How to Start a Company
New companies thrive on innovation. If you want to come up with a winning idea for a new company, you'll need to set yourself up for success by learning to conduct market analysis and identify a gap in consumers' needs, then develop a compelling vision to fill that desire with a new and undeniable product. See Step 1 to start learning how to start a new company.
Having an Innovative Plan
Identify a new market.A successful company is one that uses creativity and innovation to discover previously untapped markets for products and services, creating things that consumers didn't even know they needed, then selling it to those consumers at a profit. If your goal is to form a successful company, you need to start by finding a great need in a consumer base and planning a way to exploit it.
- Do market analysis to identify potential consumer needs and desires. If you've already got a great idea for an innovative product, think about who it is that will want to use and purchase your product or service. Be as specific as possible.
- Consider important statistical factors in your potential consumer base that will help you plan your product and structure your company around its consumers:
- Age of average customer
- Socioeconomic status
- Location (urban, rural)
- Spending habits
Develop a compelling product, concept, or service for that market.When you've identified a need, fill that need with a new concept for a product. Think big. Innovation requires that you identify something that will change the way people think. Apple wouldn't be a successful company if they hadn't identified a consumer base's desire for elegant and simple music, phone, and computing technology.
- Recent start-up success-story "Coin" had the idea of a simple card that consolidates all your credit cards, debit cards, gift cards, and other wallet-clogging plastic into one, easy-to-use card. By identifying a consumer need (to de-clutter) and a simple, elegant product that filled that need, Coin generated a lot of buzz and attracted serious investors and customers.
Create a working model of your product.In order to attract serious investors, you're going to have to prove that your innovation is possible. Whether your company will be structured around the most delicious brownie mix ever marketed to Brooklynites, or a chain of coffee kiosks, you'll have to develop a working model that actually works.
- Hook up with engineers and other technological innovators if you can't create a working model of your product yourself. Depending on what you're trying to create, this may be a serious time and money investment. Consider crowd-sourcing for an initial product, if it should prove expensive.
Create a long-term series of goals for your company.What will you need for your company to be successful at the end of this month? The end of this year? Ten years down the road? Give some serious thought to where you want your company to head and what you'll need to take it there. Flying by the seat of your pants is a good way to create a company that will fail. Careful planning will help you to structure your company and accurately anticipate the challenges that await you.
Put a name on it.It's important to come up with an appropriate and eye-catching name for your company to make it official. Brainstorm lots of possibilities and get feedback on a handful of your favorites. A well-named company has a much better chance of sticking around long-term. Your name also needs to be unique in your state, if you plan on filing for incorporation, and should be registered with the Business Bureau or Administration in your state.A good company name should be:
- Easy to brand
Write up a business plan to define your goals and appeal to investors.A business plan is an essential step in starting any company. A well-written business plan forces you to articulate the corporate philosophy for your company, the practical execution of your ideas in terms of marketing and funding, and a detailed description of your product or service. Your business plan needs to include:
- Your vision for the company
- Market research and consumer analysis
- A detailed description of your corporate structure, including leadership and staff
- Your marketing plan
- A specific breakdown of costs needed to get your company off the ground
- A personal appeal to potential investors
Obtain the proper state and federal permits to conduct business.Depending on the nature of your products or services, you'll have to file at the federal and state level to conduct business legally. Research the requirements and talk to a representative at the business bureau to make sure you've filed appropriately and are within the bounds of the law. You can find the requirements for your particular state by clicking .
Structuring Your Company
Form a Limited Liability Company (LLC) for maximum flexibility.An LLC is a hybrid of the flexibility of a partnership-style organization, with the liability features of a more complex corporation. While a corporation is owned by shareholders, the members of an LLC are not taxed as a business entity, but rather report the business of the company on their personal tax returns, making it a popular option for small companies getting off the ground. To register as an LLC, you need to:
- Register your name. The name must be unique and registered with the business bureau in your state.
- File articles of organizationin your state. This is a basic document available from and filed with the Secretary of State in some states, and the corporation commission in other states.
- Create an operating agreement. While not required in all states, an operating agreement exists to codify the financial organization of your company in terms of profits.
- Obtain the necessary licenses and permitsto hold business and/or manufacturing in your state.
Funding and Marketing Your Company
Complete a cash-flow analysis.Before anyone will consider putting up money to invest in your business, they're going to want to know when they'll start seeing some return on that investment. You can determine this by performing a cash-flow analysis, the result of which will be a reasonable expectation of the time it will take for your company to become profitable and begin paying back the investment.
- A good cash-flow analysis should accompany your business plan when you meet with investors.
Apply for equity or debt financing.To get a business loan, you'll need to provide both evidence of good credit as well as experience in a management role, and also decide whether or not you're going to seek equity or debt financing options, or some combination over several sources.
Generate as much buzz as possible.People will be more willing to invest in your company if there's a difficult-to-define "buzz" around it. You want your company to poise itself as being impossible to fail. You want your ideas to seem so strong, your leadership so secure, that there's no way it could possibly lose money. Partly, this will come from establishing an innovative and exciting idea that it will be difficult to deny, as well as dipping your toe into the vast pool of advertising.
- Revolights, a garage-start-up that made awesome-looking rotary bicycle lights, managed to crowd-source almost five times their essential funds based on a simple Kickstarter video that went viral. Because the lights looked so cool, it was easy for individuals to convince themselves to pony up some money in exchange for the product's availability.
Embrace new media and advertising.While it's important to announce your company in the traditional business trades and make the regular contacts, it's essential to embrace new media and structure your company in the 21st century. Building a buzz around social media and other online venues could be the difference between a hot new unveiling and a flat-out failure.
Make your company a trendy place to work.As you recruit and hire new employees, dropping your new company on the world, you want to cultivate a reputation as an innovative and trendy place to be associated with. Companies like Google and Facebook, aside from being incredibly successful and innovative service-providers, have also established a reputation as places that celebrate progressive office culture. If you want to attract the best and the brightest in young workers, forego the dismal office park and the traditional culture in the wake of flextime, worker-friendly aesthetics and features, and an open policy of making your employees happy.
- In general, the difference between thinking in terms of a successful business and a successful company is that a company requires much obsession over issues of HR and office policy, in addition to the traditional business concerns of product development and innovation.
QuestionDo we need a building for our company, as in headquarters?wikiHow ContributorCommunity AnswerYes. You need somewhere appropriate to plan, build and work.Thanks!
- Take your company public. When Facebook went public, lots of the initial investors became incredibly rich. As your company starts taking off, consider ways in which you'll decide to take it public and elevate to the next level.
Video: Elon Musk: How to Start a Business (Elon Musk 2017)
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