You may have spent years developing your skills and knowledge and are ready to start your own business to put your expertise and passion to good use. But starting your own business officially and independently—no matter the size—is quite a complicated process. From creating a solid plan to registering with the proper agencies and finding the right financial services, there are dozens of steps to take before you can even open. Despite all these complexities, about a million small business open each year—and you can do it, too.
If you’re ready to start your own small business, but aren’t sure where to actually start, this post is for you. We’ll discuss the basic first steps necessary to start any business, provide tips for how to lay a healthy foundation that will help you succeed and grow for years to come, and lots of local resources to help you begin. Keep reading to learn more!
Create a Thorough Business Plan
You may have a brilliant idea for your small business—it may even be simply an expansion of something you have been doing successfully on a smaller scale for years. However, without a specific plan, your business can encounter a lot of hurdles to its success, which can be particularly detrimental in its early years.
Business plans are essential for several practical and logistical reasons. Firstly, in order to qualify for business loans, your lender will likely require one. As Experian advises, “Think of writing a business plan as the price you pay to access the favorable business loan terms and lower interest rates available from banks and SBA-guaranteed lenders.” Beyond the necessity of business plans to secure financing, they also help you make sure you have a solid foundation for your new business and a plan for growth, as well as a realistic outlook for spending practices to reduce the risk of overspending, keeping your business solvent.
How do you write a successful business plan?
Developing a business plan is absolutely essential, but be prepared for some hard work. It can be an extensive and painstaking process, requiring a lot of research, critical thinking, and tough decisions. There are several different of varieties business plans, and which one you create will depend on whether your new business is a startup from scratch, an expansion of a smaller practice, or the purchase of an existing business.
As Forbes Advisor explains, any successful business plan with cover a number of important areas, including:
- An Executive Summary that summarizes your business plan
- Analyses of the industry, market, and your competitors
- Target market identification
- Marketing and sales strategies
- Details of your products and services
- Plans for day-to-day operations
- An organizational chart that includes details about your management team and each individual member’s role and duties
- A Financial Plan that includes cash flow statements, income statements, capital expenditure budgets, and balance sheets—this is especially important if you plan on applying for a loan
- An Exit Strategy, should things go wrong
If your business is also brand new or growing, it’s important that your business plan has a scalable model to accommodate its growth, with clearly outlined goals, that can be revisited frequently to ensure you stay on track, or adjust as needed.
Don’t Go It Alone
Because starting a small business is often an exceptionally complex undertaking, it’s important to remember there are a myriad of local and national resources to help you start your business on the right foot and run it successfully for years to come. Here are some key agencies to reach out to and explore their resources as you make plans for your small business:
- SCORE (Service Corps of Retired Executives): a nonprofit organization and network of business mentors “dedicated to helping small businesses plan, launch, manage and grow.” Not only does SCORE provide one-on-one mentoring, it also provides local educational opportunities from workshops to instructional materials.
- Southwestern Virginia SCORE: Offers mentoring, online webinars and workshops on dozens of topics, and an online library of small business resources. With offices located in Martinsville, Vinton, and Roanoke, Southwestern Virginia SCORE serves dozens of Virginia counties, including Botetourt, Craig, Franklin, Roanoke, Montgomery, Campbell, Henry, and Pittsylvania.
- North Carolina Piedmont Triad SCORE: Offers mentoring, virtual education opportunities, and a small business resources hub. This chapter of SCORE serves the Triad area of North Carolina including Greensboro, Burlington, High Point, and Winston-Salem.
- Raleigh SCORE: Also offers mentorship programs, new business support and training courses, community events, and other educational opportunities and resources. Serves Wake, Durham, Johnston, Franklin, Granville and Vance counties.
- U.S. Small Business Administration (SBA): The only federal agency fully dedicated to small businesses. Offers counseling, financial assistance, and thousands of educational tools and references for planning and organizing your small business practices. The SBA is an essential small business resource.
- Local Chambers of Commerce and Business Alliances: Greensboro, Raleigh, Roanoke, Lynchburg, Danville, Martinsville, and Blacksburg/Montgomery County.
- Small Business Development Centers (SBDC): Local offices that offer a number of resources on how to launch and grow your business, as well as pro bono advising and financing information. Here are links to a few local and statewide subsets: Roanoke, Virginia, Greensboro, and North Carolina.
Choose the Right Structure and Register Your Business
As you create a business plan, you will learn that an important part of the process is determining your business’s structure or entity. You’ll have to choose a business structure before you are able to officially register your business with your state, and before you apply for a tax ID and the appropriate state and local licenses and registration—but all of these items are important steps you must complete before your business can officially operate.
What type of business structure is right for me?
As the SBA explains in their guide to choosing a business structure, “Your business structure affects how much you pay in taxes, your ability to raise money, the paperwork you need to file,
and your personal liability.” Choosing the right structure is a crucial foundational step, because of how far reaching the effects of your choice can be. The above SBA article does a great job comparing the different types of entities. To help you decide, we’ll also list the types of businesses and a few associated pros and cons below. However, it’s a good idea to consult with a financial expert before making a final decision.
Sole Proprietorship: One owner. You are your business. You file your business income with your personal taxes.
- Pro: Easy to set up–no paperwork to file or registration for tax purposes.
- Con: Unlimited liability for everything. If you are sued you could lose your all your personal assets.
Partnership: Similar to a sole proprietorship, but allows for more than one owner.
- Pro: Easy to form with a simple partnership agreement.
- Con: Also has unlimited personal liability.
Limited Liability Company: Somewhere between a partnership and a corporation. Can have more than one owner.
- Pro: As the name states, owners’ liability is limited—personal assets are protected from lawsuits and debts. Flexibility in how you file taxes.
- Con: More complicated accounting and registration.
C Corp: A business entity that is distinct from its owners or shareholders. A corporation itself can buy or sell property and enter into contracts.
- Pro: Better access to financial resources and no personal liability for owners.
- Con: Complicated setup that requires a lawyer. Must pay corporate taxes.
S Corp: A cross between a C Corp and an LLC. You will be taxed like a partnership, without the liability concerns.
- Pro: No liability for owners and enjoys a simpler form of taxation.
- Con: More complicated to setup—requires the filing of articles of incorporation.
B Corp: An increasingly popular business structure that is designed to meet and showcase higher ethical and environmental standards.
- Pro: Appealing to customers, particularly those in younger generations. Owners are not liable.
- Con: Requires a verification process every three years to ensure it is living up to the standards of its mission and B Corp certification at large.
Keep in mind that it’s entirely possible (and actually quite common!) to change your business structure, should the need arise as your business grows or changes direction. If you already have a business structure and are considering switching to another, speaking to a financial expert can help you weigh the benefits and drawbacks of making a change.
How do I get an Employer Identification Number (EIN)?
Unless you operate as a sole proprietorship without employees, you will be required to get both federal and state tax ID numbers for the purposes of filing business income taxes, as well as paying employees.
You can apply for a Federal EIN for free directly through the IRS, online, through fax, and by mail. When you apply, you’ll need to know some basic information, including:
- Business owner (or responsible party): full name and social security number or individual taxpayer ID number
- Business name and mailing address
- Business structure type
- Type of business (what the business does or specializes in)
- Reason for applying for an EIN
- Date business was started and date you’ll start to pay employees
- Expected number of employees in the near future
Both North Carolina and Virginia also require registration with the state departments of revenue and taxation for withholding and possibly sales and use tax and other taxes. Each state has their own registration system and specific requirements. For more information and to register, visit the business registration portals for the North Carolina Department of Revenue or Virginia Department of Taxation.
What permits and licenses do I need?
In addition to registering your business for tax purposes, unless you are a sole proprietorship operating under your own name, you also may be required to register your business name and structure with the state. In Virginia, you’ll register with the State Corporation Commission. In North Carolina, you’ll register with the Secretary of State.
You may need to additional special permits and licenses, depending on the type of business you are running and where you are located. For instance, restaurants will need a food license from the department of health, while general contractors will need a contractor’s license. To find out what licenses or permits your specific business will require, reach out to your local chamber of commerce, office of the clerk, or occupational board. If your business is located in North Carolina, you can also browse their Business and Occupational License Database,
Get Financing for Your Small Business
If you’ve been planning to start a business, you may already have some funds set aside to fund your endeavor. However, to get your business off the ground, you will probably need to seek additional funding. This can come from a few sources:
- Private investors. Many who start small businesses will turn to friends and family members who may be able to offer a loan or funding in exchange for a stake in your business. The SBA may also be able to match you with an investor through their affiliated Small Business Investment Company (SBIC).
- Local business grants. You may qualify for city, county, and statewide grants for small businesses, depending on where your business will be located and who it will serve. Your local bank or chamber of commerce will be able to connect you to possible grant options, but here are some additional places to start:
- Commercial financing from a bank. This kind of financing can come in a variety of forms, come in the form of loans for larger purchases, and credit cards for smaller and ongoing costs. AMDB offers many options including business credit cards, equipment financing, SBA Loans, inventory financing, and commercial mortgages and construction loans.
As we mentioned above, having a solid business plan is crucial to being able to secure funding for your business; investors and lenders want to see that you have thoroughly researched the market, taken into consideration your long term and day-to-day expenses, and have a cohesive vision of your business and its role in the community. But discussing your business plan with your lender can have another benefit. Lenders often can provide valuable insights and expertise into the local business community, smart financial practices, and match you with the right funding options for your needs.
Consider Your Commercial Insurance Needs
Obtaining insurance to protect your property and equipment is an essential aspect of your financial plan. Additionally, you may need to provide workers’ compensation and health benefits to your employees and yourself, as well as liability insurance to protect you from risk associated with your product, operations, or services and cyber liability and data breach insurance to protect against cyber fraud.
The kinds of insurance your business needs will depend on its size and the goods or services it provides. Because there are so many coverage options, it’s helpful to speak to an insurance expert to find the right products for your business. AMNB works with Bankers’ Insurance to offer a variety of business insurance coverage options through hundreds of regional and national insurance carriers, including umbrella insurance policies. And when you’re ready to purchase a property, we can help you find the right title insurance in North Carolina or Virginia to ensure that your property title is clean and comes with no debts or tax liens.
Work With a Reliable, Knowledgeable Banking Partner
In order to operate effectively, manage finances and cash flow, and fulfill IRS requirements, businesses need to have bank accounts. Choosing the right banking partner that balances community business expertise and accessibility with modern services and amenities is important to do—right from the start. While it’s possible to change business bank accounts, the more your business grows and the more financial connections you make, the harder it can be.
At American National Bank & Trust we offer dozens of locations, advanced digital banking services and tools, robust accounts, and the local service that best serves your small business. Our commercial bank accounts, including many Business Checking and Business Savings options, are designed for businesses of all types and sizes.
Beyond simply providing business banking products, we also offer specialized, community-based, small business expertise. With our team of local leaders in each of the markets we serve, we are deeply connected to each community we call home, and can draw on this knowledge to help your local business thrive. Whether you’re looking to open a business bank account, apply for a commercial loan, or speak to a business banking specialist, we’re proud to be one of the best banks for small businesses in North Carolina and Virginia. Visit one of our locations today to learn more about what we can do for your small business.