Tips for Starting Your First Business

Small businesses are the backbone of our rural communities. When our local hardware store, restaurant, or automotive shop succeed, the success spreads throughout the entire community. At BTC Bank, we’re proud to support our small businesses so that the communities we live and work in can thrive. 

According to the US Small Business Administration, small businesses in Missouri account for over 99 percent of all state businesses. If you’re planning on starting your own businesses, we’re committed to providing helpful resources and tips to help you succeed. Check out our tips below, or stop by your local branch to meet with our team to get started. 

Tip 1: Develop a Solid Business Plan

It’s exciting imagining your dream and hard work come to life, but a successful business requires a solid business plan to get off the ground and become successful for years to come. The Small Business Administration (SBA) recommends that everyone who wants to start a business begin by writing a business plan. Business plans can contain many different elements depending on the type of business and how the plan will be used. Most generally include: 

• Executive Summary and Company Description
  This could include the mission statement, the products or services the business will provide, basic information about the company’s location and employees and other high-level information. You may also include what needs your business is addressing, who your customers are and other information. 
• Competitive Analysis and Target Market
  Explain your understanding of who your competitors are, what sets you apart from similar businesses, who you will be reaching as customers and how you plan to meet their needs.
• Organization and Management: Include who is in charge of your company and in what capacity. Share a bit of information about the leaders and expand on how their experience makes them a good fit for their roles. Depending on the size of the company, an organizational chart may also be helpful.
• Product or Service Line
  The product or service your business will be offering is probably what started your dream to begin with. Spend some time describing your product or service. Why will customers come to your business? What will the community get out of it? 
• Financial Information
  What does the financial situation of your business look like now and into the next five years? How much money will you need to establish and get your business up and running? How much money will you need to borrow? How will you effectively manage your budget? 

A detailed business plan is a crucial step in building a solid foundation to build upon. It’s also a necessary resource when it comes time to secure funding and show the viability of your future business to potential financial partners, including lenders, landlords, suppliers, and local government agencies. It may take several iterations to reach your final plan, but there are many resources available along the way. The SBA website, state agencies, local chambers of commerce, community financial institutions like BTC Bank and more can all help guide you through the planning process. 

Tip 2: Understand Your Market and Customers

• Conduct competitive research
  What other businesses offer products or services similar to your business? Where are they located? How long have they been in business? 
• Get to know your customers and target audience
  Who is your ideal customer? What need are you looking to fill for them? Are you looking to reach specific demographics? Interests? 
• Identify your differentiating factors
  What sets you apart from the competition? What can you do to encourage customers to choose you over a competitor, and how will you interact with them to keep them coming back again?

Tip 3: Understand the Legal Side of Running Your Business

Choose a Business Structure

Some of the first legal requirements you’ll encounter when starting a business are creating a business entity, registering your business and understanding tax requirements. There are several different business structures available, but the end goal is to create a legal entity that is separate from you, the individual business owner. This decision should be made with great care as it will impact your taxes, paperwork requirements, the personal liability you face and your ability to secure funding.

• Sole Proprietorship/Doing Business As (DBA): Common and easy to create as there is only one owner. However, that owner is personally liable for the business’s financial obligations. In Missouri, a Sole Proprietorship does not require articles of incorporation to be filed with the Secretary of State, but you do need to register the name of your business as a “Fictitious Name.”
• Partnership: Two (or more) people share profits and losses, taxed through their individual tax returns. Like a sole proprietorship, partners are personally liable for any financial problems, it doesn’t need articles of incorporation, but does need you to register as a “Fictitious Name.”
  
• Corporation: Protects individuals from personal liability. Requires a lot of bookkeeping and articles of incorporation to be filed with the Secretary of State.
• Limited Liability Corporation (LLC): A cross between a corporation and a proprietorship or partnership. An increasingly popular option, it allows owners to be protected from liability like a corporation, while enjoying the tax benefits of sole proprietorship. Also, requires articles of incorporation to be filed with the Secretary of State.

Understanding Other Legal Requirements

After you file the appropriate articles of incorporation or register your business name, there are a number of additional agencies that you must confer with in order to legally do business. Below are a few of the main ones, but refer to the Secretary of State’s page of important agency and organization links for a more comprehensive list.

Tip 5: Focus on Customer Experience and Service