Thinking of starting your own business? Here are 4 tips to get you started

July 24th, 2019

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You’ve always dreamed of being your own boss. And you have a skill or passion you know could make money. But where to begin?

There is a lot to consider when starting a business. Here are four tips to get you started:

Have a business plan.

Before you start a business—and ask for funding to start that business—you’ll want to have a plan.

Donna Bowlby, a commercial relationship manager at First Interstate, said a business plan doesn’t have to be fancy—it can be as simple as an outline. But it should detail what you plan to do and how you intend to do it. Consider:

  • What product or service are you offering?
  • What is your competitive advantage? How is what you’re offering going to stand out?
  • What markets—customers and location—are you going to pursue?
  • What are your goals for the business? How and when do you plan to reach them?
  • What experience do you have that’s relevant to the business? 

If you’re buying an existing business or expanding your business, you’ll need a plan, too. That plan should include how the business will continue under new management.

Bowlby, who specializes in SBA lending, said a business plan also can help you figure out if the business is feasible—before you take the risk and invest money.

If you’re unfamiliar with how to create a business plan, a number of local resources can help:

  • The Small Business Administration offers resources for small businesses.
  • SCORE is a nonprofit organization that helps small businesses get off the ground and offers services to business owners that include mentoring, webinars and course, online resources, and local events.

Do your homework.

New business owners need to do their market research and determine their competitive advantage, Bowlby said.

Before you start your business, you’ll want to figure out how you can do it better or differently than others. Consider your competitors, and figure out if there are enough potential customers.

Check into the legal requirements by consulting a legal advisor before starting your business. You’ll need a business license and formation documents. There may be other requirements depending on the type of business.

In support of your business plan, include projections.

  • Beyond initial startup costs, what are the monthly/annual operating costs?
  • How much will you need to pay wages, taxes and insurance?

One to two years of projections can provide you an outlook and budget to measure your success. Completing this process will help you fully understand the financial plan from inception to stabilization.

Understand your personal finances.

In addition to the business finances, lenders—and most investors—will want to know about the personal financial health of the business owners.

“Have skin in the game,” Bowlby said. “How much of your own resources/funds are you planning to contribute?”

This personal financial statement form used by First Interstate Bank provides a financial snapshot that lenders will want to see.

Make sure you have a strong credit score. Pay your taxes on time. Avoid late payments and other financial missteps that can reflect poorly on your ability to pay back a loan.

Know how much you need to borrow.

How much money you need depends on your business plan, projections and financing options available to you. Each loan type requires different down payment amounts. That’s where your lender can help. There are various types of business loans and lines of credit.

Business owners need to “understand their working cash position to support operations expenses to production costs,” Bowlby said.

Begin understanding your startup costs such as what’s needed to build or buy a property, to purchase the equipment needed to run the business, and what it will take to stock the business.

Businesses take time to get off the ground, so consider how much money you’ll need to get to the point where the business is financially stable and profitable.

“Let us work with you, be your advocate and a partner in helping understand the financing options and what the different requirements are for each,” Bowlby said.

If you’re ready to start a business—even if you’re just thinking about it—stop by your local First Interstate branch to discuss your options with one of our experienced commercial bankers.