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Essential Small Business Start-Up Guide

Starting and growing a small business can be challenging under the best of circumstances. If you are considering launching your own company, you will face all the usual requirements – conducting market research, securing funding, registering the business with the government, creating your brand, and more. But today, you will also have to deal with some unique obstacles brought on by the pandemic, like labor shortages, mask requirements, social distancing, stringent sanitation practices and other state-by-state restrictions. This makes choosing the right business plan and model even more critical if you want your business to fare well in today’s business climate.

Despite the additional challenges presented by the pandemic, small business applications in the U.S. have surged in the past year. This is striking when considering that new business applications had been in a slump for decades. If the rebound continues, it could mean a more resilient economy for all.

If you are ready to take the leap and start a new business, Allegiance Bank wants to help. Read on to learn the essential steps to get your business off the ground.

1. Conduct market research

Before you start your business, identify your target customers and gain an understanding of their typical purchasing behavior, as well as your future competitors and market trends. This is always the first place to start, but is particularly important today, given the way consumer activities and lifestyles have changed during the pandemic.

Ask yourself these questions:

  • Is there demand for your product or service?
  • What is the size of your target market?
  • Who will be your major competitors; what portion of the market do they currently serve; and is there an obvious way you can differentiate from them?
  • What will your pricing strategy be? What is the average amount that customers currently pay for the products or services you will offer?
  • How will you engage with potential customers? How have similar businesses adapted to meet consumer needs during the pandemic?

2. Write a business plan

  • Executive summary: A concise description of your business including its purpose and what you hope to achieve.
  • Business overview: Includes the type of business; descriptions of your products or services; the legal structure of the business; and how you will do business (retail space, e-commerce, mail order, etc.)
  • Operations plan: A description of how your business will function, including its physical structure, key labor needs, market analysis.
  • Organization and management: The owners and executives of the business, as well as key management roles and other necessary staff.
  • Sales and marketing plan: An outline of your pricing structure, competitive differentiation, and how you plan to reach potential customers through your sales and marketing efforts.
  • Competitive analysis: Identify your direct competitors, their strengths and weaknesses, and explain how you will differentiate.
  • Funding and financials: Include startup costs; the funding you will require; and ongoing business expenses, including salaries, marketing expenses, insurance, and other operating costs.

3. Choose, register, and protect your business name

Conduct a trademark search prior to settling on your business name to ensure the name isn’t already registered as intellectual property. After deciding on your business name, take steps to protect it:

  • Claim an entity name in your state which protects your business name at the state level.
  • To further protect your business name, register it as a trademark at the United States Patent and Trademark Office for protection at the federal level.
  • If you plan to do business under any name besides your own personal name or the name of your business, your state, county or city may require that you register a DBA (Doing Business As).
  • Once your business name is secure, claim an appropriate URL for your website. Even if you won’t be using them immediately, you should also create social media accounts to ensure you have the account names you want when you’re ready to go live.

4. Determine your legal business structure

There are several types of legal structures to consider:

  • Sole proprietorships: There is only one owner and the business has a less strict structure. However, owners are solely responsible for any liabilities the business assumes, and assets may be at risk if the business goes into debt.
  • Partnerships: Two or more owners operate the business together and both partners share liability for business debts.
  • C corporations: A C Corp is considered a separate entity and the business is taxed separately from its shareholders. C Corps provide “limited liability” to the owners, which means that your personal assets are protected from business liabilities.
  • S corporation: S corps are like C corps, but income is taxed through owners’ personal taxes, not as a separate business entity.
  • Limited liability company (LLC): LLCs are taxed as a “pass-through” entity. The business is managed by its members, each of whom own a percentage of the business.

5. Register your business with the government and IRS

After deciding on your legal structure and location, you can register your company with the proper authorities. There are several documents you’ll need prior to registration:

  • Articles of incorporation and operating agreements are required for all corporations.
  • LLC’s must create an operating agreement.
  • If you will be operating as a DBA, you must register your business name.
  • Employer identification numbers (EIN) are required by the IRS for all business entities except sole proprietorships with no employees.
  • Some businesses may also require federal, state, or local licenses and permits to operate. The best place to obtain a business license is at your local city hall. You can then use the SBA’s database to search for licensing requirements by state and business type.
  • You must obtain an employer identification number (EIN) from the IRS if you plan to hire employees, either now or in the future.
  • Sole Proprietorships need to open business bank accounts or obtain lines of credit.

6. Determine how you will fund your business

Most business owners will need additional funding to launch and grow their startup. Do your research and learn which types of loans or credit are right for your business. Allegiance Bank offers a full suite of small business loan options, all designed to fit your business goals, including:

  • Working capital revolving line of credit: Open access to financial support whenever you need it
  • Term loans: Short- or long-term loans with monthly repayments, usually with low interest rates
  • Equipment or specialty financing: Loans for specific purchases, like capital equipment and real estate, repaid over a longer period of time
  • Owner-occupied real estate loans
  • Commercial real estate loans
  • SBA guaranteed loans
  • Merchant cash advances: Using future credit card sales as collateral for cash advances, generally repaid daily
  • Personal loans: If you have a good credit score, you might consider taking out a personal loan for business expenses

7. Open a bank account for your business

In order to protect your personal credit and assets, you should open a separate business checking account. Things to look for are low fees, good benefits, incentives like introductory offers, and competitive interest rates for checking, savings and lines of credit. You’ll also want to look at transaction, early termination, and minimum account balance fees.

Allegiance Bank understands that every business is unique. That’s why we offer a variety of checking solutions that can grow with your business, in addition to these small business banking services:

    • Online banking
    • Online eStatements
    • Online bill payment
    • Online integration with QuickBooks
    • Remote deposit capture
    • Business credit cards
    • Business debit cards
    • Merchant credit card processing
    • Commercial risk assessment

Starting a business is a long, challenging journey; but it’s also incredibly rewarding. If you’re ready to become a small business owner, Allegiance Bank wants to help you succeed. Our small business banking solutions will streamline your financial needs, so you can focus on what matters most. Contact us today to learn more, or to schedule a visit with one of our small business banking experts.

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