20 Frequently Asked Questions When Starting a Business
Starting a business can seem like a scary venture. With so many components, most people don’t know where to start. From not knowing what type of business to start to expecting profit immediately, there are a lot of subjects that entrepreneurs may need help navigating. This article discusses 20 frequently asked questions to help potential business owners get their new business off to a great start.
1. What type of business should I start?
It is crucial to start a business focused on something you are enthusiastic about, will enjoy doing, and have experience in. It is also imperative that it is cheap to fund and has the potential to grow into something big (in a logical period of course). Lastly, it is important to start a business that will supply meaningful change in your customers’ lives.
2. How can I ensure that my idea is protected?
Everyone has ideas. The difference is whether you attempt the idea or not. If you feel as though your idea may have potential, acquire a patent for it. You may receive protection from trade secret programs, copyright, or even NDA’s but compared to a patent, they are not immensely helpful.
3. Do I need a business plan?
It is useful to have a business plan for the development of your business, and it can be helpful to get advice from a financial adviser or trusted business. However, it won’t help to go overboard with an overly complicated and lengthy plan. The reality is that most start-ups will have to deviate from their plan, so keep it straightforward and relevant to specific needs.
4. How can I finance my business?
There are many places to get money for your business including but not limited to, personal funds, credit cards, friends/family, sites like Indiegogo.com or Kickstarter.com, loans, or venture capitalists. Having a good financial plan for your business out of the gate is imperative.
5. What permits will I need for my business?
Although it depends on the business, you may need these permits: sales tax license/permit, home-based business license, zoning permit, health department permit (for restaurants), federal and state tax/employer IDs, sellers permit, and/or permits needed for regulated businesses (e.g., for aviation, agriculture, alcohol, etc.). This is an important step because it can be much more costly later if your business is not compliant with local, state, and federal laws.
6. When hiring employees, what should I be concerned about?
It’s important that the employee has experience pertaining to the job and will be able to fit into the culture the company provides. It is also important for you to do a reference check and a background check depending on your business. Knowing all the local, state, and federal laws for hiring an employee is extremely important so you do not run into tax issues later. North Carolina has specific requirements for the handling of contract employees versus W2 employees, you should know the difference before making the decision on how you will be hiring
7. What are the biggest challenges when starting a business?
There are many challenges when starting a business. Some of these challenges are hiring good employees, knowing when to fire bad employees, managing your time, shortage of cash flow, coming up with a great product/service and sticking to it, and working more than you expected.
8. What are the biggest mistakes made by startup entrepreneurs?
There are a lot of mistakes you can make when starting a business. Not starting with enough capital, thinking success will be swift, working without a budget, ignoring legal/contract matters, not adapting quickly, or mispricing the product/service are some of the biggest mistakes a startup can make.
9. What records are important to keep regarding my business?
It is crucial to keep records of things when running a business. Financial statements, bank accounts, invoices, contracts, employee records, tax filings and records, board/stockholder minutes and consents, as well as employee records are all important records to keep.
10. Who are my primary competitors in the industry?
It is imperative that you as a business owner, understand your competitors to better understand the market and improve your business. For example, Google is the biggest search engine with just under 80% of the global search engine market share. Other search engines such as Edge and Bing must work much harder to bring in new customers because of this.
11. How should I pay myself?
A good rule of thumb is to pay yourself a flat salary. This salary should be in line with your business’s performance and what the IRS considers a “reasonable salary” based on your tax setup. It is never a good idea to just “take some cash” from the business or stop paying yourself altogether. Business and personal funds and expenses should always be kept separate for your own protection.
12. How can I attract talented employees?
The most effective and obvious way to attract talent is to offer a competitive salary. However, this may not be a possibility for you so thinking creatively is beneficial. Other ways are to offer internship opportunities where students are eager to learn and bump up their resume, offer competitive benefits, offer perks such as remote work opportunities, and be the type of business that is inclusive and supportive of employees.
13. When will I make a profit?
The rule most entrepreneurs stick by is about a year. It takes around a year to start turning a profit. However, as the market changes with technological advances and communication, starting a company only gets easier. Keep in mind, that having a business plan will help you see when your business will start making a profit.
14. What entity should I form my company as?
There are several types of entities to form your company including S-Corp, C-Corp, LLC, sole-proprietor, or LLC. The best thing to do is to consult with your tax professional or business law attorney as this decision can make a big impact on your business ongoing. You can always change the entity down the road, but this process can be costly and time-consuming. You will want to choose the one that best supports your goals and tax setup.
15. Who will support me?
Outside of your business partners, it is beneficial to look for advice and guidance from others. Friends and professional acquaintances are a good place to start as well as networking groups and business advisory organizations. They can give you initial feedback. They will also have a fresh take on the idea and will mostly be neutral in their perspective. The internet is also a great resource. For financial advice, go to a professional. Business organizations such as
16. Will I need a lawyer?
It is always a good idea to make sure your new business is set up correctly to protect yourself and your business going forward. Consulting with a business attorney is not required but can be a good first step. An experienced business attorney in your state will no the local, state, and federal laws applicable to your type of business and can also guide you in the employment process.
17. How much ownership of my company should I give up to investors?
Growing your business should be a big priority, not over-optimizing ownership. While you want to make your investors happy, this should be weighed with growth projections and long-term goals. Consulting a business attorney on partnership agreements could be a good first step in analyzing ownership percentages. It is important in any negotiation that you have an advocate for what’s best for you.
18. How do I find a good domain name?
“.com” domains are the most sought after which means that many are already taken. However, 99% of them are available to be bought. Search www.networksolutions.com or other websites like this to find the owner of a domain name that fits your business and contact them and offer to buy the name. Be prepared to pay a fair price for the name, if you don’t offer something reasonable then you will be ignored. If you can come up with an original name for your business that gets you a great url or .com, that can also be advantageous.
19. How do I drive business to my website?
There are many ways to get potential customers to visit your website. You can pay major search engines (Google, Yahoo, Edge, Bing) to send you potential clientele. But building a great website is also crucial including keywords and SEO. Make your website easy to use with original, quality content. Lastly, use social media to your advantage. Create a plan using free sites like Twitter, Instagram, Facebook, etc. to drive potential customers to your website.
20. Where can I go for online resources?
The following sites can offer advice and guidance as you start your business:
Dye Culik PC is a Charlotte, North Carolina business and franchise law firm. Our attorneys love working with new businesses to make sure you are compliant with local, state, and federal laws to protect yourself and your business long-term. Give us a call at 980-999-3557 or contact us here to set up your consultation to see how we can help.