Let’s assume you already have an awesome product idea, a solid business plan, know who your competitors are and what your marketing strategy is. How do you actually convert your business idea into an actual business? What are some logistical steps you need to take?
Below are 10 steps you should now take to set up your business:
- Register your company as an LLC (First Week)
For me, I was registering as a sole owner and manager of my own business. I decided to register my company as an LLC and it was a very straightforward process.
When you don’t set up your business as a company through incorporation, you’d operate as a sole proprietor by default. This means that your personal assets and name will be used as your business and that could lead to severe negative consequences. For instance, you could personally be sued for something or incur debts from running your business, and creditors or customers could come after your personal assets. That’s why it is important for you to create a legal entity to protect your personal assets.
I decided to set up a LLC because it was the most straightforward option for registering my company and reporting my taxes. The process took less than an hour and only required me to fill out 1 form which I mailed into my state government. When that form was processed, I was assigned a legal entity legal number. Within 2 weeks I was able to find the articles of incorporation published on the state government website, which proved that my company is now official.
- Register your domain & create quality content (Week 1, continue to work on this indefinitely but get the bulk of your articles published within the first 3 months)
As soon as I knew I was going to create my own brand and sell my products through an ecommerce webstore, I came up with a business name and created my website by registering for a domain via Google Domains. At just $12 USD a year, Google Domains is the cheapest on the market as far as I know, given it also includes WHOIS privacy protection (for no additional cost). For hosting, I decided to use Bluehost as my hosting provider. I’d recommend you do this as early as possible, even if you don’t have any content ready to be published, because it takes time for Google to recognize a new website.
Since my products are complex, for the first 3 months after I created my website, I focused on writing high quality articles (blog posts) that explain, in detail, how my products could be used in different settings and by different target customers. Knowing that my target customers frequently have questions about my products, I knew that creating detailed, useful content would be extremely valuable to my potential customers.
At the same time, I worked on my SEO as I was adding more content to my website. It took me about a year before I hit 1,000 organic unique visitors a day, and this was after posting around 50 really high quality, detailed articles about my products.
- Create a business email account, social media accounts (Week 1)
Now that you have a website up (even if you are still in the process of writing content), go ahead and set up your social media accounts, which include (but are not limited to): Facebook Page, Instagram, Pinterest, Twitter, YouTube. It shouldn’t take you more than half an hour to set everything up.
One thing to keep in mind is to be consistent when naming your social media accounts so that your customers know that they all belong to the same company. Creating social media accounts early on (even if you don’t have any content ready to post to them!) will help you stake your claim in your company’s name and branding. Once you’ve created your social media accounts for your business, don’t forget to link to them from your website. Make sure to create a tagline (perhaps your company’s mission statement) under your social media accounts’ profile sections so your customers can easily identify you later on.
As you continue to create content to your website, you can cross-promote them across your social media accounts. This will help expand your reach and allow more potential customers to find your company website.
- Make a business bank account & Paypal account (Week 2)
A business’ purpose is to make money, so it should go without saying that having a bank account is necessary. A business checking account not only holds money, but also serves as a clear accounting and legal method of separating personal and business finances.
Because I elected to register my company as an LLC, this meant that my new bank account should be under the name of my LLC, and not under my personal name. This bank account is owned by the LLC, which is totally separate from my personal accounts and savings. This is especially important to maintain the liability benefits of an LLC.
Most of the major banks offer basic checking accounts for small businesses, and the way they work is pretty much the same as personal checking accounts. I went with Chase, since my wife and I also use them for our personal banking and have been overall quite satisfied with them. Before going into the branch, be sure to ask what forms of ID and documentation are required. In my case, they needed to see the articles of incorporation for the LLC, so it was good that I called beforehand to check.
Once the business checking account was set up, I wrote the LLC a check for $19,980 USD. (The banker required a nominal deposit at the time of account setup, so I put in an initial $20 USD). No actual business had taken place, but seeing the $20,000 balance in the business checking account definitely made things feel real!
Two years later, my business has now grown to doing $1 million USD in revenue, and I started with just $20k USD!
- Sign up for a Business Credit Card (Week 3)
Once you have a business checking account, the associated debit card can be used to start making purchases. Credit cards, however, when used responsibly, have far greater benefits over debit cards.
For me, one of the more obvious benefits is the ability to earn rewards and points on my business purchases. Since my business expenses far outweigh my personal expenses, the rate at which I have accumulated rewards points in the past couple of years has been quite phenomenal!
When starting your own business, you’ll incur business expenses right away, so it’s a good idea to open up a business credit card as soon as possible. One of my earliest purchases was a new Microsoft Surface Pro laptop, since I had to return my previous laptop to my former employer when I resigned. As with the accounting for my business checking account, I only put my business purchases on the business credit card, and do not put any business purchases on any other cards. This not only makes accounting and expense tracking more straightforward, but also shows a clear paper trail that you are properly separating your LLC operations from your personal funds. If you recall my point under step #1 (setting up an LLC) – in order to avoid personal liabilities in case your business incurs debts, it’s just as important that you separate your business expenses from your personal expenses in practice.
Because my LLC was brand new and had no established credit history, both American Express and Chase had me personally liable for paying back the balance on the credit cards should the LLC ever become insolvent. While this goes against the philosophy of the LLC’s limited liability benefit, this is unavoidable for a brand new LLC. Therefore, don’t go crazy with your business credit card spend! This should go without saying, but spend on only what you need in order to grow your business (and can pay back).
- Get a reseller certificate (Week 3)
Unless you happen to live in a state that doesn’t charge sales tax, almost everything you purchase as an individual consumer (not a company) will be assessed a sales or excise tax at the time of purchase. These taxes are assessed only when the final purchaser completes the transaction – when a wholesaler sells to a retailer, for example, no sales taxes are charged.
If you plan on purchasing products that will ultimately be passed on or sold to your customers, you will want to register for an exemption on the sales tax so that you will not be charged sales tax when you first purchase the items.
When making purchases that incur sales tax, you can submit a reseller certificate to the vendor and ask that they not charge sales tax on the transaction.
The reseller certificate does not cost you anything, and is issued by the state tax board and is typically issued very quickly. Go to your local state government’s website to research how to get a reseller permit.
- Get an employer identification number (Week 3)
An employer identification number (EIN) is an identification number issued to legal entities by the federal government. It is a way for the government, and more typically the IRS, to keep tabs on your newly formed LLC and ensure that the tax obligations are accounted for. It is usually most necessary if and when you hire employees so that the IRS is aware that your employees are subject to income taxes. In many situations, however, vendors, customers and import & customs authorities will often ask for an EIN number for their accounting purposes, so it is a good idea to register for the EIN as soon as possible.
The EIN is somewhat analogous to an individual’s SSN, and is one of the more commonly used methods to uniquely identify your LLC. In fact, in some instances such as credit card applications, you may provide your SSN instead. For privacy purposes, however, I recommend signing up for the EIN and using the EIN only, even if you do not plan on having the LLC become an employer by hiring any employees.
- Get Supplier Quotations & QC your product samples (Week 4, continue to work on this as needed)
Once you have all of the banking and legal stuff out of the way, it’s time to start talking to suppliers! I recommend doing this in this order because suppliers will be much more likely to take you seriously when you reach out to them on behalf of an incorporated entity with a business website and company email address. Overseas suppliers typically do not require any up-front paperwork, but some US-based suppliers will ask you to fill out some basic information such as the EIN and reseller certificate numbers, so it’s generally a good idea to be patient and do things in this order.
The main goal at this point is to have volume quantity quotations issued to your LLC, and begin purchasing sample quantities to evaluate. I chose to be transparent about being a brand new company, but made sure to include lots of relevant details in my list of requirements, and was not shy about emphasizing the potential value of the partnership.
I primarily use Alibaba to find suppliers based in China, but after the initial contact, transition our communications to email. I find that many vendors are more comfortable using WeChat, and they tend to respond much faster. For important communications, including the quotations and other specifications-related documents, and even courier tracking numbers, I recommend insisting that the supplier send you an email, just so there is a permanent paper record in case something goes awry. Despite all the conveniences of WeChat, it’s very difficult to dig up anything from more than 20 messages ago.
My strategy in purchasing samples was two-fold. First, and obviously, I wanted to see and test the products in person to determine if they perform as promised by the suppliers. Second, there was no reason I couldn’t immediately sell the products I approved of. So, I did my best to strike a balance in purchasing an optimal quantity of product. If I purchased too many, and the product quality was not up to par, I’d be stuck with a bigger loss, but if the product performed as expected, I wanted to be able to sell as many as I could right off the bat, without having to wait for my first production batch to arrive.
As a first-time customer, most suppliers were more than willing to work with me, even if my purchase amount was less than $200 USD in the beginning, and I think you will also find that to be the case with other suppliers that you reach out to.
- Create content for your ecommerce webstore (Week 5, continue to work on this indefinitely)
At this point, you should have your business’ legal/banking stuff set up, your website up, some great content about your brand and products (ideally even getting some organic traffic coming in), and have received quality products that you approve of from your supplier. What comes next?
Now you’re ready to actually set up your ecommerce webstore! I use Shopify to sell my products, which is very user friendly and intuitive. The pricing starts at $29 USD/month and there are 3 different tiers (Shopify pricing details here). Once you’ve signed up for a Shopify account, you can start to create your product pages! There’s a section where you can upload photos of your products as well as description boxes to add your product’s specifications. Shopify’s UI is quite intuitive, and once I had prepared my product photos and details, it only took me several minutes to publish it to my Shopify page.
Setting up your Shopify product pages will take some time and patience, and any optimizations you make can potentially result in a boost in your sales. Over the last year and a half, I steadily added close to 200 different products to my Shopify webstore.
- Drive traffic to your site and wait for your first order to roll in (Week 5, continue to work on this indefinitely)
We’re almost there! If you’ve followed steps 1-9 above, you should now have a properly (legally and financially) set up business. Additionally, you should even have some organic traffic and social media traffic to your site, as well as products listed and ready to be purchased on your ecommerce webstore.
To boost your sales and incoming traffic, you should now consider investing in paid ads. I advertise my online business using AdWords and Facebook ads, and have found AdWords to work extremely well for my business, generating about half of my sales.
With a properly set up online webstore and vetted products that serve a need in the market, you can now wait for sales to come in. We’ll go into detail later on how to store and fulfill your customer’s orders, as well as deal with customer inquiries and issues, but for now, congratulations on having your online business officially set up!