30 Steps for Startups- Maryland
Below are the 30 Steps for Startups in Maryland, developed by the Will Holmes Consulting team. There is a lot of information here, but don’t let it overwhelm you! Each new step builds upon the previous steps to help guide you to success.
NOTE: Some links point to the old 30 Steps for Startups website. We are currently migrating that info to the WHC website. If you are unable to access it, contact us.
INDEX- LEVEL 1
Step One: Have a talk with yourself.
CONSIDER: Why are you doing this? What are your priorities? Are you mentally and financially ready? Is now the time? How much money do you have to get started? How is your credit? Can you get your spending under control? Should you wait to leave your job, go part time, or quit today? Can you deal with the risks involved? What sacrifices are you willing to make to be successful?
Being an entrepreneur is risky and emotional. There are lots of benefits that come with having your own business but, most businesses fail and you are going to have to work hard every day to make sales and generate enough revenue to cover your personal and business expenses. Hopefully, you’ll have some money left over for profits and reinvesting. Are you sure you are ready? Is this what you want? Audio: Live Workshop- Step One
Step Two: Consider the size of your company, the revenue you want to generate and the team you’ll need to help you.
CONSIDER: What is your revenue number? How much money do you need to bring in monthly to cover your personal and business expenses? Do you want to just make a few hundred extra dollars per month or do you want to fully replace your income and leave your current 9 to 5 job?
The bigger you make your revenue goals, be prepared for a bigger team and the need for better technology. Think about how many people you will you need to assist you. Research and understand what technology you need to sell your products efficiently. Start to develop a basic list of projected expenses. Do simple research online to determine if your industry is growing and trending upwards. Audio: Live Workshop- Step Two
Check out the following resources:
Link: Data source to research business trends on the Bureau of Labor Statistics website | Link: From the IRS website: The difference between personal expense, business expenses, capital expenses and the cost of goods sold | Bureau Labor Statistics: www.bls.gov | Federal Spending and Budget: www.fpds.gov www.fbo.gov
Step Three: Determine what need your product or service fills.
CONSIDER: How will your products or services make your customers’ lives better? Is your customer a person, a business, a government agency? Have you researched your market or spoken to any potential customers? Are you sure this isn’t a non-profit? Is there enough money in this venture for this to be a viable business? Or is this just a way to make a few dollars a month? How do you really know that your customer wants what you have to offer? How will your business reach enough potential customers to make enough sales to cover your expenses and turn a profit? How many customers do you have to sell to each month to cover your expenses?
Let’s talk about ego. Often, ego will get in the way of making money. Often, it will cloud decision making. When it comes to making sales, it is all about what the customer wants. It is not about what you think they should want or how great you think your product could make their lives. Focus on what the customer is telling you that they want. Understand their requirements. Understand what products are already out there and what improvements the customer wants and is willing to pay for.
Step Four: Determine your target market and determine your pricing model.
CONSIDER: You should know your customer when you see them. You should be able to reach them and talk to them about their needs before you build your product. How will you reach them? What is their Location? Age? Race? Gender? Income/ Revenue? Other Demographics? How do they receive information? (Via social media, newspaper, tv, blogs, videos, from their friends?) Are you selling to other businesses or to government agencies?
Understand that different demographics pay differently for the same product or service (Example: Honda vs. Audi or Toyota vs. Lexus). How much will your target market pay? Who are your competitors? How are your competitors reaching your target market? Use Google to find your competitors and then visit their websites. Use the Census Bureau and Bureau of Labor Statistics websites to research your target market’s demographics and to determine how many people actually make up your target market. If it’s too few, you may need to expand your target or geographical target area.
Step Five: Know your numbers!
CONSIDER: What is the price of your product or service? What are your profit margins? How much money will you need to get started? What taxes, fees and expenses are associated with manufacturing your product and getting it to your customers? Will you be making the product yourself or using a fulfillment center or partner? Is outsourcing your sales, marketing, production or manufacturing a good idea to keep costs low? How can you do it cheaper?
Examine your personal expenses, necessary business expenses and projected revenue. Fill in a cashflow statement to really get a idea of the timing of monthly expenses and revenue in year one. You might also want to consider if its better to purchase an existing business or build yours from the ground up. Research the lean business model to understand the concept of quickly testing a market to determine its viability.
IMPORTANT: If your business idea doesn’t make financial sense, either rethink it or consider a different idea. Remember, you are in business to make money. As a business owner, you have to be strong enough to stop yourself from working on bad business models and move on to testing better ideas. This may be where you start over at Step 3.
Step Six: Talk to your loved ones.
ASK THEM: Are they willing to support you financially and emotionally, if needed? Are they okay with the possibility of less money and less time with you? What long term and short term effects will this new business have on them? Use the info you have gathered so far to explain to them what to expect. Audio: Live Workshop- Step Six
Step Seven: Seek the help of the Small Business Administration, local small business resource centers, someone in the same business or an experienced Business Consultant to discuss the logic of your business idea.
It’s a good thing to have people tear your idea apart early in the process. Find your greatest Hater/ Critic. If they can’t find holes in your business process, then you may have a great idea! It will make your business stronger and more sustainable later.
Step Eight: Consider your value proposition and what sets you apart from your competition.
CONSIDER: What value do you bring to your customers? What do your customers perceive your value to be? What differentiates you from your competitors? Who are your competitors? What are your basic processes and standard operating procedures. What are your marketing and sales processes and how you will reach, message and convert customers? What metrics will you use to measure your success? How will you convey your message and value to the public? Are there organizations that you can partner with who share the same target market? What technology will you use to keep track of your customers, sales, metrics and money?
Step Nine: Choose a Business Entity and Understand Your Tax Obligations.
CONSIDER: Talk with an attorney and an accountant about the best business entity, tax structure and the types of contracts and accounting tools you’ll need. Will you build a Sole Proprietorship? LLC? S Corp? Partnership? Corporation? Depending on your chosen entity, you will need to complete different types articles/ bylaws before registering with the IRS and state. Don’t forget to ask about business personal property taxes!
Check out the following resources:
Link to SBA information on Business Entity Types | Preferred Providers- Attorneys | Preferred Providers- Accountants | Link to IRS information on Business Entity Tax Requirements | Link to IRS information on Tax Tips for Different Industries | Business Personal Property Taxes Maryland
Step Ten: Research funding sources and what you need to qualify.
SBA backed loans, micro loans and grants may be available. Also, research local private equity firms and angel investors. Additionally, find sources for commercial loans and determine what documents you need to gather and what qualifications you need to meet to qualify. Determine how you can use the customer’s money to get started with pre-orders or deposits. Is crowdfunding for you?
Step Eleven: Start to identify the skills sets and personnel needed on your management team.
Define your business processes and the types of people you’ll need on your squad to make your business grow. Determine if you need partners or if you can run your company alone. If you are taking on partners, you will need to determine revenue splits, roles and responsibilities and what financial obligations are required to be a partner. Additionally, start to research the costs of Virtual Assistants and other team members to help you with the simpler tasks.
Step Twelve: Research potential business locations and advantages of having your office or store in certain areas.
If you plan on seeking certain contracts, considerations or grants, location does matter. For example, there are benefits to having your location in a Federal HUB Zones or City Empowerment Zone. But, there are zoning laws that restrict certain business activities. Want to grow your business? Consider foot traffic, crime rates and competition in the area. Consider mass transit access for employees and customers. What about parking?
Step Thirteen: Choose an effective business name that works with your brand and your business strategy.
Having a similar name to another company can confuse your potential customers when they try and find you via Google. Research your business name and slogan on the internet, with the US Patent Office and on your state’s official listing of businesses. Look for available web domains and consider using a consistent social media handle if possible.
Step Fourteen: Research the laws and regulations!
If you plan on staying in business long term, you must stay in compliance with state, federal and local laws and regulations. Research laws, requirements, permits and licenses for running your business within your state. Determine if you are using fulfillment centers or outsourcing manufacturing of your products. If you are importing your materials or outsourcing, ensure that you are in compliance with international, federal and state laws.
Step Fifteen: Determine if you will have employees or use contractors.
If you plan to have employees, you must research and understand federal and state employer responsibilities such as taxes, payroll, workman’s compensation and unemployment insurance. If you use contractors, you must understand what you can expect from them and what types of agreements and contracts are acceptable.
Step Sixteen: Research necessary insurance types and bonding in your state. Know what is required for your business.
Certain businesses require more insurance and protection than others. This protects you and your customers.
Step Seventeen: Improve your understanding of your customer!
You should know what they look like when they enter a room. You should know their age range, income range, geographical location, likes and dislikes. You should know what differentiates your product or service from your competitors and why your target customer will prefer working with you. Do surveys and have focus groups with potential customers and gain a strong understanding of their needs. If you plan to work with the government or with government contractors, look at forecasts, budgets and go to hosted meetings to gain an understanding of upcoming needs, contracts and requirements for doing business with the government.
Step Eighteen: Write Your Business Plan.
Now that you have gathered all the info from steps 1-17, you should have information on your industry, target market, marketing strategy, management team, business processes, expenses, expected revenue and competition. You can determine what metrics you will use to measure success. You should now do more in-depth research on the market and take a hard look at your company’s strengths, weaknesses, opportunities and threats. Understand the political, economic, social and technical forces that affect your industry and business. A normal business plan can be 20 to 40 pages, depending on the complexity of your business and your intended audience. Business plans are written as a guide for your business, but can also be used to help qualify for a loan, entice investors and explain your vision to potential partners. If you have partners, this is where their expertise will truly help create a strong plan for growth. Incorporate their ideas and solidify their commitment to the business. If you don’t have 2-4 weeks to dedicate to writing your plan, seek the help of experienced business consultants to help you.
Check out the following resources:
Link: Business Plan Templates | Link: Census Bureau for demographics | Link: Bureau of Labor Statistics for stats on industries and customer spending habits | Link: Templates for Financial Projections
Step Nineteen: Obtain an Employer Identification Number (EIN) from the IRS website. Its free!
But, before your log on you need to prepare your business address, description of your business, business entity and the proper spelling of your business name. After you input this info, you will receive a Declaration Page. Keep this form! You will need this form to register with your state and open a business checking account.
Check out the following resources:
Link: Apply for an EIN on the IRS website
Step Twenty: Register your business with your state.
Different states have different rules, procedures, forms and fees. Research your state’s requirements and proceed carefully. In most cases, the final documents from the state verifying your new business’s legitimacy and tax status will be needed to open a business checking account.
Step Twenty-One: Research banks in your area and open a separate business account. You don’t want to mix business and personal expenses.
Determine which banks have a history of lending to your industry and supporting new businesses. Discuss benefits and small business options and open a business checking account in the name of your new business. You will need money and certain documents to open your account, so confirm what you’ll need in advance.
Check out the following resources:
Link: Preferred Provider Harbor Bank Online Account
Step Twenty-Two: Set up your online accounting, payroll and invoicing system.
Research available online accounting, payroll, invoicing and/or a PayPal account (or similar online payment system) so that you can receive electronic payments from customers and efficiently pay your contractors and vendors. These systems can be easily integrated.
Step Twenty-Three: Set up additional payment methods that allow you to accept payments in person.
Research Point of Sale (POS) Systems for your brick and mortar locations and face-to-face interactions with customers. Ideally, these tools should all be integrated with a customer relationship management (CRM) tool and accounting tool to help you keep track of your customers, your interactions and your transactions.
Check out the following resources:
Link: Integrating Your Customer Relationship Management System
Step Twenty-Four: Refine or develop your logo, branding, website, social media and business cards.
Most people do this on day two. But, why do we recommend waiting until Step 24? Well, after you have done your research and actually talked to your potential customers, it is easier to create ads, logos and images that cause the reaction you desire (converted customers). It is important to have a consistent, professional look. Don’t forget to create a dedicated phone number/ voicemail and email address to maintain a high level of professionalism. Remember to integrate your payment systems with your website!
Step Twenty-Five: Obtain a Dunn & Bradstreet D&B/ D-U-N-S number. It’s free.
When you apply for a DUNs Number with D&B, the Data Universal Numbering System issues a nine-digit number that is unique to your company. This DUNs number is used to create your business credit file, similar to how your social security number is used to identify your personal credit reports. It can be used by other organizations to determine your credit worthiness and financial strength. You will need this number if you want to work with the government and apply for business credit.
Step Twenty-Six: Finalize your strategy for officially opening your business.
Apply for funding if needed to purchase raw materials and supplies and cover startup costs. Use this time to triple check your expenses and look for ways to prioritize immediate needs and determine what expenses can wait. Test your technology, marketing and business processes and hire and train your team in preparation for opening day. Consider a public relations strategy to go along with your marketing plan. Take time to update your business plan as needed.
Step Twenty-Seven: Do the final checks! Review your local, state and federal regulations.
You don’t want to get shut down due to non-compliance! Purchase proper business insurance and obtain necessary licenses and permits. Have a talk with an accountant to ensure that your process for tracking your expenses, revenue and tax obligations are in order. Talk with an attorney to ensure that your contracts, terms and legal obligations are in order. Speak with an experienced Business Consultant to ensure that your marketing strategy makes sense. Get final approvals and inspections from state, federal and local officials.
Step Twenty-Eight: Get connected with your local politicians, local chambers of commerce, trade and professional organizations and local business publications.
Become familiar with elected officials and organizational leaders who can affect your industry. If you are doing business with the government, begin to register and become certified as a vendor so you can be considered for future contracts. Research and join groups that actually help their members to grow.
Step Twenty-Nine: Use all free and low-cost methods for creating awareness about your business.
Look for ways to partner with larger or similar organizations that share your target market. Negotiate terms so that your joint marketing and messaging is mutually beneficial. Consider advantageous, strategic situations that involve joining boards, assisting non-profits and meeting influential people.
Step Thirty: Implement the strategy and tactics you developed in your business plan!
Begin to market and sell your products and services. Submit proposals and go to informational meetings. Network with a purpose! Begin to test your advertisements and track response rates and customer conversion rates. Keep your eye on the dollar! Sales drive the growth of your business! Remember to keep yourself and your team motivated and don’t be afraid to make some mistakes. You are ready! And when you get tired, remember WHY you are doing this.