Congratulations on taking the bold step to start a new business! All things considered, creating your own business allows you to achieve a work-life balance. However, it is sometimes easier said than done. Because of the challenges involved, many business owners agree that the first year is challenging. Nevertheless, that shouldn’t discourage you from starting.
With this in mind, this guide acts as your checklist to open a small business. It’ll help you prepare thoroughly at the start and build your brand along the way to enhance your success rates.
1. Choose Your Business Idea
The first thing in your checklist to open a small business is to decide what you want to do with your business. What services or products do you want to offer your target audience? Additionally, ask yourself if the idea is profitable and whether it’ll keep you in business for long.
2. Conduct a Feasibility Test
Undoubtedly, the best way to find out the viability of your business idea is to do a feasibility study. In other words, you need to do market research to gather facts and figures. These will come in handy in helping you make an informed decision depending on the following:
- Industry: What is happening in the entire world of the particular type of business you want to start?
- Market: Determine the total population of consumers or businesses currently using the product or service you hope to offer.
- Customers: Who will be your clients to buy your product or service?
- Competition: How many other companies sell the same product or service? Why would customers choose your business over others?
3. Write Your Business Plan
Create a business plan once you have your facts and figures on paper. It’s a map that helps you determine the direction your business will take, how to overcome difficulties, and what to do to sustain the business. While 70% of business owners recommend drafting a business plan, 13% of entrepreneurs think it’s unnecessary, but this isn’t true. Indeed, creating a business plan can be a daunting task. Nonetheless, the good thing is that you’ve already captured most items in the steps above.
Remember that your first business plan isn’t the final copy. You’ll need to keep revising it as your business grows and learn more about your market.
4. Determine How Much Money You Need to Start
The next thing in your checklist to open a small business is startup costs. Whether you’re self-funding your business or working with investors, you need to determine your startup costs. Therefore, you need to map out all your anticipated costs like hiring and setting up the business premise. Further, consider the expenses of stocking up your business, hiring employees, and getting the right office equipment.
You also must establish how your cash flow should look each month to keep the business running. Think of the salaries, workers’ compensation insurance, health insurance, liability insurance, and other finance-related business needs like utilities and business taxes.
5. Create and Register a Business Name
Once you’re sure you have the funds to start you off, choose an appropriate business name and register it, depending on whether it’s valid. For example, it should not be similar to an existing and registered business name and should fall within the parameters of a business name in your region.
An expert can help you choose a business name, decide the business structure, create a logo, and register the business. Registration requirements vary depending on whether it’s a sole proprietorship, partnership, or a limited liability company.
With the business name registered, you’re ready to set up your business in the desired location and hire employees. Equally, you must get a business bank account, and set up your accounting systems. Also, apply for a social security number, buy business insurance, and get an employer identification number.
Similarly, don’t forget to apply for business permits and licenses as determined by your zoning laws. The Small Business Administration (SBA) can help you acquire business licenses and permits.
6. Brand Yourself and Get the Word Out
At this juncture, you want to attract customers and start doing business. Thus, your startup checklist isn’t complete without a marketing plan. Every business should have a website where it promotes its products and services. However, beyond having a website, consider other forms of marketing, including:
- Online ads on popular websites and social media platforms like LinkedIn
- Print advertising on magazines, newspapers, or business cards
- Networking with like-minded small business owners or attending business events in your community
- Digital signage advertising that allows you to communicate directly with your target audience. Your options include setting up digital kiosks, video walls, LED walls, and LED billboards.
- Asking for referrals from your customers through social media or word of mouth.
Putting up a business is no easy feat, but that doesn’t mean it’s impossible. A lot goes into it to ensure you do it right. The above checklist to open a small business gives you valuable tips to get you started. We hope it helps you find your way to building a successful business.
The Perfect Investment: RAD Diversified and Income-Producing Farms
Amidst the global lockdown of 2020, Dutch Mendenhall, founder of RADD America, began looking for an alternative to standard residential real-estate investments. So, he turned his analysis to farms and was blown away by the immense potential he saw. After going public in late 2019, RADD America purchased US farmland and made slices of the real estate available at minimum investments of $10,000.
Income-producing farms vs. other real estate asset classes
According to Mendenhall, an apartment complex in today’s US real estate market commands approximately a 4% or 5% cap rate. Farms offer somewhere around a 15% to 20% cap rate.
“When I first began looking at investing in farms, I compared each acre to an apartment or housing unit,” Mendenhall recalls. “The variety that income-producing farms provide is what I really love about them as an opportunity. With one season producing wheat and corn the next, you can double tap — you can raise livestock on top of agriculture. Putting money into the farm only pays off in time. Everything from improving soil to increasing irrigation makes a major impact on potential income, and so much of America’s farmland has fallen into disrepair during the last 20 years.”
When Mendenhall began investing during the early days of the pandemic, sustainable acres of producing farmland sold anywhere from $3,500 to $5,000. Today, he finds that income-producing acres of farmland easily sell for $9,500 to $10,000.
“I’ve seen farmland values almost double during the last couple of years,” Mendenhall says. “Currently, we’re in Tennessee, Arkansas, and Idaho, but we are analyzing land all over America. What reports don’t show is the difference between a properly maintained acre of farmland and an acre that is in disarray. There’s only so much workable farmland on the market today. We’ve hit the tipping point, and now, there’s a scarcity of land for people to buy. If you have the opportunity to purchase amazing agricultural land, you have to pull the trigger quickly.”
Income-producing farms as an asset class
Mendenhall is no stranger to investors. Since 2006, he’s connected them to deals in short sales, wholesaling, residential properties, and storage units, though he admits that every asset class has caused the same excitement as farmland. “At this point, we can’t find enough bargains for our investors,” he says. “They take real pride in their investments and keep asking us for more.”
RADD America takes a true grassroots approach when connecting its investors to farmland. “The farming world is different from any other in real estate,” explains Mendenhall. “We start by having our acquisitions and agricultural teams meet with farmers. When we get ready to brand cattle or plant, all the local farmers come and help. In the same spirit, our teams go out and help the local farmers when it’s their turn to brand and plant. To do it right, you have to build a relationship and a connection that’s quite different than other types of investing.”
RADD America is composed of expert investors and expert farmers. The company offers its investments through fractionalized ownership. In other words, the company purchases one farm and then allows a joint pool of investors to own it together.
“If you don’t have a team that knows how to farm and maximize income, you’re not going to get the best possible return for investors,” warns Mendenhall. “Thankfully, our team isn’t so big for this type of investing that we forget who we are, and we have the economy to scale at a great pace.”
The impact of global competition on income-producing farm investments
RADD America closely monitors global trends. In Mendenhall’s experience, investors win when they move before the market. However, when they move after the market, they lose.
“When Russian first invaded and sparked its war with Ukraine, for example, we kept a close eye on its global impact,” he says. “As one of the largest producers of wheat in the world, we knew that Ukraine — now in the midst of a war — wasn’t going to be able to produce wheat at the same scale, so someone else needs to step in and fill the gap. We’re constantly monitoring what’s happening in the world to stay on top of evolving trends.”
In terms of global competition, Mendenhall is frustrated by foreign entities staking ownership of American farmland and agriculture. In this area, China has positioned itself as the number one threat to the sovereignty of the United States.
“When foreign powers have ownership of agricultural land in the US, it puts us all at risk as Americans,” remarks Mendenhall. “Over the past few years, we’ve seen soil quality erode, closures of meatpacking plants, and numerous fires. The likelihood of nuclear war in this age is very small. The quiet war of buying American agriculture and unsettling the American dollar is the threat we face today.”
Clearly, RADD America has a lot to pay attention to at home and abroad. “We’re monitoring weather patterns and making one-year, three-year, and five-year predictions,” Mendenhall explains. “We’re also paying close attention to interest rates to see where this shifting economy is headed. The up-and-down cycles are faster than they’ve ever been. Monitoring the industry is critical. With expert investors and agricultural specialists from RADD America on your team, farmland can be one of your most promising and rewarding investment opportunities.”
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