let's be honest starting a small business isn't easy so i understand where the hesitation comes
from i mean a lot of people think to themselves whoa whoa whoa i don't want to go into more debt
to start a business plus it's very risky 8 out of 10 small businesses fail right well
here's the thing how to start a business in 2020 is easier than it's ever been before
you see back in the day you would have to go out and get a loan so you can get retail space
or office space just to set up your foundation so you needed thousands and thousands of dollars
just to get started and you need to hope and pray that someone actually buys your products
and your services well today you can start a business without nearly as much capital and as
the co-founder of two companies and someone who's helped a lot of people get started i'm excited to
share with you exactly what we learned about how to start a business in 2020. hey i'm sean
with life accounting the accounting company that saves you from bad financial decisions and low
profitability now there are so many things to think about when you're starting a business
so today we're going to make it super easy for you and break down what you need to think about
step by step but before i dive in make sure you like this video and you subscribe to learn more
about business and financial growth also you don't have to follow this exact order but if you do
then it'll make it much easier when you connect all the dots all right let's go ahead and get into
it with step number one build your business plan now this step is so obvious so plain so apparent
so okay sean we get it i mean a business plan is like an idea right well as someone who has
personally rushed through this stuff i can tell you that it is a mistake to not fully
think about your business plan now sure you won't have it all figured out on day one but you should
definitely ask yourself some of these questions what problem does your business solve and who
are the people who have this problem you want to define your audience how big is it what are their
goals what are their challenges and also think about your competitors what are their solutions
and how are they solving the problem what makes you different and also how can you sustain this
difference if you need to replace yourself and also will you need a team will you need a partner
what will be your initial cost these are just some of the key questions that you need to ask yourself
before you even decide to start a business think of it like this you might decide you want to
start a boutique burger restaurant you may get so excited that you find your location you put
together your digital menu you hire some staff and you get ready for business only to find out later
that there are eight other burger restaurants with bigger menus more quality and lower cost and
because you skip the business plan step you're on a fast track to business failure before you
even get started so plan plan plan and when you're done planning plan some more let's move on to step
number two choose your business entity ladies and gentlemen boys and girls it's time for entity wars
let's get ready to choose now there are five types of entities that you can look at when you're ready
to make it official so we're gonna look at some of the pros and the cons of each one starting
with sole proprietorship now sole proprietors is someone who owns an unincorporated business
for themselves which basically means that you begin working at any time for yourself the pro
here is that you can get started without fouling any forms which require annual fees another pro is
that you are in complete control you keep all the profits and losses for yourself the kind of sole
proprietors is that your financials and your legal situations are tied together this means that you
are personally liable for your company's actions so if someone has a bad experience with your
company and they sue you then they can go after your personal assets which obviously could affect
you and your family so i would only recommend a sole proprietorship if okay i don't recommend
a sole proprietorship let's move on to the next business entity which is a general partnership if
you want to go into business with someone else and you want the same ease of maintenance and freedom
that a sole proprietorship gives you then you may want to consider a general partnership now the
pros and cons of a general partnership are similar to those of a sole proprietorship except you share
control taxes lawsuits profits and losses with a partner or partners so needless to say i'm not a
big fan of general partnerships either because you don't have liability protection now the
third entity to choose from is a c corporation which sounds so prestigious right well let's
look at the pros and the cons the major pro of a c-corporation is that they are legal entities that
shield stakeholders from personal liabilities and company debt so if someone sues the company then
the only thing that person can go after are the corporations assets another pro of a c corporation
is that they can take special deductions such as fringe benefits now the kind of c corporations
are the strict guidelines on operations oftentimes you have to hold broad meetings
record minutes and meet trading requirements so for most small businesses you will spend more time
managing the corporation than actually growing the business plus another con is that you will
experience double taxation which basically means the corporation will be taxed and the
shareholders will be taxed on any income that the company generates now this is an
oversimplification of how c corporations works but in short they're more complex and
it can be a huge opportunity cost if you use them the fourth business entity to choose from is an s
corporation now at first glance the s corporation and c corporation are very similar except that s
corporation is limited to 100 shareholders however the major pro of s-corporations is that you avoid
double taxation because the tax liability is passed down directly to the shareholders
instead of the corporation and you still get liability protections that c-corporations offer
now the kind of s-corps is that you still must have articles of incorporations and you must
record corporate minutes like c-corps the entity can be pretty complex and generally requires
the help of an accountant for example an s-corp requires that all shareholders within the company
take a reasonable salary even if the company is not making a profit now let's cover a fifth and
last entity on my list which is the llc llc stands for a limited liability company to me it's like
the combination of a sole proprietorship partnership c corporation s corporation
all booked into one good flexible option the major probe at loc is that it offers more control and
flexibility while also providing that liability protection also you can choose your tax structure
from any other entities that we already covered now the major con of llc is that you are required
to pay an annual fee and this structure makes it really hard for investors to contribute capital
whereas a s corp or c corp makes it very easy so in my opinion out of all these entities the clear
winner here is the llc but hey maybe you have a different opinion comment below which structure
you think is best let's move on to step number three register your business registering your
business may differ between states but oftentimes you will still want to file with your secretary of
state office if you have partners it's important to create an operation agreement between you
and the other stakeholders this agreement will be used to decide voting rights or control ownership
percentage successorship and more many states will ask you for your operations agreement when you're
registering your business once you're registered then it's time to move on to step number four
get your ein ein stands for employer identification number this is a simple step in
the process where you need to make sure you fill out a brief application so you can get a unique
number for your business your ein works like a social security number but for your business you
will often need it when you're paying employees applying for licenses or permits filing your taxes
and paying your team you will also need it for step number five set up your business bank account
the cardinal sim when operating your business is to mix your personal finances with your
business finances because it can easily blur the lines between your business profit and losses
and your tax situation okay let's see 23 sales product cost shipping costs make a d
tesla uh freeze irs okay so maybe the irs won't show up at your door but you still want to make
sure that you're relying on accurate information so you can make strong business decisions all
right let's move on to step number six set up your accounting once you have your business bank
account you want to make sure you're tracking all your transactions with something like quickbooks
and then hire an accountant to help assist you with your bookkeeping your taxes and monitoring
your finances closely this way you can concentrate on growing your business instead of more reporting
all right let's keep going with step number seven get business insurance i know i know insurance
can be boring and sometimes feel like a waste of money earlier we talked about business entities
and protecting your personal assets but if you're serious about the success of your business then
make sure your business assets are protected as well step number eight protect your intellectual
property if you have something that is extremely unique and you spent a lot of time creating it
then you should protect it that means opting in for trademarks patents copyrights and so on but it
needs to be extremely unique and important listen whether you have a protection in place or not
people will try to copy your success so remember there's an opportunity cost to everything that
you do you want to make sure you're focused on your growth rather than protecting your
trademarks against nobody especially because your legal costs can get very expensive
and time consuming and unfortunately sometimes these copycatters will win their legal arguments
with a small and simple modification so make sure you stay focused and unfortunately sometimes these
copycatters will win their legal arguments by making small and simple modifications all right
let's move on to step number nine start marketing in advertising now when you got all your business
stuff set up and you're ready to go to market with your products and your services then you're ready
to start marketing and advertising your business if you're just starting out then you can check
out my video on how to calculate your marketing budget but the key takeaway is to make sure you're
putting away at least a year's worth of expenses that will be spent on your advertising which leads
us to our last step step number 10 be patient and prudent remember what i said at the beginning
starting a business isn't easy but in 2020 it's easier than it's ever been before and in 2021 it's
probably gonna get even easier you can do a lot of the things that we talked about by simply whipping
out your laptop and hanging out on the couch the most important key to your future success in my
opinion is to be patient and prudent because if you follow the steps outlined above there's
no reason to give up after a few months and if you're being prudent about your expenses and
your financials then you will be able to build a long-lasting company so in conclusion follow these
10 steps number one create a business plan number two choose a business entity number three register
your business number four get your ein number five set up your business bank account number six
set up your accounting number seven get your business insurance number eight protect your
intellectual property but that's optional number nine start marketing and advertising and number
ten be patient and prudent well that's it for this video guys if you enjoyed it tell us in the
comment section below and as always thank you for watching and i'll see you in the next video you