American Gateway Bank's Blog

Making your dream a reality: Starting a small business

So you have the next million dollar idea! You are finally ready to kick your day job to the curb and start your own small business. You are ready to be your own boss, or so you think. Do you even know where to start?  Did you know that 33% of businesses fail in the first two years and after four years only 45% are still in business? The primary reason that most of these businesses fail is due to poor planning and execution of their business plan. Business Plan? Wait, what's that?

So where do you start? You have the idea and it is going to make you rich. Do you love doing it? This is also a place where people go wrong. If you want to start a small business, make sure it's something you enjoy doing. So let's talk about the steps you should take when starting a small business.

  1. Write a Business Plan

    You are probably wondering what a business plan is. A Business Plan is a formal statement of a set of business goals, reasons they are attainable and how your business will attain them. A Business Plan is a little more lengthy and entailed than that, but there are tons of resources on the web to assist you in writing a Business Plan.

  2. Choose a Location

    Are you starting the business in your home? Do you need a building? - You have heard it a million times, "Location, Location, Location!" Another reason that many businesses fail is due to location. This should definitely be something that you put time into choosing. Yes, you may be able to find cheaper real estate somewhere else, but why is it cheaper? Have 10 other businesses tried this location in the past five years? Why haven't they succeeded? What will change the location, just because it's your business?

  3. Finance your Business

    How are you going to start your business? Are you going to self-finance your business? Do you have working capital, money to carry the business and yourself through the first 18-24 months? Many people believe that they can make the business run with their funds but often forget about having to pay themselves.

    Are you going to borrow the funds to start your own business? Do you need to borrow funds to purchase the new location? Many banks work with the U.S. Small Business Administration (SBA) to help small business owners get started. Contact your local bank to see if they participate in SBA programs.

  4. Choose a Legal Structure for your Business

    Are you going to setup a Limited Liability Company (LLC) or just act as a Sole Proprietor? These are questions that you should ask an attorney. You should also register the name with your Secretary of State.

  5. Register for State and Local Taxes

    Death and taxes are the only two things that are certain in this life. As a small business owner, you need to register to pay and collect both state and local taxes. These are two important things that you do not want to get behind on doing.

  6. Employees

    Are you going to run the business alone? Is this really a one man or woman show? Do you need help to grow your business? These are all questions you have to ask yourself. You also have to understand that with employees come other responsibilities. You have to understand all of the laws that go along with hiring employees. You must understand taxes and benefits (should you choose to offer both).

So starting a new business is not as easy as putting an open sign in the window. You need to be prepared and ready before you even open the doors. But with a little time and determination, you might just have the next million dollar idea. There are lots of great resources out there for people looking to start a small business. One great resource is your local community bank. At American Gateway Bank, we have Small Business Bankers that are experienced and willing to help you get your business off the ground and running. Feel free to visit our Business Banking Page or any of our convenient 10 branches.

Posted by Edwin Lagarde at 09:00