What’s up guys, my name is Crescent and I know starting your online business, especially if it’s your first time starting any business, can be exciting and scary and a lot of you are probably winging it like I did. So, I’m going to share with you the first 5 steps you need to do in order to get started off on the right foot and avoid some of the headaches that I went through when I started my first business.
So, if you’ve been following me for a while, then you probably already know that my very first business in online gaming is what put me on the map but to be honest with you, my business partner and I started that business
the hard way, we didn’t have a business plan or any direction. In fact, we didn’t know that we should have one or anything else for that matter. We definitely winged it. We didn’t have a mentor and Youtube didn’t exist back then for us to learn from. We just got extremely lucky and thank god we had passion and dedication and a damn good idea or we would have failed. And I guess timing had a lot to do with it, too but if you ask anyone, we were the exception, not the rule.
Now, if you do some research, you’ll discover that one of the top reasons why businesses fail is the lack of a business plan. Because failing to plan is planning to fail. So, if you’re not going to watch the rest of this video, then at least get this crucial step out of it, which is why I’m mentioning it first.
And so speaking of first, the first thing you should do is smash the like button for the youtube algorithm! Ok, it isn’t going to help you with starting your online business but if you appreciate the information, it really does help out the channel tremendously, so thank you. And with said, you can see in this article, it says, “Business owners who fail to address the needs of the business through a well-laid-out plan before operations begin are setting up their companies for serious challenges.” And that’s because if you haven’t sat down to write up a business plan, then you haven’t thoroughly thought out everything that’ll you need for the business to succeed and more importantly, all of the potential pitfalls you can encounter, strategies on how you can avoid these pitfalls or solutions to them.
Small businesses often overlook the importance of effective business planning prior to opening their doors. Sun Tzu, one of the most prominent military general and philosopher said it best “Every battle is won before it’s ever fought”. What did he mean by that?What did he mean by that? He’s referring to the 3P’s of battle but it also applies to business. In fact, his book The Art of War is taught in business schools around the world. The 3P’s are Preparation, Positioning, and Planning and together they make a drastic difference in the outcome of a battle. Success is predetermined before a battle even takes place. You must have a well-planned strategy, map out every detail, and have a strategy against any counterattack imaginable.
So what’s involved in putting together a business plan? A good business plan should include the following six action items:
- 1. A clear description of the business
- What exactly is your business going to do? What are you selling or what service are you providing? And be specific. What exactly is it are you selling or the service that you’re providing? To who? And who is that demographic?
- 2. What are the current and future employee and management needs
- Ask yourself how the business going to operate? Who’s responsible for the day to day activities and operations? And are you going to do it all on your own? Be realistic. Are you going to need to hire staff or outsource any projects or tasks? If so, what are they?
- 3. What are the opportunities and threats within the broader market
- Here, you need to answer questions like how and from where are you going to get clients? How do you plan to grow the business? What is your competitive advantage? How unique is your product or service and easily can it be copied by a competitor? If so, how can you protect it? One of the quotes that really stuck in my mind after reading Mark Cuban’s book “How to Win at the Sport of Business”, he said you have to treat business like war. Everyone is trying to destroy your business and make you obsolete. So, think about in what ways can your competitors crush you? What are the ways that your business can fail and how can you avoid them?
- 4. How much capital do you need, including the projected cash flow and other various budgets
- So, here’s where you need to figure out the finances. What are your start-up costs? Where are you going to get that money from? And if you’re borrowing it, from who and how do you plan to pay it back? And besides the start up costs, what are your ongoing operating expenses? This is how much money you’ll need on a month-to-month basis to keep the business running and where will that cash flow comes from? Cash flow is one of the most overlooked areas’s when starting up a business. Cash flow is how you’re going to keep the business running so you can pay bills, paychecks, and buy inventory.
- 5. Marketing initiatives
- This is how you plan to capture a portion of the market from your competitors and what the cost is for you to acquire new customers and customer retention. What’s your marketing and advertising strategy and how much is that going to cost?
- 6. Competitor analysis
- Now, you need to clearly identify who your direct competitors are and what products or services are they offering. How long have they been in business and how many new businesses are entering the market annually? How many are leaving or failing? How much of the market does each competitor have? And how many products or services does each competitor sell annually and what is their annual revenue?
Now, I know some of you are asking yourself how in the world are you going to find all that information. Well, that’s where you’re going to have to put in work and do the research. Look on the internet, contact people in the industry, visit your competitors and speak to the owner or manager. If you’re serious, you’ll figure it out. There’s also professional services that will do market research and competitor analysis for you. Look on fiverr.com or Google.
Alright, so moving on. Step 2 is registering a business. Although it’s not required to register a business at least here in the US, you can run a small business just as an individual using your social security number. Selling on Amazon for example, you’re not required to have a registered business. However, registering a business has it’s benefits. For example, you get tax benefits as well as the ability to write-off your expenses and buy products at wholesale prices. But more importantly, by registering a business, you can protect yourself from being personally liable in the case anything happens with your business. That way, you don’t risk losing any of your personal assets like your house or car.
Now, here in the US, you can register your business yourself by visiting your local state government website, it’s not very expensive, or you can hire an attorney to do it for you. There’s also professional business formation services that will help you as well such as LegalZoom. You just answer a few questions and they’ll set up the business for you.
Now, while we’re on the topic of registering a business, you may want to consider registering your trademark as well. A trademark is the brand you’d like to sell your products or services under. And just so you know, because I know some of you are going to ask, the business name you registered doesn’t have to be the same as your trademark. Often times, the registered business name is something boring like the owners last name or something and the brand is a catchy name like Coffee Cats or something. I dunno, is that a thing?
Anyway, registering a trademark isn’t necessary but it has its benefits. For one, it protects your brand from copycats. And if you’re selling on Amazon, it gives you brand protection as well as access to advanced marketing tools like A+ Content and Brand Registry. Like registering your business, you can also register your trademark on your own on USPTO.gov but it’s slightly more complicated. You can also hire a professional to help you do it and again, professional services like LegalZoom can help you as well. Keep in mind though, registering a trademark takes around 6-9 months to get approval so its definitely something you want to plan ahead for and get started early if you foresee registering one.
And lastly, in many cases, you’re also going to need to register for an EIN. An EIN is an employee Identification Number. This is something you can do easily online if you live in the US or over the phone if you live internationally. You can apply on the irs.gov website and I’ll leave a link down in the description below, just follow the instructions. You’ll typically get the EIN number right away once you’ve completed the application. Take note that you need to have a registered business ahead of time in order to apply for an EIN.
Alright, and step number 3 is setting up a business bank account. It’s important that you set up a business bank account so that you can keep your personal and business transactions separate. This will make doing your taxes a lot easier. It also lets you build credit for your business. Setting up a business bank account is pretty easy. Just have your business details ready and go speak to an agent at the bank you currently bank at, that’s the simplest way.
However, if you’re selling on Amazon for example and you don’t live in the US or you need to open a bank account that is accepted by Amazon, then the best way is to set up a new bank account on Wise.com. You don’t need to have a US mailing address or SSN to set up a bank account on Wise. Setting up a new account is quick and easy. By funding your account with as little as $20, you’ll instantly get your bank account details that you can use right away. You can also get an international Wise debit card that you can use worldwide and on your Amazon seller account. Wise also has the best exchange rates if you ever need to do any currency conversions. I’ll leave a link in the description below if you want to learn more about setting up your Wise account.
Ok, step 4. Keeping and maintaining your books. How would you know how much money you’re making… or losing if you don’t keep good records. Accounting can be pretty simple when you’re just starting out and you don’t have many sales. You can probably do it yourself with a simple journal or Excel spreadsheet. In fact, that’s how I started with my first business. You may quickly outgrow that though or realize that you need more advanced options and features, so you can switch to a software solution such as Quickbooks. Beyond that, you can always hire a CPA or bookkeeping service. Don’t overlook this step. Once your business gets going, you can be wasting a lot of time on bookkeeping every day if it’s not set up to run efficiently.
And finally, the last tip for starting your online business is registering a domain name. Registering a domain name doesn’t mean you need to have a website or online presence. By registering your domain name, you can hold that domain for future use should you decide to build a website or online store but more importantly, you can use a more professional email address instead of a gmail or hotmail email address. It just doesn’t look very professional to merchants or your clients if your email address is firstname.lastname@example.org, rather than email@example.com
Registering a domain name only costs a few dollars per year and I’ve been using Namecheap for decades to register my domains. You can also host your website through Namecheap for just a few dollars a month as you can see here.
I can tell you that every day, I get a few emails from people trying to pitch me their new business idea or service and one of the first things I look at is the email address it was sent from. If it came from a gmail, hotmail or any other free mail service, I instantly ignore the email. It can easily be a scam or they’re simply not a serious business.
Alright? I hope you found these tips helpful. If you haven’t already, I highly suggest reading The Art of War and Mark Cuban’s How to Win at the Sport of Business. They’ve both helped me immensely. If you want to know what other books I recommend reading, leave me a comment below.
So if you want to get in touch with me, you can find all of my contact details in the video description below. I’d love to hear your thoughts, so leave a comment or question in the comment section below, I answer every single one.
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