By Sarah Edwards, Digital Content Specialist
The first week of May is National Small Business Week — an annual celebration and recognition of small businesses and entrepreneurship which has taken place for over 50 years. There are various events and promotions held nationally with the general aim to support, encourage and guide small business owners towards success.
There has been a notable shift in work: more employees than ever before are advocating for remote work or leaving traditional employment in favor of starting their own business. The process of doing so is complex and it is common to miss critical steps when establishing a business without building a clear plan and understanding the legal processes involved.
Why Do People Start a Remote Business?
Though specific motives vary, many people start a business for a few main reasons:
- Flexibility. With proper time management, working remotely and for yourself offers flexibility that traditional jobs don’t typically offer. This is especially appealing to caregivers, students, disabled people, and others who struggle to find supportive traditional employment.
- Better pay opportunities. Rather than being beholden to a rigid pay scale, business owners can grow their business — and their profits — in numerous ways. For many, starting a successful business offers better long-term pay than available traditional employment.
- Autonomy. This ties into flexibility, as business owners can determine their products or services, rates, working hours and locations, terms and more.
What Are Common Challenges to Starting a Remote Business?
Being a business owner comes with a lot of freedom, but that doesn’t mean it’s easy.
Here are a few of the challenges a small business owner may face:
- Time management. The downside to having so much autonomy and flexibility is the requirement of structure and time management skills. It can quickly become overwhelming to juggle administrative duties, life and business without external oversight.
- Taxes. Selecting the best legal business structure can be challenging for new business owners. The tax implications of this decision are significant and can impact more than just profit.
- Raising funds. Some businesses require more overhead than others to start operations: software for bookkeeping, website domains and any manufacturing costs for products are a few examples.
With the numerous legal and financial challenges of starting a business it’s easy for business owners to get lost in the weeds. In an effort to support entrepreneurs, we’ve outlined a general guide to starting a small business below.
How to Start a Business at Home
- Define business goals. What need does your business fill? How is your business filling that need (what products or services are you offering)?
- Conduct market research. In other words: is what you want to sell something that people want to buy? This step also helps narrow down or change what you intend to sell to be more aligned with buyers. This step explores who your target audience is and what their buying preferences are. Keep in mind that banks and investors want to see details.
- Write your business plan. These can be very long and incredibly detailed or shorter and summarized. Think about how you intend to use the plan and tailor it accordingly. Business plans typically cover the steps above plus marketing strategies, competitor analysis, operation and management plans, legal and financial data, and development or production. There are templates online but be sure to customize them to your small business’s need. Your business plan is also what stakeholders analyze when you pursue funding, making it a critical document.
- Select your business’s legal structure. Use the business plan you develop to determine the best legal structure for your business entity. Many small business owners start out as sole proprietors, but some may opt for a partnership, limited liability company (LLC), or incorporation.
- Register your business. The exact requirements to do this vary by state and business entity. Generally, you’ll need an Employer Identification Number (EIN), official business address, a separate business bank account, tax IDs, permits or licenses and insurance.
- Apply for any trademarks, patents, or copyrights. As you establish your small business, you may have intellectual property — products, services, ideas or brand materials — you need to legally protect.
- Secure funding. This may be your own personal money, loans from friends or family, bank loans, or various types of investors. The business plan you spent so much time on is necessary here — without one, you’ll be unable to secure funding. Your source of funds should already be included in the business plan you developed, it’s just a matter of implementation.
- Develop prototypes or start building a portfolio. If your business is product-based, you’ll want to start producing prototype products and getting formal feedback before taking it to market. For service-based businesses, you’ll want to build up a portfolio with samples or case studies and get feedback around those.
- Establish your operations. This may include building a team, but it also includes internal business operations like booking calendars, websites, bookkeeping and billing.
- Start marketing. It takes time to get the word out, so marketing prior to a full launch can help drum up your audience base. Go in with a strategy and a budget based on your market research and business plan.
- Launch. Follow the feedback about your products or services, tweak your marketing if necessary and start full production.
Navigating the Legal Challenges of Business
Beyond taxes and business structures, business owners face other legal obstacles nearly daily. These may include contracts, liability issues, collecting client payments and more. Finding good resources to equip yourself to address these challenges can be daunting.
Certificate programs like Columbia Law’s A Legal Toolkit for Starting and Scaling Your Business are available to small business owners who want to navigate business ownership with confidence.
Taught by Lynnise E. Pantin, Pritzker Pucker Family Clinical Professor of Transactional Law and director of the Columbia Law School Entrepreneurship and Community Development Clinic, this 100% online, non-credit certificate program — specifically designed to be accessible for business owners without a law background — addresses formalizing your business; legal boundaries of operations; the tax implications of selecting a business structure; and how to advance your business while adhering to local, state, and federal regulations.
The information provided in this article does not, and is not intended to, constitute legal advice. Instead, all information, content, and opinions available in this article are for general informational purposes only.
