By now, you’ve mastered the importance of cracking your life’s purpose code and finding your purpose. Now, it’s time to discuss monetizing your true purpose.
There are five primary reasons people do not achieve their dreams:
- They never begin.
- They quit too soon.
- They make poor decisions, derailing their ambitions.
- They worry about what others think.
- They are either too comfortable to begin, or too uncomfortable to begin due to the fear of failure or fear of rejection.
It is not your choice of craft that will determine whether you make money; it is whether you dedicate yourself to becoming an expert at making money in the same way you will work hard at improving your craft. This will require you to focus more energy on becoming a great entrepreneur as well.
My definition of an entrepreneur is someone who actually owns a business. To own a business means you have formed a legal entity. There are four primary types of legal entity business structures in the United States. They are partnerships, corporations, S Corporations, and limited liability companies. A sole proprietorship is the simplest business form under which one can operate a business, but it is not a legal entity. It only qualifies as an entity for accounting purposes. It also offers zero protections from liability, so I don’t recommend it.
After arriving at a place where you want to create a business, here are the seven steps I always take to put the proper infrastructure and strategies in place to have success as an entrepreneur.
A step-by-step guide to success
Step 1: Name search.
A name gives your business life. You don’t want to run into problems later by getting a cease-and-desist letter from some business owner’s lawyer telling you that you can no longer legally use their registered name, so it is important to check that it is available.
Don’t dread this! It should be exciting and fun. It is highly likely that your first couple of names will be taken. If not, reason to celebrate. But if it’s taken, this is your reason to get creative. Seeing your name taken is NOT a reason to quit. It is a reason to dig in! In all honesty, this is the easiest part of starting a business.
Here is the Holy Trinity that you should do EVERY time!
- Visit GoDaddy.com and search for the availability of your name.
- Go to the USPTO.gov website and conduct a trademark search.
- Search your state’s fictitious business names database for your name’s availability – there are tons of options for this. I use my attorney, but you can use free online services like legalzoom.com, www.directincorporation.com and www.incfile.com.
Step 2: Form your legal entity.
Once you have selected your name, to become a legal entity in the United States you must apply for a Federal Tax Identification Number with the IRS. Also know in its abbreviated form (FEIN). Why? Because you need a FEIN to open a bank account in your company’s name, to file taxes and for many other purposes.
You have two options for completing this.
- I always use my lawyer. I typically get this service done for around $1,250.
- You can do it yourself online for free by going to the following irs.ein.tax.id.com. YOU will need to complete and file your Articles of Incorporation and will have to pay the required registration fees. The fee is about $75.
Step 3: Open a bank account.
Bank selection is very important and way undervalued. Unless you do all your banking online, you will want a bank that is nearby where you live as you will most likely often need to go in to deposit checks or conduct other bank matters. You want a bank that will care about you as a customer because at some point you will need a business loan.
Big banks will not care, but they will be the most convenient. They will have a high employee turnover rate making it hard to get to know your banker.
Smaller banks will know your name and be more attentive, but may not be as convenient.
Regardless of selection, get to know your bank manager. This will pay dividends many times over. They have the power to fix problems you may have down the line, like removing holds on checks. The danger in doing all your banking online is that you will have zero relationships to lean on when it matters most to you.
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Step 4: Set up your books.
As soon as your bank account is open, it is time to set up your books. I encourage you to do this Day 1, not a year after you have started your business. I recommend using QuickBooks by Intuit.
If you are a beginner or really want to keep your costs down, their Essentials product will work for you, but I recommend their most popular offering – Plus.
It has a few more features you will need as your business grows. I’d suggest finding a bookkeeper or certified public accountant (CPA) to set up your books one time for a fee. I would not pay more than a few hundred bucks to have this done.
Related: 5 Tips to Keep in Mind as You’re Starting a Business
Step 5: Start creating your budget.
After you give your bookkeeper or CPA a list of your accounts so they can set up your books, it is time to create a Year 1 projected budget. I strongly believe that this is the primary difference maker to calling yourself an entrepreneur and actually being a business owner.
The benefits of learning how to budget properly are:
- You will have a road map for your business.
- You will be the first one to know when money is projected to run low with time to do something about it.
- You will know how much money to borrow and when.
- You will gain confidence from getting predictions right and learn a lot when you get them wrong.
- You will get better each year, which will benefit your business tremendously.
- Categorization of entries in your books will be much easier.
- You will gain confidence as an entrepreneur.
Step 6: Create your pricing.
The first thing to know about pricing is that “one shoe doesn’t fit all.” The second thing is that you must have a strategy.
Would you try to climb Mount Everest without a really well-thought-out strategy?
Heck no! So don’t do this to your business’ products and services, either.
You need to spend a lot of time thinking about your product or service and how you want to show up in the marketplace before even thinking about setting a price. There are five general strategies to utilize in creating pricing.
- Cost-Plus pricing: simply calculating your costs by using your budget and adding a markup.
- Competitive pricing: setting a price based on what the competition charges.
- Value-based pricing: setting a price based on how much the customer believes what you’re selling is worth.
- Price skimming: setting a high price and lowering it as the market evolves.
- Penetration pricing: setting a low price to enter a competitive market and raising it later.
From the above list, ask yourself which strategy makes the most sense for your business and deploy one or more for your products or services.
Related: 5 Founders Share the One Piece of Advice They Wish They Knew Before Launching a Business
Step 7: Create your customer avatar.
A customer avatar is a detailed profile of your ideal customer. The avatar focuses on one person and outlines everything about them. It goes into much greater depth than a regular marketing persona, providing marketers with many more targeting tools. The key phrase in the definition I just shared is “everything about them.”
When you know your customers deeply, you have what you need to write effective ad copy speaking directly to their desires and hopes. You can get on a sales call and do the same. You can build marketing campaigns to better reach them on social media and through email. This is the key to your marketing and sales.
Nail this, and the money will start to flow. Now, go start your amazing company!
Originally published Sept. 29, 2021.