Hello this is the team over at R & R Chicago, a pressure washing company in Chicago. Prior to R & R, all the founders have started and operated successful businesses and we decided to create a quick little start up guide for all aspiring entrepreneurs. Without further ado: the guide.
Prerequisites
This will be the longest part of the guide because it is arguably the most important. Starting a business blindly might be one of the dumbest and costliest mistakes you could make. Waiting a few months, and saving some money in the meantime, could be the difference between success and failure.
- Decide what business you want to start. Is this something you have experience in, such as an experienced plumber looking to venture on his or her own? Are you entering a new industry with no prior knowledge? Or are you starting something that has never been done before?
If you already have experience in an industry, then you must figure out what your value proposition is. The value proposition is simply what will you offer different than every other plumber in town? Is it a higher standard of customer service? Are you adding something new? Figuring this out early on will help you greatly down the road.
If this is a new industry for you, make sure you spend a few months in it working prior to starting your business to learn the ins and outs and most importantly the processes (the steps you take to complete a job).
If this is something entirely new skip to the next section.
No matter what you decide you must know how the industry works or you will have a long uphill battle.
- Do your homework. Figure out exactly what you're offering, why people need it, who exactly needs it, how much they will pay for it, who else offers it, what do they offer that is currently not satisfying customers needs. This is called target market research. This is the one thing every failed business has in common - they have a great idea, a few people tell them it's good and they just go head first. But that is probably the #1 mistake you could make. You need to know EXACTLY who your market is: We build custom utility belts for large commercial plumbing companies with yearly revenues of $1MM or greater in the midwest market and online, most of their owners are in their 50s and 60s, very indecisive and frugal but once you have them as a client, they'll be a client for life.
Next, work in the industry if you haven't already. Now if it's a new field or an app, one of the best ways to gauge customer interest is by starting a website or simply a landing page and gathering emails through a sign up. Pretend like your business is up and running and see how many people you can get to sign up. If not many seem interested, either refine your target market or move on to something else.
The Guide
So your idea checks out, you have people interested, and you know how to do any service or create any product you will be selling. Now you need to create a budget for start up costs. Remember the less expensive a business is to start, say cleaning houses or selling souvenirs, the more competition you have. The more expensive it is to start say marine construction or underground drilling, the less competition you have.
With budget created, it's time to choose a name. Choosing something that is closer to the beginning of the alphabet is always a good option for SEO as well as being found in directories first. Make sure it is not taken by checking your state website's LLC database and a domain name provider - we used Namecheap, the cheapest domain provider we could find.
With name in good standing, purchase the domain name first and build the website. We used Divi for a quick and easy template to get something going and updated as time went on. This is important because you'll want the domain to age as soon as possible for SEO purposes. Sign up for Google Business, trust us you'll want to be on the snack pack when people search for you. Your business will show up even if its on the 100th page. Cost so far: $70
Hire a lawyer to draft up your Articles of Organization. If you are in a low liability business, you can hold off on the LLC and just get an FEIN and open a bank account known as a Sole Proprietorship. If you're in a service business or something that could result in a lawsuit, which these days could be anything, an LLC is highly advisable. You can also form this yourself but highly inadvisable. You can draft it up and have a lawyer look it over to save money. Cost so far: $150 - 800
With your LLC or Sole Proprietorship formed next up is other legalities. Get your insurances (general liability, other applicable insurances), licenses if necessary, and workman's comp (if it's just you at the time you can hold off but please make sure to consult with your attorney). For your insurance get on the monthly plan rather than pay the premium upfront. Cash flow is very important and having money in the bank when you're getting started is crucial. We would also recommend filing as an S-Corp so your business becomes a pass through entity (meaning money goes through it to you) and you only pay taxes once. Cost so far: ~$250- $2500
Get your start up equipment if needed or if it's not just simply business cards and begin talking to people. Whether it's in person, phone calls, blogging on websites, answering questions in forums, etc. Tell everyone you know about your business. This was a tactic we used to employ when launching new venues in the hospitality industry. And you'd be surprised how few people talk about their business.
And that's basically it. Starting a business isn't hard, the difficult part is finding clientele and convincing them to use you as opposed to other providers or suppliers. But with consistent delivery of good customer service, a unique approach, and strong marketing and sales plan you will see your business grow in no time.