Who do they buy from? You may also want to know where your target audience shops for clothing, groceries and other needs. Discovering these interests may help you find marketing partners and reveal which brands you want to watch.
  • What is their preferred method of communication? You should also consider what will be the most effective way of reaching your target audience. Will they respond to texts? Will they prefer phone calls, or will they find them intrusive? Or will they prefer to receive emails? Knowing how your target demographic prefers to be contacted lets you pinpoint your marketing efforts in a way that improves your chances of being read or heard.
What to Consider When Starting Your Own Business
  • Why do they buy? What helps your target audience make the final decision to buy? Is it hearing about the product from others, watching a product in action or spotting a deal they can’t resist? Understanding why your leads buy certain products or services allows you to place your marketing efforts correctly. Offering a survey right after a purchase may help you determine why buyers are selecting your product.
  • Where do they get their news? Knowing where your target audience gets their news and information every day reveals the areas where you should be concentrating your marketing efforts and paid advertising. If you are using online surveys, you may boost your response rates by placing them on sites your target audience frequents.
  • Where do they work? Knowing the fields and industries your target audience works in can help your marketing efforts. Where they work will impact what friends your target has, which places they visit and which groups they join. This market research may help expose your product to new prospects and places you hadn’t previously discovered.
  • What do they do for fun? Hobbies can give you additional insight into your target market’s interests. When you know their favorite movies, TV shows and books, you’ll have something to discuss with your potential customers. Questions about their interests can be a nice icebreaker in a survey and reveal more demographic information.
  • How much money do they make and spend? Money is an important aspect of whether your target audience can afford your product or service. Your target audience should be able to earn enough money and keep enough of their income that they can buy what you’re offering. If you are selling a luxury item, the amount of money your buyer can spend may be more important than how much money they make.

Can You Fund Your Business?

Can you become an entrepreneur if you are unsure how you will fund your business? Part of the process of learning how to become an entrepreneur is determining whether you can afford to keep your company up and running.

Many entrepreneurs struggle to find the funds to launch and grow their businesses, but this is one of the first and most crucial financial choices you will make as a business owner. How you fund your enterprise may affect how you structure and run it.

What to Consider When Starting Your Own Business

When determining whether you can fund your business, consider your asset and capital requirements, along with your operating expenses. Your capital requirements include how much money you need to fund your enterprise and help it reach its financial and operational goals. Your assets will involve the resources your company owns, such as properties, buildings and patents. You shouldn’t go broke while trying to obtain all your necessary assets, which is why you should determine everything you’ll need for successful operation and budget accordingly.

Additionally, operating expenses will include things like inventory costs, payroll, rent and more. A major responsibility as a business owner will entail keeping your operating costs low while still maintaining quality service and staying ahead of the competition. To acquire an adequate amount of money for your company, you can:

  • Use money given to you by your friends and family.
  • Get a small business loan from the bank.
  • Tap funds from your 401(k).
  • Use your personal savings.
  • Try crowdfunding.
  • Use a credit card.

 

How Will You Form Your Business?

The structure you choose for your business will affect how your day-to-day operations run, how much of your personal assets will be at risk and how much you will pay in taxes. Select a business structure that provides you with the right balance of benefits and legal protections. The following are some common business structures you may choose from.

What to Consider When Starting Your Own Business

Partnership

A partnership is the simplest structure for a business owned by two or more people. Limited partnerships and limited liability partnerships are two common kinds. Here’s how they work:

  • Limited partnerships: In a limited partnership, one general partner will have unlimited liability, and all other partners will have limited liability. Those with limited liability usually have restricted control in the business.
  • Limited liability partnerships: In a limited liability partnership, limited liability is given to each owner. Each partner is protected from debt against the partnership and will not be liable for the actions of their other partners.

If your enterprise has multiple owners who want to test a business idea before establishing a more formal organization, a partnership may be the right choice.

Sole Proprietorship

Sole proprietorships are easy to form and allow you to have complete control of the company. If you perform business activities and do not register as any type of business, you will automatically be considered a sole proprietorship.

A sole proprietorship does not create a separate business entity. As such, your business liabilities and assets are not considered separate from your personal liabilities and assets. Under a sole proprietorship, you may be held personally liable for your company’s obligations and debts. Raising money can be difficult, as you cannot sell stock, and banks are hesitant about lending to sole proprietorships.

If you want to test your business idea before you develop a formal company — and your business is low risk — a sole proprietorship may be the right choice for you.

Cooperative

Cooperatives are businesses owned and operated for the benefit of those who will use the companies’ services. Earnings and profits the cooperative generates will be distributed to the members. Generally, an elected board of officers and directors will run the cooperative, and regular members will have voting power to control the cooperative’s direction. Purchasing shares allows someone to become a member of the cooperative.

What to Consider When Starting Your Own Business

Corporation

A corporation is a legal entity separate from the owners. A corporation offers the strongest protection to business owners against personal liability. However, the cost of forming a corporation is greater than other business structures. A corporation also requires more extensive reporting, record keeping and operational processes.

In terms of raising capital, corporations have an advantage because they can raise funds via selling stock. A corporation pays income tax on the business’s profits. Corporations may be a good option for a company with medium to high risk, one that needs to raise money or one you eventually plan to sell.

Limited Liability Company (LLC)

When you form an LLC, you can enjoy the benefits of both a partnership and corporation. In most instances, an LLC protects you from personal liability and your personal assets will not be at risk in the event of a lawsuit or bankruptcy.

In an LLC, you are considered self-employed and will likely need to pay self-employment taxes. In many states, LLCs also have a limited life. An LLC tends to be a good option for businesses with medium to high risk, owners with significant personal assets and owners who wish to pay a lower tax rate.

 

Do You Need Special Licenses and Permits?

Many small business owners need a combination of permits and licenses from both state and federal agencies. The requirements vary depending on your location, government rules and business activities. The following are some examples of special licenses and permits you may need for your business:

What to Consider When Starting Your Own Business
  • Sign permit.
  • Zoning permit.
  • Health permits.
  • Sales tax permit.
  • Special state licenses.
  • Environmental permits.
  • Fire department permits.
  • Home occupation permit.
  • General business license.
  • Construction or building permit.
  • Occupational/professional licenses.
  • Special federal permits and licenses.

 

What’s Your Marketing Plan?

Having a marketing plan is as important as having a business plan. A marketing plan is strategic, includes objectives, facts and numbers and is focused on winning and retaining customers. Follow these steps to create your marketing plan:

What to Consider When Starting Your Own Business
  • Conduct a situation analysis: Define your business, its services or products and how your business’s offerings set you apart from the competition. Additionally, describe the external opportunities you can capitalize on. Your situation analysis should provide an overview of your business’s strengths, weaknesses, threats and opportunities.
  • Research tactics for marketing: Look up marketing tactics to determine which may be right for your business and advertising plan. This strategy may include email, print advertising, loyalty programs and outdoor billboards.
  • Define your target audience: Next, describe your target market. Focus on demographics like the prospective customer’s sex, age, earnings, location and family composition, along with their lifestyle. Narrowly define your target audience, as this will guide you in marketing efforts.
  • Write a list of marketing goals: For this list, consider what you want your marketing efforts to achieve. Jot down a list of measurable goals. To create your goals, make them specific. You may also want to consider optimistic versus realistic objectives and short-term versus long-term goals.
  • Determine your business’s marketing budget: Finally, you will need to determine what percentage of your budget will be devoted to marketing. Consider the costs of the marketing tactics you plan to implement to help you figure out your budget.

 

Choosing Commercial Liability Insurance for Your New Business

Today, business owners face many risks. Commercial or small business insurance can provide you with the protection and peace of mind you need. At David Pope Insurance, we can customize a commercial insurance policy to suit your business’s unique requirements for protection.

Why Do I Need Business Insurance?

With commercial insurance, you can protect the money and time you have invested into your business. In Missouri, we are one of the preferred choices for commercial insurance brokers. Our insurance agents are dedicated to our clients and bring their passion and know-how to creating comprehensive, affordable business policies. Along with Missouri, we also serve other states, including Kansas, Tennessee, Iowa, Illinois, Arkansas, Colorado and Nebraska.

What to Consider When Starting Your Own Business

You deserve a commercial insurance plan that provides your business with the coverage needed at a price that fits within your company’s budget. We can help you find the commercial insurance plan that’s right for you thanks to our connections in the insurance industry.

Running a business comes with many responsibilities, from managing employees to controlling inventory. With commercial insurance, you can alleviate the stress of worrying about whether you are covered in the event of a disaster. When you connect with one of our agents at David Pope Insurance, we will learn what your business needs are and find the right plan to meet them. We will put our decades of experience to use, outlining the potential areas of concern and identifying a policy that can handle them.

Selecting the Right Commercial Insurance Plan

We understand that not every commercial insurance policy is right for all businesses. Further, we know many businesses need multiple policies to successfully cover all of their concerns. As such, we ensure our agents are trained in writing various policies. When you choose David Pope Insurance, you won’t have to deal with the hassle of working with multiple insurance brokers. We offer the following types of business insurance plans:

If you’re looking to save money on your commercial insurance, you may want to consider bundling multiple policies. For complete protection, a business often needs more than a single commercial insurance policy. We can help put together a bundling package for you that allows you to obtain full protection with deep discounts.

Learn More From David Pope Insurance Services, LLC

We offer financial stability to our clients by finding the lowest rates available on the market. We are a local, family-owned agency with more than two decades of experience providing insurance to residents in Missouri. At David Pope Insurance, we can give you the peace of mind you need while keeping your costs low.

Along with commercial insurance, we offer the following policies to Missouri residents:

  • Auto insurance: Car accidents can happen at any time, and whether you own a sedan, motorcycle, classic vehicle, boat or RV, we can help you find the policy that’s right for you. We insure all kinds of drivers, including new and teen drivers.
  • Life insurance: If you’re the family’s breadwinner, you may want to consider the financial implications for your loved ones if something happened to you. A life insurance policy can help support your family if your income is lost if you pass away.
  • Home insurance: For a comprehensive home insurance policy, David Pope Insurance is your one-stop shop. We can help you find a policy that protects you and your loved ones against many perils like wind damage, fire, liability and theft.

Assess yourself. Are you an entrepreneur? If you are a new business owner or are on the verge of starting your business in Missouri and want to learn more about commercial insurance, contact us at David Pope Insurance today.

What to Consider When Starting Your Own Business
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