Starting your first business

07 Apr 2021

What kind of business should I start?

Finding a niche for your new business is tough. The main focus for successful businesses will always be providing the most value to your customers. The "under promise over deliver" mentality is crucial when building and growing a new company. When your customers perceive that they are getting more than what they are paying for, they are more likely to be repeat customers and share your company with people they know.

If you ever find yourself searching through google or a shopping mall for something only to find that that product or service does not exist, you might very well be on track to finding your niche. Chances are other people are also looking for that very same thing and are just waiting on someone to create it. For example, someone might have dropped their phone on their face when scrolling through cat memes late at night and realized that putting a handle on the back might be useful. Boom! The popsocket was born and is now valued at more than $200 million! Do you have a certain skill that others do not? People will always need skilled photographers, personal trainers, bakers, and so many other skilled services. You can start small by offering these services yourself and begin to hire as you grow! Finding an industry for your new venture is an extremely important first step in building a company. Find something that you are passionate about and that will make your customer's lives just a little better.

The group of people that are your biggest supporters and truly want you to succeed! Your customers might not know it but they will be your biggest asset. While you are coming up with your business idea, spend time thinking about who your customer will be. Spend the time to create a few customer personas. Creating avatars of your potential customers early on will help you relate to this group of people to find what they are looking for. Attributes like age, location, career/income, goals, and challenges can all aid in making business decisions that will provide the most value to these people. Give them names and find pictures that match the persona, have fun with it!

Are you entering a highly competitive industry with many other similar companies? Will you be a trendsetter and provide something no one has ever seen before? Both have their advantages and disadvantages of course. Entering a competitive niche (selling kitchen utensils on Amazon for example) has the benefit of being a proven model and is guaranteed to have customers that will be actively looking for your product or service. However, you will be competing with the best of the best. The top of competition has most likely built a "moat" around their product. In other words, they have accumulated brand recognition, social proof, and real-life data on what works and what does not. To compete, you will need to stand out from the competition. These large established companies have a weakness, they can often become complacent or become so large that they cannot move quickly when trends change. On the other hand, creating a company with little to no competition will be easy to get on the first page of google. The downside is that your customers will not know that they need your product or service. You will initially have to invest time and resources into letting customers know that you even exist and why they need you.

Incorporate with an LLC

Starting an LLC, aka limited liability company, is one of the hidden gems of starting a business. As the name implies, an LLC limits your exposure to risks from your business without forming a more complex and expensive corporation. Without an LLC, creditors and lawsuits would have direct access to your personal property if money is owed to someone. Forming an LLC also provides credibility in the eyes of your customers. Your company is a legitimate business that can be trusted.

Taxes are inevitable when starting a company. With an LLC you have the benefit of what is called "pass-through taxation" which means any profits or losses are filed on your tax filing. You might also qualify for the 20% pass-through tax deduction which can deduct up to 20% of net business income from your income taxes. With a type C corporation, you can qualify to have your income taxes at the corporate tax rate of 21%.