Step 1) Plan Your Business Idea
The first step you should take toward starting a business in Connecticut is creating a detailed business plan. Designing a well-rounded plan is crucial for securing funding, managing cash flow, and tracking your progress as your business grows and evolves.
Here are a few things you’ll want to focus on during this process:
- Your pitch. A super-distilled one-page summary of your plan, hitting all the bullet-points below and more.
- Your unique selling proposition (USP). A short phrase defining the core mission of your business. For example, our USP at Startup Savant is “Entrepreneurship Simplified.”
- Your target market. Who you’re selling to (specifically) and where to find them (specifically).
- Your marketing plan. How are you going to promote your business? Through social media? If so, which platform? Paid advertisements? If so, where, and how much do you intend to spend?
- Milestones. What do you hope to achieve in the next 3 months, 9 months, or 2 years? Of course, these are bound to evolve over time, but setting goals is a great way to stay motivated and track your business’ performance over time.
If you’d like to take more detailed look at business planning, check out our free business planning guide. This guide runs through all of the basics, including how to create a USP, design a marketing plan, craft an executive summary, and take care of everything else you need to include in your plan.
If you're feeling a little overwhelmed by this step, a business planning software might be the perfect solution for you. There are a bunch of programs out there that provide step-by-step guidance all along the way, and tons of tools to help you stay organized. Head over to our top business planning tools guide for details on the best programs available.
Step 2) Form Your Business
Now that you’ve got a plan for your company going forward, it’s time to get down to business and work your way through the formation process.
The first thing you need to consider is which structure will best suit your business. There are several to choose from, and each has different requirements for your business’ management structure, liability and taxes. Choosing an appropriate structure is one of the most important decisions you’ll make for your business, so it’s important to choose wisely. The main options are:
- LLC (Limited Liability Company): LLCs are the most popular business structure because they offer the protection of a corporation without the double taxation or intensive legal upkeep. If you choose to form an LLC in Connecticut, you’ll have more flexible taxation options -- for example, if your company has at least two members, you can choose to be taxed as a partnership or corporation.
- S Corporation: More formal structure, with up to 100 shareholders, a board of directors, and corporate officers. No corporate taxation, though, as all income/loss goes through the shareholders’ personal tax returns.
- C Corporation: Organized the same as S Corps, but there’s no limit to the number of shareholders you can have. C Corps are the only structure that face double taxation, meaning the business and the shareholders are both required to pay taxes on the profits. Check out our guide for more information on how to form a corporation in Connecticut.
- Sole Proprietorship: The least hassle, but the most risk. If you’re operating without any partners and haven’t registered a formal business structure, you’re automatically classified as a sole proprietor. No need to file articles of incorporation/organization, but you might benefit from filing a DBA.
If you’re torn between structures and need some more help deciding, take a peek at our business structure comparison guide.
Once you’ve decided on the best structure for your business, you’ll need to select a registered agent, file formation documents with the state, and see to other legal matters.
It can be quite a task, especially if you’re trying to take it on by yourself. If you feel like you’re being stretched a bit too thin, there are some fantastic services out there that will take care of everything for you. Head over to our top 7 incorporation services for a look at our favorites.
Step 3) Tackle License & Tax Obligations
In Connecticut, general business licenses are issued locally, and they’re not required for all business types.
Connecticut Tax Registration numbers, on the other hand, are required for all businesses in order to engage in the sale of goods and services. You can apply for a TRN through the CT Department of Revenue Services.
After obtaining a general business license (if you need one) and a TRN, you may still need a few more licenses/permits in order to be compliant. Here are the best resources we’ve found on this subject on a federal, state and local level:
- Federal: The Small Business association website has some helpful information on federal tax requirements and federal licenses and permits, and the IRS business taxes page is also a great resource.
- State: You can apply for a Connecticut business license through their eLicense website. Additionally, the Connecticut Secretary of State website has a Business Startup Tool that offers a ton of information, including a page on all their licensing requirements.
- Local: For information on municipal requirements, you’ll need to contact your local chamber of commerce.
If all you need is a general business license, this step is totally doable without expert assistance. However, if you find that you need quite a few licenses/permits on a federal, state and local level, you may want to look into using a business license service. These companies specialize in helping new businesses like yours stay compliant with all regulations by doing all the heavy lifting on your behalf.
Step 4) Create Financial Foundation
Too many entrepreneurs make the mistake of running their business out of their personal bank account.
To start out on solid financial footing, it’s super important to keep your personal and professional expenses 100% separate. If you’ve already slipped up on this, don’t panic -- there’s still time to get yourself situated, simplify your taxes, and take advantage of all the benefits of having a business bank account!
A couple pieces of advice for choosing a business bank account:
- Do some research on what local banks have to offer. There are tons of Connecticut-based banking options available, like Liberty Bank and Webster Bank, and often local banks offer excellent perks for small businesses.
- Don’t disregard the big banks. Compare their features to those of your local options and see which feels like the best fit. There are some major benefits to working with a bank like Wells Fargo or Bank of America -- their services are incredibly secure, highly automated, user-friendly, and they still offer some great incentives for small businesses.
To get the ball rolling, check out our top 5 business bank accounts for a comparative look at our favorite options.
Separating your personal and business expenses is an essential first step, but managing your finances going forward is going to require constant care and attention. Once you set up your business bank account, make sure to sync it with some accounting software to start properly tracking your finances. This is especially important if you’re not ready to hire an accountant yet!
Step 5) Finance Your New Business
Now that you have a financial foundation in place, it’s time to figure out how to fund your business.
There are tons of funding opportunities out there, including angel investors, microloans, trade credit, crowdfunding, and many more. However, some funding opportunities will suit you better than others depending on the size of your company, your level of financial security, whether or not you’ve established credit, and some additional factors.
Our guide on how to finance a business outlines all the major strategies to help you decide which ones are most likely to work for you. We highly recommend giving it a read when you’re ready to start researching funding opportunities.
- The Connecticut Department of Economic and Community Development website has an abundance of information about financial assistance options for small businesses. The DECD even offers direct assistance in the form of low-interest loans and grants for certain businesses.
- Other Connecticut-based funding resources include in the Community Economic Development Fund, the Community Investment Corporation and Connecticut Innovations. All of these options have specific regulations for who can apply and what the funds can be used for, so be sure to do the research before getting your hopes up.
- In addition to statewide funding resources, there are also regional ones like the Hartford Economic Development Corporation, the Waterbury Development Corporation and the Northeast Connecticut Economic Alliance.
Step 6) Build A Brand
You’ve taken care of most of the initial paperwork by now, so it’s time to work on building your brand.
Creating a professional brand that appeals to your target market is essential to effectively marketing your business and bringing in the right customers. There are a number of things that impact your brand image, but two of the major ones are your business logo and website.
When you’re ready to start designing your logo, keep the following objectives in mind:
- Capture the essence of your business. Design a logo that reflects the nature of your company. Think about what your color, imagery and font choices will imply about your brand, and what else they’ll bring to mind for your target audience.
- Differentiate yourself. Before designing your logo, take a look at some of your primary competitors’ logos. You want folks to be able to differentiate your business from the competition, so it’s a good idea to choose a color scheme and other physical characteristics that will help you stand out in the market.
- Make it memorable. Aim to create a sleek, bold design that will leave a lasting impression in people’s minds.
- Hire a professional. Unless you’ve got a professional designer on staff, it’s a wise idea to outsource this task. Designing a logo is a significant step for your business, so it’s worth investing a few bucks to get it professionally done.
Take a look at our guide to choosing the perfect logo for an in-depth discussion of all the things we’ve mentioned here and much more!
Your business website is another hugely important aspect of your brand image. A great way to create a beautiful, professional website for your business is to use an existing web-building platform like StudioPress. This way, you won’t have to expend the time or money involved in building a website totally from scratch. Head over to our top business website builders for our recommendations.
Step 7) Market Your Business
The final step of this guide is one that never ends: marketing your business.
Marketing will play a major role in the trajectory of your new business, and it requires consistent effort and care in order to be successful. Here are a few things to keep in mind during your marketing journey:
- Know your target market. In order to effectively market your business, you need to know who your target demographic is. Sure, you could invest in ads on YouTube or FaceBook, but if the content isn’t crafted with your target audience in mind (or if they aren’t even active on that specific platform) you’ve just wasted your time and money.
- Don’t spread yourself too thin. There are tons of marketing approaches out there, but that doesn’t mean you should try them all. Instead of making half-hearted attempts at content marketing, social media, SEO and email campaigning all at once, concentrate on one and do it well.
- Be willing to evolve. Once you’ve established a marketing strategy, you should definitely stick with it long enough to see if it gets results -- but if it doesn’t quite pan out as planned, don’t be afraid to switch it up. You should be willing to make adjustments, or even switch gears completely if that’s what you have to do to reach your target market.
- Don’t get distracted by vanity metrics. Sure, it’s great to get clicks, likes and views, but if your marketing efforts aren’t generating any sales, it’s time to head back to the drawing board.
- Leverage software. Marketing a business is hard work, but you don’t need to do it all on your own. There are tons of free/inexpensive programs out there that can help you schedule social media activity, craft professional emails, calculate ROI, and more.
There’s so much more to say on this topic, but it’s too much to cover here. We encourage you to read through our definitive guide to marketing a business for an up-close look at all of the topics we discussed above, and many more.