We are a small firm that seeks to help small and medium sized businesses, and we often get clients who are eager but unsure about how to get their startup off the ground. Here we hope to outline a few of the considerations a potential entrepreneur should have before starting a new business.
Let’s start with the very basics.
Is Your Business Idea Feasible?
This business is going to be your livelihood – make sure that your livelihood is something that is tenable and realistic. You need to do research on your startup idea – what good or service will you provide? To whom? Is there any demand for your idea, and is anyone else already supplying it? See what similar businesses are doing, and whether or not they’re successful.
You’ll find an hour of research on the front end of a business might save yourself months or even years of stress on the back end. It also gives you the practical benefit of being able to demonstrate your seriousness to potential investors. You’ll need to acknowledge that even if your startup is in a healthy, well-trodden industry, your margins might be thin. Ask yourself whether you’re willing to put the time and money in, and also be realistic about what can happen if this business does not work out.
Choose a Business Name
First, make sure the name isn’t taken. A quick Google search can generally verify whether or not your startup name is already in use. Illinois also has a database of business names currently in use, and registering a name requires that it is sufficiently different from anything else currently in the database.
Second, business names, much like human names, can be judged by a simple litmus test – if you were to tell it to a 3rd grader, would they be able to 1) pronounce it and 2) use dispassionate ridicule to twist it into a parody? Imagine putting this Business Name on a card and handing it out to investors – it does not need to be boring, but boring and utilitarian are often preferable to gimmicky and gaudy. Think about how you cringe whenever you remember the name of your first email address. Try to avoid that feeling when you’re naming your business.
Business Plan or No Business Plan
Do you need a business plan? What even goes into a business plan? Honestly, there are lots of example business plans online so if you’re curious about what goes in one, look there. Generally, a business plan is not necessary, but it’s probably a good idea to do one. The reason is that the process of going through the plan will help solidify your thinking about your future business. You will think through some of the early challenges the business will face, which will make the growing pains easier to deal with. Plus, if you’re looking for investors, you’ll need a plan. People rarely throw their money at someone without a plan (you’re not Elon Musk).
Decide how to Organize your Business
This is the next step, and it determines how you register with Illinois and the Federal Government, or if you need to register at all. A small business is most likely to organize under Sole Proprietorships, Partnerships, or LLCs. We will tackle what each of these mean in another blog.