Building a Business from the Ground Up

By Grace Cuollo (Columnist for Wealth Intelligence Academy)

So you have this great idea, and you're thinking of going into business to capitalize on it. You are pretty sure that all you need now is a little guidance on how to get started. Starting a business is never easy, and you want to be as prepared as you can possibly be for what may be lurking ahead. With that said, let us do a little litmus test to see if you really want to choose the entrepreneur path.

The first thing you must understand and accept is that in order to get things up and running, there may be times that you will need to dedicate extra time and energy to your business. These longer hours may cut into what would typically be personal or family time. Are you willing to make that sacrifice?

The second thing you must ask yourself is if you are willing and able to leave your ego at the door. Are you willing to seek out the advice of those who have been in your shoes and succeeded in doing what you are working to achieve, and are you willing to take that advice? Are you aware of your strengths and your weaknesses, and are you willing to bring on board others who have skills that complement yours?

How much do you truly desire this? Are you ready to commit to what you are beginning, and see it through to the end? It is here that you will find yourself most greatly challenged. It may challenge everything that you thought you knew about yourself, and then some. Do you have what it takes to absorb the highs and lows of building a business, and do you truly possess the unmitigated drive to succeed?

If you doubt yourself, then do not get started until the time comes that you have the confidence to do what is necessary to prevail. If you can honestly answer yes to all of these questions, then forge onward with my blessings.

The Business Plan

The first thing that a business needs is a good, solid business plan. A business plan is your road map to your final vision. It will help you to focus on exactly what it is that you are trying to accomplish, and how you plan to get there.

It is also crucial to have this plan written when presenting your ideas to others. The ability to visually see your proposed road to success will allow friends, family, and potential partners and investors the chance to develop confidence in your vision, and hopefully, will inspire them to support and help you.

Funding

Generally speaking, the bigger the business, the larger the overhead. Understand where your capital is coming from. If you are starting on a smaller budget, then you may want to consider starting out of your home and expanding as finances allow. You may later be presented with an opportunity in which it makes sense to borrow money to grow your business. Because of this, your credit score is important. Banks will rely heavily on your credit score when deciding to loan you money. Be sure you know what your score is and, if needed, work toward improving your score as much as possible.

Entity

You must decide on the type of entity your business will be. Will you be a sole proprietor, or do you want to enter into a partnership? Depending on your situation and your business idea, perhaps a corporation or limited liability company would be a better choice. This decision is an immensely important one, and it may behoove you to seek the advice of a professional or professional organization, such as a CPA or an attorney specializing in the development of professional entities.

You will also want to consider the fiscal year of your business. Depending on your circumstances, you may want to use the regular calendar year as a start and end date, or it may be beneficial to use different months as start and end dates.

These decisions will have an impact on your tax filings at the end of the year, so choosing the most appropriate entity and fiscal year for your situation will both be very important decisions.

Federal Identification Number

A federal tax identification number, also referred to as an Employer Identification Number (EIN) is given to you by the IRS as a means to identify your business for tax reporting purposes. If you form a business entity, you will certainly need a federal identification number. It is easy to get an EIN, and you can set one up by contacting the IRS. If you decide to establish a professional entity through the means of an outside resource, they will probably get the EIN for you.

Accounting

The method for keeping accounting records will be another choice that you will have to make. There is a variety of accounting software that is available on the market these days that does a very nice job of keeping the books organized. You will want to do some research in this area, since some software will be more user-friendly than others, and you want to purchase a software package that will be most appropriate for your situation. It is possible, however, to keep records without software, and if you feel that your situation lends itself to a non-computerized method of accounting, then there is nothing wrong with going that route.

Contracts

If you will be presenting contracts or are presented with contracts as a part of your business model, than you may want to discuss them with a licensed professional before implementing them. Make sure they meet your requirements for personal and professional protection, and, if applicable, that they meet any federal, state, or local regulations as well.

You want to start your business the right way, and taking the proper initial steps will go a long way in helping you to do that. There have been countless unfortunate situations in which people tried to cut corners when first starting out, only to learn too late that doing something differently in the beginning would have meant success and not failure.

Starting a business may feel a little overwhelming in the beginning, especially if you have never done it before, but with guidance from the appropriate professionals and by following a few carefully plotted initial steps, much of the fear and uncertainty should be lifted, leaving you free to begin your new adventure toward achieving your dreams.