“Know yourself, and work in a job that caters to your strengths. This knowledge will make you happier” – Sabrina Parsons
Begin by taking stock of yourself and your situation. Why do you want to start a business? Is it money, freedom, creativity, or some other reason? What skills do you have? What industries do you know about? Would you want to provide a service or a product? What do you like to do? How much capital do you have to risk? Will it be a full-time or a part-time venture? Your answers to these types of questions will help you narrow your focus.
- What would you do if money wasn’t the problem?
- Is money really important? Or rather, is making a lot of it really important? If it is, you’re probably going to be cutting out a number of options.
- What things really matter to you?
- Do you have the support of your family, especially your immediate family? They may have to make sacrifices at the beginning, so it’s important to have them behind you.
- Who do you admire in business? Perhaps in the industry you’d like to go into. Why do you admire them? What are their likable traits? What can you learn from them?
Analyze the industry
“The more you know about your industry, the more advantage and protection you will have” – Tim Berry
Once you decide on a business that fits your goals and lifestyle, you need to evaluate your idea. Who will buy your product or service? Who would be your competitors? You also need to figure out at this stage how much money you will need to get started.
Your ‘personal evaluation’ was as much a reality check as a prompt to get you thinking. The same thing applies when it comes to researching your business and the industry you’d like to go into.
Evaluating your market
In order to identify how attractive your prospective market really is (your own desires aside for the moment), there are a few things you should consider:
- How urgently do people need the thing you’re selling/offering right now?
- What’s the market size like? Are there already a lot of people paying for this thing? For example, the demand for ‘traditional signwriting classes’ is almost non-existent.
- How easy (and how much will it cost) to acquire a customer? If you’re a lead generation business, this may require a significantly larger investment that say a coffee shop.
- How much money and effort will it cost to deliver the value you would like to be offering?
- How long will it take to get to market? A month? A year? Three years?
- What size up-front investment will you need before you can begin?
- Will your business continue to be relevant as time passes? A business that repairs iPhone 5 screens will only remain relevant so long as the iPhone 5 sticks around. If your business is only relevant for a specific period of time, you will also want to consider your future plans.
Realistically speaking, registering your business as a business is the first step toward making it real.
However, as with the personal evaluation, take your time to get to know the pros and cons of different business formations. If at all possible, work with an attorney to iron out the details. This is NOT an area you want to get wrong.
You will also need to get the proper business licenses and permits. Depending upon the business, there may be city, country,or state regulations as well as permits and licenses to deal with.
The term “business license” is a bit misleading as it makes it sound as if there is one license you apply for, sort of like a driver’s license, that you obtain and—voila! You’re legally in business. That is not the case.
Generally speaking, a business license is granted at the city level, and is a fee paid to get a tax registration certificate and legally allows you to conduct business in that area. All of the total licenses and permits you’ll need depends on several different factors: the type of business you’re in, where it’s located, and your specific business needs.
For example, say you’re a restaurant that wants to serve alcohol and have an outdoor patio. Depending on your location, you may need a license to open a restaurant in your selected location, a license to serve alcoholic drinks on the premises, and a permit to build a patio area. Most likely, those would be three different applications, possibly involving you going to three different government departments to obtain them.
Don’t forget that these types of licenses and permits are also different from the legality of your business entity; just because you’ve incorporated your business or formed an LLC doesn’t mean you’re done with the fees and paperwork.
The federal government in the United States generally only requires permits and licenses for very specialized industries. If you’re manufacturing alcohol or transporting farm animals across state lines, opening a commercial fishery or a gun shop, for instance, you’ll need to check out their requirements.
If it seems like your industry is very niche or has a high level of liability, the odds are you will need to jump through some hoops. For the complete list with relevant links to resources, look here.
State and local level
As there are fifty different states, you can imagine the level of diversity in laws regarding permits and licenses. You can find a general state-by-state directory here, while local laws will vary even more. There are some consistencies, however; every state has an alcohol control board, and you can be sure that if you need to demolish or build a structure (such as a patio or parking lot) or a building, you will need a local permit.
Permit and license types
Permit types will of course vary by state and local law, but there are a few areas where you can almost always expect to be applying and paying for a permit or license.
Land use and construction
If you are creating a building or structure on a piece of land, you will almost certainly need a construction permit from your municipal government, based off of local zoning laws. You should be able to find the pertinent contact information and applications on your city’s government website, such as this one.
If you’re using or building any kind of a facility, such as a storefront, office, factory, commercial kitchen, or similar, you will need the space to outfitted appropriately for your purposes and up to corresponding legal codes.
Signs and building exterior
Somewhat related to the above, many city or county level governments have rules related to to the size and placement of signage and the look of building exteriors (such as painting murals or bright colors) that are good to look into, and bear in mind as you decide upon branding for your business location.
If you are selling alcohol, your business and in some states your employees will need a liquor license to do so, which you can obtain at the state level. If you are manufacturing alcohol, you will need a federal permit.
If you have an existing parking lot at your facility, this shouldn’t apply to you, though you may need to negotiate use of spaces with your landlord if you have one. If you need street parking in your area, you will need to purchase a parking permit from your city government for each of your company vehicles.
If you are constructing a parking lot, you’ll need a construction and land use permit from your municipal government, and don’t forget that it must be compliant with the Americans with Disabilities Act.
Industry specific licenses and certifications
In your field, there may be industry associations or state boards that you have to apply for, possibly including tests. Most people immediately think of a lawyer having to pass the bar or a doctor being board certified, but did you know that you also need a license to be a hairdresser,and a certification to be a personal trainer? If you sell food, you will need a clean review from the health department and the corresponding permit. Make sure to do your research into your industry so you have all of the licenses you need.
Natural resource licenses
Most counties or municipalities have rules and regulations involving business use and possible pollution of air and water. Look into which laws may apply to your business, particularly if your business must dispose of a lot of waste, as you may need to apply for a specific permit to do so. If you deal with any hazardous materials, this one should be a no-brainer, and you may need to be in compliance with additional regulations regarding pre-disposal storage of those materials as well.
Do I really have to?
The short answer is yes. While it might be tempting to think you can skate through without the necessary business licenses and permits, you’d be leaving yourself wide open to fines and legal liability if something goes wrong. One of the requirements of being a business owner is getting all of your licenses and permits out of the way and keeping them up to date. It can be complicated and time-consuming, but it simply comes with the territory of entrepreneurship.
Have you had a difficult time getting the permits or licenses you need to start your business? Did you have a useful tool or trick that made the process easier? We’d love to hear your story!