What do you want your dream to do, and how can you sustain it?
Introduction
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Introduction
When you decide to start a business, it can be an exhilarating, exciting, frightening, challenging, and meaningful experience, and there’s nothing else that’s like it in the world! Your dream is in front of you, but without a vision for where it can go and how to build and sustain it, it can get quickly overwhelming.
What is your dream for this business? Is it to successfully provide for yourself and your family? To support your parents or create a legacy for your children? Create lasting value to your community? There’s no wrong answer here, but if you’re going to give your business its best shot at being something that is valuable and meaningful then there are some things you need to know right from the start, such as various business structures, customer types, revenue streams and more.
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Key Questions Before You Start
Before you get too far down the road with banks and forms and whatnot, it’s important to take a few minutes to really consider your responses to the following questions. This is part of what’s known as a lean startup canvas - a prompt that helps new and established business owners alike to examine how their business will run, whom it will serve, how you’ll market the business, and how you’ll spend and make money.
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Understanding Your Audience
Staking Your Position
Getting into the Details
Understanding Your Audience
Customer Segments
It’s possible and even likely that you’ll have more than one type of customer, but for now let’s really work to understand your main customer type (called a primary audience.) The more narrow and detailed your customer description, the better you will be able to focus your energy on marketing and delivering your product or service to that group of customers.
Problem
What is the customer problem that your business will solve? Be specific and realistic about their problem, making sure you empathically know and understand not only the problem, but also what or how that problem interferes with their ideal state.
Solution
This one’s not as easy to figure out as it sounds, but how do you solve the customer problem you’ve identified? What is it in that problem which you can control or alter, and what can’t you do anything about? Knowing the difference here is going to be the key to helping them solve that issue and to opening up their wallets.
Communication Channels
It’s also important to have a general understanding up front of how you’ll communicate with this audience. Keep in mind that they want to communicate their way, which may or may not align with how you envision this going. The key is to meet them where they are and communicate with them the way they want to communicate. This could mean email, SnapChat, toll-free phone numbers, social media, or other avenues to communicate.
Staking Your Position
Unfair Advantage
You need to understand that you’re going to have competition. Sometimes that competition takes a direct form (other businesses that offer products and services similar to yours) or an indirect form (you have to compete with other influences that take up your customers’ time, attention, and finances – such as work commutes, media, and disposable income like bills.
Unique Value Proposition
Again, looking at what you’ll bring to the table vs. your competitors, what are you going to offer in terms of service or product that they can’t or won’t. Basically, how are you going to differentiate and distance yourself from the competition to keep your value high among your target customers?
Getting into the Details
Key Metrics
What does success look like to you? It’s okay to explore the intangible success metrics such as job satisfaction and making a difference in the lives of people – those markers are important because that’s where a lot of your drive comes from, and without them as part of your vision you’re going to have a tough time staying motivated. But you also have to know what other markers of success look like, such as number of customers quarter-to-quarter, sales, and greater profit margins over time.
Revenue Streams
Now that you have a sense of what your customer might be willing to hire you to do for them, you need to identify where that money is going to come into your business and in what amounts. If you make more than one product, each of them is a revenue stream. If you offer more than one service, each of them is a revenue stream. A subscription service is a revenue stream. Be careful not to try and be everything to everyone by offering more than you can produce, though!
Cost Structure
Your time, your materials, your resources, your transportation, your internet plan and your wireless plan all cost. Figuring out how much your spending and in what categories can help you understand how much revenue you’ll need to generate in order to produce a profit.
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Choosing a Business Structure
Getting started as a business owner is roughly the same process for anyone, regardless of immigration status. Deciding what kind of business structure you want to have depends on many factors, such as what kind of dream you’re bringing to life, how comfortable you are with risk, and how much or how quickly you want to grow.
Here are a few business structures that are helpful for you to determine first before you start to build your business.
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General Partnership
You join up with one or more other people to carry on a trade or business. Each partner uses their SSN or ITIN, and together they can either use surnames of the individual partners or come up with a business name. With a general partnership, you must file an annual information return to report the income, deductions, gains, and losses. Also - the partnership does not pay an income tax, but instead passes and profits or losses through to the partners who then include their share of the income or loss on their tax return.
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Sole Proprietorship
As a sole proprietor, you are technically one and the same with your business. There is no legal distinction between you (the owner) and the business. This means that you are liable for the same business debts and legal proceedings as the business. Your assets (your car, house, and other personal property) also belong to the business. If you’re going to be a sole proprietor, you’ll need your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), and in some cases you may have to apply for and Employer Identification Number (EIN) or file as a business Doing Business As (DBA) with your local government agency, typically the City or County Clerk’s Office.
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Corporations
A corporation is a business in which shareholders exchange money, property or both for the business’s capital stock. The corporation then pays taxes and distributes (any) profits to shareholders. Anyone, regardless of immigration status, may incorporate as a corporation. The most common corporation types are S-Corporations and C-Corporations.
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S-Corporations
C-Corporations
S-Corporations
S-Corporations cannot have a nonresident alien (for tax purposes) as a shareholder. The corporation passes profits and losses through shareholders so the business is not taxed.
C-Corporations
C-Corporations limit liability of directions, shareholders employees and officers. Legally, the business’s obligations do not get passed on to the personal debt of any individual sso with the business. Most corporations are C-Corps.
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Limited Liability Corporation (LLC)
Provides limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. Here, the LLC’s owners are referred to as ‘members’, and that could include individuals, corporations, other LLCs and foreign entities. There’s no limit to the number of members. Keep in mind that LLC regulations vary by state.
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Worker Cooperatives
Members who are both workers and owners. Control the structure and practices of the work environment. Obligations are limited to the company. Tax rules vary from state to state.
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Pros and Cons of Business Structures
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Sole Proprietorship
General Partnership
Corporations
Limited Liability Corporations (LLCs)
Cooperative Corporations
Sole Proprietorship
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General Partnership
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Corporations
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Limited Liability Corporations (LLCs)
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Cooperative Corporations
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Additional Resources
We’ve put together for you a handy list of other resources you can visit to help you get more information on the structure, permits, and registration specifics required to get your business started.
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Sole Proprietorship
Partnerships
Corporations
LLC
Business Licensing and Permits
Sole Proprietorship
Corporations
Business Licensing and Permits
Cal Gold (CA) – This website assists you in finding appropriate permit information for your business. It also provides contact information for the various agencies that administer and issue these permits.
Immigrants Rising’s Guide to Professional Licensing
