This article contains the first 3 of 10 total steps I follow to start businesses. In the following weeks, articles will be provided consisting of the remainder 7 steps. STAY TUNED!
Starting a business can be a daunting task. There are a million variations to accomplish
a variety of goals. And when you list it all out, it can cause you to second guess the idea. However, as a persistent business owner, you must acknowledge that the road won’t be easy. Identifying a plan and chopping it into bite size pieces is important.
While there may be no one single way to create a business every time, the ten steps discussed on this blog series over the next few weeks have been proven to work in my businesses (no matter how big or small) TIME and TIME again. For this case study, we will also use mu business, The Cashflow Hustle, to go through how I utilized each of these steps.
1. Identify passions, pick a niche & know your target audiences NEEDS
For me, part of starting any business begins with reflection on passion and enjoyment. If you have neither in your pursuit of financial independence, it is going to be a long and painful road. You can make money doing anything - especially what you don’t enjoy doing. So, why not generate some revenue while doing what you enjoy?
I am a big list (spreadsheets, etc.) kind of guy. So I start a list of each passion and then list types of businesses that could serve each of those niches. Once you have identified some ideas that bring you thoughts of joy and fulfilment, you need to weigh the options using pure economics. If you want a hobby, this article won’t be of great use to you. However, if you want to provide value to consumers and monetize your product or service, then please continue.
Once you’ve identified the niche, its worth running a bit of a test sample. The thrifty way to do this is to ask people from your target audience. If starting a dating website, people you know who may be around the age where that is of interest would be necessary (as opposed to your parents or neighbor). If you want to start a toy distribution business, perhaps you could ask some nieces or nephews for feedback on the type of toys they like. Don’t know a kid? How about a teacher or associate with a kid?
As you may know or will soon find out, this whole game of entrepreneurship comes down to your ability to be RESOURCEFUL. Obstacles are at every turn. But, if you can flip them around and identify them as challenges leading to a stronger business, then you’re on target.
The key here is to get some feedback from your target demographic.
The Cashflow Hustle: As I considered ideas to build a brand to provide “multiple income stream generation” content, I considered what I found useful on my journey. I loved hearing stories and listening to examples from people who had been there and done that. In particular, I loved learning about the variety of opportunities to create cashflowing businesses with both goods and services. There are other great content creators in the space. But I have my own spin on things and find great joy in sharing what I have learned with others. Through the blog and podcast, I am able to spread my message as well as incorporate some awesome guests who have inspiring stories.
Find your passion with an economic component, pick a path and continue reading below on how to EXECUTE.
2. Search for legal entity name and domain availability
Once you’ve identified the niche you want to pursue, its time to start thinking about a brand identity. I’ve heard some people say differently, but in my opinion, it is important that you identify your brand well right out of the gate.
I make a list of business names and start spit balling with my wife or business partner. This is one of my favorite parts of the business creation process – its when I can start to think of the business as “alive.” Eventually, we come up with a few key words that we can use interchangeably.
Next, I do an entity name search (see point three below) along with a domain search. I primarily use Google Domains for all of my websites and businesses – they are very affordable with quick hosting speed and great customer support which comes in handy in step 5 when you are creating a website and linking your domain. Using Google Domains, I run through variations of all of our listed key words that we liked. I list those that are available and cross out those that are not. Given the nature of the keywords (competitive or not), I purchase the domain. Sometimes, if we are undecided between a few, I buy the top three or four available for one year to make sure we don’t miss the opportunity. However, like a good community member, once we decide on a name, we put the items we own back on the market for others to buy.
Once I have purchased the domain, I get it hosted at SiteGround. There are other hosting services out there but for all of my websites and businesses, I host with them – they are very affordable with quick hosting speed and great customer support which comes in handy in step 5 when you are creating a website and linking your domain.
Another simple and professional addition available is to signup for an email and Office365 account. When I am interacting with a business representative, my impression of the overall quality of the business (as a consumer) is much more favorable if I am talking with an established domain email as opposed to a gmail or yahoo account. If I am taking to email@example.com I feel much les of a personal connection to the person as opposed to firstname.lastname@example.org. For me, a few bucks for a domain specific email address is a small price to pay for the perception of higher quality in the eyes of a consumer.
3. Establish your entity & trademark
As noted, this is likely best done at the same time as step 2 above. To have a domain without a matching entity may be a bit confusing. Depending on where and how you are going to market, there are ways to operate under an assumed name at the state level. However, lets keep things simple and unified at this point.
There are many options when it comes to entity formation. Companies, lawyers and friends are all options to plug into the creation of your entity. Each one serves a purpose, as I will explain.
If you have a large budget, a highly scrutinized service/niche (such as tax planning) or complicated operation (such as an international brokerage firm trading widgets and cryptocurrency), a lawyer is the way to go. The nuances of covering specific risks in those types of businesses requires a little more than a cookie cutter members agreement. Please also note that if you have a business partner that you are sharing responsibilities with to run the operation, it is worth getting a document drawn up by a lawyer outlining specific details. Examples of issues that arise is what happens if one party dies or you partner does something negligent that harms the entity. Having those clauses in the members agreement can be "life savers" when the unthinkable happens.
However, if you have a tighter budget or a less risky business type, LegalZoom is the way to go. There are other options out there but these guys have always delivered for me. It is worth noting that while you fill out their seamless questionnaire during the registration process, you will have to un-select a variety of buttons that auto-enroll you into additional services. It is worth noting that when I forgot to uncheck an opt-in button once, they refunded me the entire amount when I noticed I was being billed for a service that I had never used and didn’t mean to sign up for. Again, fair and honest customer service.
One of the options you will have to choose is whether or not to be your own “registered agent” or to pay for them to. To learn what this entails, please read here. For me, it comes down to personal preference and how much/many calls I want from solicitors selling me products off of the new business owner lists publicly available on government websites. If you have one business, it may not be important. If you have 10 entities, your phone or email may well turn into a catchall for sellers of all services.
Please note, using a friend is not recommended above to set up your entity. Even for my friends who ask, I recommend they follow Options A or B above. I have used each of those two methods without issue and I am not an expert at entity formation.
Next week, we will cover tools to utilize automation and technology to build your team out to achieve better results, faster. We will also cover establishing a web and social presence.
Have any questions or comments on this material? Please contact me at email@example.com - I always enjoy talking business and cashflow.
Justin Grimes has been an active real estate investor since 2007 participating at various levels in asset classes from single-family rehab and mortgage note creation to multi-family, self storage and mobile home parks.
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