Step 1) Plan Your Business Idea
Before making any big leaps when starting a business in Delaware, you’ll need to create a plan. Having a well-organized business plan is essential for securing funding, managing cash flow, and tracking your progress as your business takes shape.
When creating your business plan, here are some of the most important things to include:
- A pitch. A super-distilled one-page summary of your plan, hitting all the bullet-points below and more.
- A Unique Selling Proposition (USP). A short phrase defining the core mission of your business. For example, our USP at Startup Savant is “Entrepreneurship Simplified.”
- A target market. Who you’re selling to and where to find them. It’s essential that you’re able to define your target demographic and how best to communicate with them.
- A marketing plan. How are you going to market 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 future? These will probably change over time, but setting some initial goals is a great way to stay motivated and track your business’ performance over time.
For more information on how to create a business plan, check out our business planning guide. We go over forming a USP, marketing plan, executive summary, sales forecast, and everything else you need to include in your plan.
If you’re feeling a bit overwhelmed by this step, investing in business planning software might be a good fit for you. There are a handful of intuitive, tools out there that can help you through every aspect of your business plan. Head over to our top 7 business planning software ranking for details on some of the best options!
Step 2) Form Your Business
Now that you’ve got a plan, it’s time to execute it — and the first thing that entails is choosing a business structure and legally forming your business with the state of Delaware.
There are quite a few structures to choose from, and each will affect your business’ leadership, liability and taxes differently. That said, the most popular options are:
- LLC (Limited Liability Company): LLCs are the most popular business structure because they offer the same amount of protection as a corporation without facing double taxation. Forming an LLC also offers more flexibility — for instance, if your company has more than a one member, you can choose to be taxed as a partnership or a corporation.
- S Corporation: A much more formal structure than an LLC, allowing up to 100 shareholders, and requiring a board of directors and corporate officers. No corporate taxation, though, as all profit/loss goes through the shareholders’ personal tax returns.
- C Corporation: C corps are organized similarly, but there’s no limit to the number of shareholders you can have. They also face double taxation, meaning the business and the shareholders are both required to pay taxes on the profits. (Read through our guide for more information on forming a corporation in Delaware.)
- Sole Proprietorship: Definitely the path of least resistance, but it comes with a few additional risks. 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 a Certificate of Incorporation/Formation, but you may benefit from filing a DBA.
If you’re unsure which route is your best bet, we highly recommend checking out our comparison guide for more details on each business structure.
Once you’ve decided on a business structure, you’ll need to handle all of the legal paperwork. This is a pretty intensive process, so if you’re not ready to handle it on your own, there are some great services that can take care of the entire process for you.
Step 3) Tackle License & Tax Obligations
Depending on the nature of your business, you may have a few different things to take care of in the way of taxes, licenses and permits.
Most businesses will need to apply for a general Delaware business license, but on top of that, you may also need to apply for additional, more specific licenses or permits. Here a few resources for you to check out to ensure your business is compliant on a federal, state and local level.
- Federal: You can find a ton of information on federal licenses and permits on the Small Business Association website. As far as federal taxes go, head straight to the IRS business taxes page.
- State: The Delaware One-Stop website has all the links you’ll need to acquire or renew a general business license. Again, depending on your industry, you may also need to acquire additional state permits & licenses.
- Local: For information on municipal business requirements, contact your local chamber of commerce.
If all you need is a general business license, this step may be totally manageable without any additional assistance. That being said, if you learn that you need multiple specialized permits or licenses, you may look into a business license research service. These companies will do all the legwork so you can feel confident that everything is being handled and filed correctly.
Step 4) Create Financial Foundation
Too many entrepreneurs make the mistake of running their businesses out of a personal bank account.
To start out on solid financial footing, it’s critical that you keep your personal and professional expenses entirely separate. If you’ve already slipped up on this, don’t panic — there’s still time to straighten things out, simplify your taxes, and take advantage of all the benefits of having a business bank account!
A couple pieces of advice when choosing a business bank account:
- Shop around Delaware-based banks like WSFS and Wilmington Trust to find out what they have to offer. Often local banks and credit unions have excellent customer service and additional perks for small businesses, so be sure to do some research on the local level.
- Don’t disregard national banks. Look at what features they have to offer and compare them to your local options. Bigger banks like Capital One and Chase do have some major benefits — their services are super secure, automated and user-friendly, and they still offer some incentives for small businesses.
To jumpstart your research, check out our top business bank accounts for a look at our favorite national options.
While separating your personal and business expenses is an important first step, managing your finances going forward will require constant care and attention. Accounting software is a solid investment for all businesses, especially if you’re not equipped to hire an accountant at this point. We recommend syncing your business bank account with an accounting program as soon as you get it set up!
Step 5) Finance Your New Business
If you do some research, you’ll find that there are tons of funding options out there, including angel investors, microloans, trade credit, crowdfunding, and many more. But depending on the nature of your business, your financial history and some other factors, you may want to pursue some methods before others.
We’ve created a guide on how to finance a business that outlines all of the major strategies and when to choose them. Have a quick read through it before deciding on a primary funding method!
As far as Delaware-specific funding opportunities go, here are a few resources to consider:
- Delaware’s Small Business Development Center provides free financial advising and low-cost workshops for new businesses. They’re not a direct funding option, but they can help you figure out what financing options are best for your business and prepare you for future applications.
- The SBA has released a resource guide for Delaware-based small businesses, with an entire section dedicated to financing and gaining capital. Here you can also find a ton of information on the loan options that the SBA has available.
- Smaller, more specific loan programs are available for many industries — you just need to put in the research to find them. Start by searching the Delaware state website, where they’ve listed several loan options for various business types.
Step 6) Build A Brand
Now that you’ve gotten the formation and financing taken care of, it’s time to work on building your brand. There are several things that impact your brand image, but two of the significant ones are your business logo and website.
When it comes to designing your brand logo, aim to do the following:
- Capture the essence of your business. Choose a design that reflects the nature or mission of your company. For example, if you’re opening a floral shop, you might use elegant shapes and cursive fonts.
- Differentiate yourself. Check out the colors and shapes that your competitors use in their logos and try to head a different direction. This will help you stand out in the market.
- Make it memorable. Select a sleek, bold design that will leave a lasting impression in people’s minds.
- Hire a professional. This is a very important step for your business, so it’s worth investing a few bucks to get your logo professionally done.
Check out our guide to choosing the perfect logo for an in-depth discussion of all of these points and more!
A professional business website is another hugely important factor in your brand image, but that doesn’t mean you have to build an entire website from the ground up. A simple way to craft a professional-looking website is to use an existing website builder. This will save you the time and money involved in building a website from scratch.
Step 7) Market Your Business
This last one is more of an ongoing project than a one-time step: marketing. Keep in mind that the most effective marketing strategies require consistent effort and care.
Some other important things to remember along your marketing journey:
- Identify your target market. In order to sell, you need to know who you’re selling to and where to find them. For instance, some social media platforms are more popular than others for specific demographics, so it’s vital that you identify which ones will most effectively reach your target market.
- Quality over quantity. There are tons of approaches to marketing, and too many entrepreneurs make the mistake of trying all of them at once. Instead of making inconsistent attempts at content marketing, social media, SEO and email campaigning, hone in on one or two and do them well.
- Be willing to evolve. This can be a bit of a double-edged sword. Once you’ve established a solid marketing strategy, you should definitely stick with it long enough to see if your efforts pan out. But if they don’t, be willing to try something new and make whatever changes necessary to reach your target market.
- Don’t get distracted by vanity metrics. Sure, it’s encouraging to see increases in clicks and views, but if your marketing efforts aren’t generating any sales, it might be time to head back to the drawing board.
- Leverage software. These days, there are dozens of free/inexpensive programs designed to aid busy entrepreneurs like you. From scheduling social media activity to calculating ROI, there’s a wide array of ways software can help your marketing efforts. Marketing a business is a huge responsibility, so it’s worth it to keep an eye out for ways to lighten your load.
There’s so much more to say on this topic, but we won’t get into it here. Bookmark and read our definitive guide to marketing a business for a more detailed look at all of the above topics, and many more!