Starting a small business? Make sure you've reviewed each of these important steps.
Click on each link below to expand that step for more detailed information.
|Step 1: Select Your Business Industry Type
This is the first crucial step to begin the process of starting your business. Many small businesses fail because the research and strategy necessary to start the business does not happen. It is important to select the right industry that meets your needs, not only because it is something you are interested in, but also because it is something that reflects your experience, management style, leadership, background and specialty.
As you consider the business you’d like to start – visit the following Web sites for further information:
Consider attending one of BizLaunch’s free monthly business workshops.
|Step 2: Write Your Business Plan
The business plan (BP) is a living, breathing document – and can be the very reason whether your business will succeed or fail. The BP consists of the how, when, where and what you need to do to successfully, start and operate your business. Unfortunately, many start-ups skip this crucial step in their quest to get started in business.
The BP is used to ensure that the assumptions made regarding your industry type are completely accurate. It is developed first for you: the entrepreneur. It may also be needed if you will secure leased retail or commercial space. It is also needed if you will acquire capital from a financial institution. The length of the business plan varies depending on the complexity of the businesses industry. Typically a plan will range from 10 – 20 pages.
Can you write the plan yourself? YES! Watch for our Business Plan Workshops on the calendar of upcoming BizLaunch Events.
The Arlington County Public Library offers free business databases (accessed via your library card) which can assist you in identifying the latest market trends, competition, opportunities and more. Key business databases include: ReferenceUSA, BusinessDecision and BusinessInsights Essentials. Browse the many database resources available on the Arlington County Library Web site.
|Step 3: Financing Your Start-Up
A business never can have too much capital. Your business plan (see Step 2) will determine how much you’ll need to start and manage your business successfully. Include financing for unforeseen circumstances such as business continuity planning or other potential business emergencies.
Common Forms of Capital Sources for a Small Business Start-Up:
....be sure to shop around for a financial institution that lends to small businesses in your industry sector.
Before you set up an appointment with a lender, be sure you can answer the following questions:
Questions to Ask the Lender
Ask the bank to confirm the terms and conditions of the loan in writing, and carefully analyze them before you sign any agreement. These details should include:
It is also recommended to ask the following questions when you wish to borrow from your bank:
If you are a non-profit organization, you may be able to obtain grants.
If you are opening a for-profit business, the likelihood of securing a grant is remote.
Obtain a list of current financial institutions with contact names of organizations participating in the SBA’s financial programs. You’ll also find the current ranking of lenders working with small businesses here.
|Step 4: State Licensing
The Virginia Department of Professional and Occupational Regulation (DPOR) regulates more than 30 occupations and professions through 19 boards composed of practitioners and citizens appointed by the Governor. DPOR licenses or certifies over 300,000 individuals and businesses ranging from architects and contractors to cosmetologists and professional wrestlers.
If you believe your industry sector is regulated by the state, visit DPOR’s Web site. You’ll be able to download the appropriate forms and register for certification courses.
|Step 5: Hire An Industry Specific Accountant & Lawyer
It is important to hire an accountant and a lawyer to save you headaches in the future. These two professions may cost you some overhead – but consider them both worthwhile investments in your business.
Tip: hire a lawyer and accountant who practice in your specific industry or business field: this isn't the time to hire that friend-of-a-friend.
|Step 6: Determine the Location of Your Business
The location of your business is extremely crucial to the success of your business. There are 3 types of zoned business locations in Arlington: home-based, retail or commercial.
If you are planning to start a business in your home you must fill out a home occupancy permit through the Arlington County Zoning Office as well as a parking space disclosure. There is no additional cost associated acquiring a home occupancy permit.
Note: If you reside in an apartment building, check with your leasing agent to ensure there are no restrictions on operating a business out of your rental unit.
If you need to lease space in Arlington it is highly recommended you speak with Arlington Economic Development, hire a broker and start six months to one year in advance. Space in Arlington can be highly competitive. Before you speak with a broker, make sure you know how much space you need and the amount you can afford per square foot. This is where the business plan comes in handy!
As a small business owner, you will need to familiarize yourself with the American with Disabilities Act (ADA). There are certain federal requirements in the build out and maintenance of both commercial and retail locations.
Please review the small business publication on the ADA Web site to ensure that your business complies with ADA requirements.
A business is required by law to recycle the two recyclable materials it generates in the greatest quantities. They must submit a recycling plan with Arlington's Department of Environmental Services within thirty days of receiving a Certificate of Occupancy and have an operational recycling program in place within ninety days. Forms are available online. If a business qualifies for a Home Occupancy Permit, it is exempt from this requirement. For additional information contact: Department of Environmental Services Solid Waste Division
|Step 7: Obtain an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is also known as a federal tax identification number, and is used to identify a business entity. Generally, businesses need an EIN. You may apply for an EIN in various ways, and now you may also apply online. If you apply for an EIN online or by phone the entire process will take approximately one week. If you apply by mail, the process may take four to five weeks.
For more information visit the Internal Revenue Service to see if you should apply and how.
|Step 8: Business Registration – What Type of Business Are You?
In the United States there are a few 6 major types of business entities you can form for your business:
Sole Proprietorship: The vast majority of small businesses start out as sole proprietorships. These firms are owned by one person, usually the individual who has day-to-day responsibility for running the business. Sole proprietors own all the assets of the business and the profits generated by it. They also assume complete responsibility for any of its liabilities or debts. In the eyes of the law and the public, you are one in the same with the business.
Partnership: In a partnership, two or more people share ownership of a single business. Like proprietorships, the law does not distinguish between the business and its owners. The Partners should have a legal agreement that sets forth how decisions will be made, profits will be shared, disputes will be resolved, how future partners will be admitted to the partnership, how partners can be bought out, or what steps will be taken to dissolve the partnership when needed. Yes, it’s hard to think about a "break-up" when the business is just getting started, but many partnerships split up at crisis times and unless there is a defined process, there will be even greater problems.
General Partnership: Partners divide responsibility for management and liability, as well as the shares of profit or loss according to their internal agreement. Equal shares are assumed unless there is a written agreement that states differently.
Limited Liability Partnership: "Limited" means that most of the partners have limited liability (to the extent of their investment) as well as limited input regarding management decisions, which generally encourages investors for short term projects, or for investing in capital assets. This form of ownership is not often used for operating retail or service businesses. Forming a limited partnership is more complex and formal than that of a general partnership.
Limited Liability Company: The LLC is a relatively new type of hybrid business structure that is now permissible in most states. It is designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. LLC's must not have more than two of the four characteristics that define corporations: Limited liability to the extent of assets; continuity of life; centralization of management; and free transferability of ownership interests.
Corporation: A corporation, chartered by the state in which it is headquartered, is considered by law to be a unique entity, separate and apart from those who own it. A corporation can be taxed; it can be sued; it can enter into contractual agreements. The owners of a corporation are its shareholders. The corporation has a life of its own and does not dissolve when ownership changes.
To register and organize your business in the Commonwealth of Virginia, visit the Virginia State Corporation Commission.
|Step 9: Register Your Trade Name
Your trade name is what makes your business “uniquely” you. A "Fictitious Trade Name" is required to be filed when a business is operating under an assumed name. If the company is incorporated with the State of Virginia and is doing business in Arlington County under the corporate name, the company does not have to register the name at the County level. If the company is incorporated in a different state, then it must register with the State Corporation Commission in Richmond Virginia as a foreign corporation.
There are three types of Fictitious Trade Name applications:
If a company is incorporated with the State of Virginia and is doing business in Arlington County under a fictitious name, the Company must register the fictitious trade names with the County. The Commissioner of Revenue issues your trade name. Apply for a trade name.
|Step 10: Apply For Your Business License/Business Tangible Taxes
The Business License is the way you pay for your local taxes.
Business License Tax
The Commissioner of Revenue assesses Arlington County business privilege license taxes on business conducted in Arlington County, including home-based businesses. Applications for licenses must be filed and paid by March 1 of each year beginning on the first day a business commences operations.
Business Tangible Personal Property Tax
Arlington County levies a tax on tangible personal property located in Arlington on January 1 and used in a trade or business. This includes items such as furniture, fixtures, machinery, tools, and programmable computer equipment. Businesses must itemize personal property and/or equipment, giving its date of acquisition and original purchase price. You must file a return by May 1; payment is due by September 5. Business tangible personal property tax is not pro-rated if you should cease business during the year.
Other Business Taxes
The following taxes are levied on industry specific activities:
|Step 11: Business Insurance
Besides your attorney and accountant, another professional you will need to bring into the start-up process will be your insurance agent. It may be helpful to have one agent who can handle all of your insurance needs. There are policies available that are specifically designed to cover small businesses that, in one package, will cover most of your insurance needs. Insurance is not only going to be important to you but it will be important to your other business relationships. For example, if you choose to lease office space, the landlord will typically require that you furnish a certificate of insurance or be listed as an additional insured on your policy as assurance that your business will not disappear overnight in the event a loss occurs.
Types of Business Insurance:
Any employer who has three or more regular employees is required to furnish workers' compensation insurance coverage at no cost to the employees. The employer may either purchase the insurance through a private insurance company or apply to the Workers' Compensation Commission to be a self-insurer.
|Step 12: Doing Business with the Local, State and Federal Government
Many small business owners decide as part of their marketing strategy to offer their goods and services to the local, state and federal government.
Arlington County Government is a Central Purchasing Agency. Register your business to receive e-mails regarding upcoming business opportunities for your business.
The Commonwealth of Virginia as well as many local jurisdictions in Virginia use the state’s purchasing engine. The Commonwealth spends approximately $8 billion a year in the purchase of goods and services. There is a fee to participate in this service.
The Small Business Administration offers an excellent Web site to help create your business development strategy.
The Procurement Technical Assistance Program (PTAP) will work with you to answer bids for free. They are a part of the Mason Enterprise Center and the Defense Logistics Agency. Click here for more information on this free program.
If you would like to find other current Federal opportunities visit: fedbizopps.gov
|Step 13: Workforce Development
Arlington Employment Center
One of Arlington’s best kept secrets for business owners is the Arlington Employment Center. This department can help you find the right employees without paying a fee.
Workforce Services – State of Virginia Programs
The Workforce Services division of the Virginia Department of Business Assistance provides customized recruiting and training services to companies that are creating new jobs or experiencing technological change. With strong support from the Governor and the General Assembly, Workforce Services' programs are completely state-funded.
If you are hiring employees, remember that you’ll have to pay the state an unemployment tax. For more information contact the Virginia Employment Commission, 5520 Cherokee Avenue, Suite 100, Alexandria, VA (703) 813-1300.
|Step 14: Marketing Your Business
Many times an entrepreneur is so focused on the first 13 steps of the checklist that they forget to develop a marketing plan. It is essential that you have a strategy to market your business to your targeted audience.
Web sites which give an overview on marketing initiatives:
|Step 15: Networking!
There are many opportunities to promote your small business to potential clients, the business community and more via networking opportunities. Where to begin? The following lists are potential business organizations you can join or participate in to promote your business: