The U.S. Small Business Administration recently hosted a Twitter chat on how to start a business. We were among the expert participants including Google Small Business, Constant Contact, IRS Small Business, QuickBooks, SCORE and more, who shared tips and resources on how to take the first steps to entrepreneurship! Below are some highlights from the session.
“How to Start a Business” Chat Questions and Answers
Over the course of the hour-long #SBAchat, we answered 6 of the biggest questions people ask about starting a business. Here’s each question with our answer, plus a few of our favorite answers from others.
Q1: How do you distinguish between a business and a hobby?
Our answer: A hobby costs money. A business makes money!
This answer earned us a lot of ❤️’s on Twitter.
We also liked this answer from Constant Contact: “Traditionally, a business is something that is providing you with income while a hobby is strictly something you do for enjoyment. That being said, as more and more people — particularly Millennials — begin to monetize their hobbies, the lines have become blurred.”
If you think your hobby would make for a sustainable and profitable business, check out this resource from Venturize to determine if your business idea has legs: Turn Your Bright Idea into A Business
The IRS has 9 factors to consider when determining whether an activity is a hobby. See them here: How do you distinguish between a business and a hobby?
Q2. What’s the first step you should take when starting a business?
Our answer: Fully vet your idea…Who will buy your product/service? What will they pay for it? Why will they buy it? Who are your competitors? What makes you different?
Here is a nice guide on how to do market research from Entrepreneur: How to Do Market Research-The Basics.
The Association of Women’s Business Centers answered that once you identify your skills, passion and expertise, you should create a business plan that lays out the marketing, operational and financial strategies for your business.
Brinks Money Solutions said to always map your plan and recommend using the Business Model Canvas because it takes a customer-centric approach and then works backward to define all other aspects of your business. It also gives you a holistic view of inputs and outputs.
Q3. There are many different types of business structures. How do you determine which one is right for you?
Our answer: Talk with a local business attorney and CPA to find a structure which gives you control, limits your liability, and minimizes your income taxes.
We love this complete list of business structure’s via the Small Business Administration: Choose a business structure.
Karen Kerrigan, President & CEO of the Small Business & Entrepreneurship Council, suggested that tax considerations may weigh in too. She said J.K. Lasser’s Small Business Taxes 2020* book could be helpful.
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Q4. What are some common problems to avoid when starting a small business?
Our answer: Assume it will take 2x as long and cost 2x as much to bring your idea to market. So stress test your projections and develop contingency plans for the inevitable speed bumps.
Be sure to check out this list of the 10 biggest mistakes small business owners make from Intuit: 10 mistakes to avoid when starting a small business.
The New York Small Business Development Center listed the following common problems:
- Not thinking incrementally–Entrepreneurs see their vision for the business in its totality and tend to overspend b/c they think they need everything at once
- Under capitalization
- Not having or using a business plan
Google Small Business replied that when starting a new #smallbiz, try to avoid:
- Buying too much inventory
- Ineffective and expensive marketing campaigns
- Outsourcing services that can be done in-house
Q5. What are the different ways to fund a small business?
Our answer: Yourself, friends & family, crowdfunding, angels, banks, venture capitalists, grants, customers, suppliers.
Here’s a comprehensive list of ways to fund your business via Bplans: 35 Great Ways to Fund A Small Business.
Crowdfunding is has also become a popular way to fund a startup. This resource explains the 3 primary types of crowdfunding.
We liked these creative funding ideas from Sandeep Todi, co-founder of REMITR who suggested the following:
- Introduce a partner who can inject capital
- Loan against future earnings. Banks may not believe in this but someone will
- Use credit card rollover if ROI is justified
- Find customers who are willing to pay in advance
Small Business Majority advised to make sure you’re working with a responsible lender. Learn more about responsible lending with the The Small Business Borrowers’ Bill of Rights.
Q6. What free or low-cost resources are available to help you start a small business?
Our answer: This list of 7 government resources to help small business is a great resource via Smart Hustle’s Ramon Ray.
(And Ramon shared great advice on how becoming a celebrity CEO can help your business grow on the BIGG Success podcast!)
Other resources that were mentioned:
- U.S. Small Business Administration
- The Census Bureau
- IRS Small Business and Self-Employed Tax Center
- QuickBooks Resource Center
…And the New York SBDC reminds us to not forget about these wonderful resources:
- Public Libraries
- Local/public computer labs with online learning programs associated with colleges
- Networking groups that have speakers
- Insight from business owners
- Customer feedback
Last but not least, keep coming back here to BIGG Success! We serve small businesses, professionals & organizations. Helping you grow your brand and think like an entrepreneur for personal, professional, financial, and business success.
View our other #SBAchat recaps:
And if are ready to take the plunge into entrepreneurship, talk to us about coaching.
Here’s to your BIGG success!
George “The Professor” & Mary-Lynn
Co-Founders, BIGG Success
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