If you’re thinking about starting a business – congratulations! Becoming an entrepreneur is an exciting and ambitious step to take. But beyond the hype and excitement of something new, a lot of hard work, planning, and research goes into becoming a business owner.
You’ll need to conduct market research, obtain a business license, choose a business entity and name, and secure funding. And those are just the initial steps. After that, you’ll have to focus on launching your business by building your professional network, marketing your products and services, and establishing your day-to-day operations.
To help you get started, we’ve pulled together this list of tips from the small business pros at the Arkansas Small Business and Technology Development Center.
1. Identify Your Business Opportunity
The first thing you should do before jumping into the technical details of starting your business is to clearly identify your business opportunity. Remember, no matter how original or revolutionary your idea is, without enough demand for your product or service, your business will flop before you have a chance to get started.
Do your homework carefully before proceeding. Conduct market research by gathering information about your potential customer base, possible competition, and the cost of operations and real estate in your area.
This kind of research will also help you identify and refine your competitive advantage. What sets you apart from the competition and delights your customer base?
Developing a deeper understanding of your market and your differentiators will help you make every decision moving forward, from choosing a name to how you’ll structure your organization, to where you’ll locate your business.
2. Write Your Business Plan
The next step we recommend for an Arkansas small business startup is to sit down and lay out a business plan. Your business plan is the roadmap that will help you structure, operate, and grow your small business.
Your business plan is also a very important prospecting and investment tool. This is the plan you’ll use to convince people to partner with you and to invest financially in your business.
For help completing your business plan, contact ASBTDC to schedule an appointment with one of our small business consultants. We’re happy to guide you through the process and review and refine your business plan.
3. Find Startup Funding
One of the questions we get most frequently from aspiring entrepreneurs is, “How much does it cost to start a business in Arkansas?” Unfortunately, there is no one pat answer. Every startup has different financial needs.
For instance, if you’re starting a consulting business, you may need under $1,000 to register your business, build a website, print business cards, and set up some basic advertising. On the other hand, if you’re starting a brick-and-mortar retail business, you could be looking at startup costs of $150,000 or more for inventory, a storefront, etc.
Fortunately, whether you need $1,000 or $500,000, there are several ways to finance your startup:
- Self-funding with personal savings
- Investors (friends and family, crowdfunding, venture capital)
- Small business loan
- Lender Match through the Small Business Administration
4. Choose a Business Structure
Choosing a business structure is a small step, but one that will affect your business for decades to come. The business entity you choose will determine how you set up your business roles and operations, as well as how you file your taxes. It also determines your personal liability in case of a lawsuit against your company.
When working alone and offering simple products or services, a sole proprietorship is a common business structure. If you have multiple owners, employees, or a more complex service offering, you may prefer to file as an LLC or a Corporation.
Not sure which would be best for your company? Discuss the pros and cons of each business structure with your accountant or attorney.
How much does it cost to start an LLC in Arkansas?
If you do decide to register as an LLC in Arkansas, the registration fee is $45 online and $50 by mail. If you want to reserve your LLC name, it will cost an additional $25 if filed by mail, or $22.50 if filed online.
5. Get All Necessary Licenses and Permits
The licenses and permits needed to legally run your business will depend on your industry and business structure. However, all businesses will need to register with the state and obtain an employer identification number (EIN). (Please note that if you are a sole proprietorship, you will be operating under your personal Social Security Number and will not need an EIN.)
Make sure that you do all of the necessary paperwork for your sales tax licenses, zoning permits, and other operating licenses before you launch your business. The consequences of skipping this step can include astronomical fines and–ultimately–business failure.
How To Obtain a Business License in Arkansas
The steps for applying for a small business license will depend on your industry and service offering. Check out these guidelines for more information on local, state, federal, and incorporating requirements for business licenses in your area.
6. Set Up Your Internal Administrative Processes
Payroll, taxes, invoicing, inventory, sales orders, HR, employment agreements, and more: administration covers so much more of your operation than most people realize. Setting up your accounting and admin systems now will help you avoid disaster in the future. Make sure that you invest in high-quality systems or outsource these responsibilities to professionals who know what they’re doing.
Need Help Starting a Business in Arkansas?
If you’re thinking about starting a small business and you have questions about how to set yourself up for success, contact ASBTDC for a free consultation today. We’ve helped hundreds of entrepreneurs plan, fund, register, and launch their Arkansas startups!