The pandemic prompted more women in the U.S. to finally take the leap and launch their own businesses after dreaming of having more control over their time and careers. Specifically, AllBright, a professional women's network, surveyed its members and found that one in four women plan to start a business. The U.S. Census Bureau reports that women filed 1.5 million new business applications in December, an 82% boost in the third quarter from last year.
Still, starting your own business isn't easy. According to the Bureau of Labor Statistics, about half of new businesses fail in the first five years, and two out of three last less than 10 years.
Some of the most common reasons for those failures include a lack of a viable business plan, insufficient funding, and misunderstanding the market.
According to the Small Business Administration, starting your own business needs to include these steps:
1. Conduct market research
This research will help you understand the following, which you'll need for writing a business plan:
- What will be the competitive advantage of your business?
- How will you find customers?
- What is the demographic for your product or services?
- Who is your competition?
- What are customers willing to pay for your product or service?
2. Create a business plan
This is the roadmap of how to set up, run and grow your new business. It's also how you will convince others to invest in your enterprise and work with you. You can use a traditional plan format that offers a detailed, comprehensive roadmap or a lean startup format that supplies only a handful of items to describe your business's value proposition, infrastructure, customers, and finances.
3. Find funding
Once you determine how much money is needed to start your business, you either have to fund it yourself or find other sources of capital, such as getting a bank loan or investors.
4. Determine location
Whether you select a brick-and-mortar location or a virtual one, you will be subject to various taxes, minimum wage laws, property values, utilities, and government licenses and fees. The location could affect your revenue and growth, depending on state or municipal laws.
5. Choose a business structure
Before you can register your business with the state, you must choose a business structure, such as sole proprietorship, partnership, or a limited liability company. The structure you choose is important because it will determine how much you pay in taxes, the paperwork you must file, fundraising abilities, and personal liability.
6. Register a business name
Once you choose a name, you need to protect it by registering it as a trademark, an entity name, a Doing Business As (DBA) name, or a domain name. You will want to check into what federal and state protections you get with each one.
7. Get federal and state tax identifications
Your employer identification number (EIN) is necessary to open a bank account for the business and pay taxes. Some states will also require you to get a tax ID.
8. Obtain licenses and permits
You'll likely need a combination of licenses and permits from federal and state agencies, depending on your business type, location, and government rules.
Another issue you need to address is how you will structure your work. You need to think about how you'll manage your time, your work/life balance, how you'll handle roadblocks, and the people you will need to hire immediately to ensure your success.
Starting a business is the dream of many women, but it can quickly become a nightmare if you don't have the right building blocks to help your business get off the ground and thrive.