Business Creation 101
Business creation is the beginning of a new firm’s life course. It consists of the process by which entrepreneurs convert their ideas into useful products or services. This includes market research, identifying the value of a product or service and developing a business plan. It also involves the creation of a legal entity, obtaining an employer identification number (EIN) and opening a business bank account.
The most important step is to start with an idea that can solve a real problem for people. This can be anything from a new shampoo to a ride-sharing app. It’s important to conduct some market research to ensure that there is a demand for the product or service and to find out about competitors.
Another way to mitigate risk is to test out your product or service with preorders. This will give you the cash upfront to invest into production and will also build a sense of exclusivity for your product. Remi did this with her hair styling products, working with a local hairstylist who “agreed to make them with the promise that she’d get paid if anyone ordered them.”
Once you’ve tested out your product or service and determined that it will be successful, it’s time to create a legal entity. The most popular choice is a limited liability company (LLC). This type of entity separates your personal assets from the business, which makes it more difficult to be sued for financial losses. It’s also a good idea to open a business bank account so that your personal and business finances are kept separate. This can help with bookkeeping and tax preparation.