 Starting a business is exciting, but it can also be overwhelming. There are a lot of questions to answer before you open your doors: Is there a market for your idea? How much will it cost? What type of business should you form? Do you need a license? How will you pay for everything?
You don’t have to answer all of those questions at once. While every business is different, there are some common steps that can help you move from an idea to an operating business. Here’s an overview of what you should consider when starting a business in Rochester, New York. 1. Start With Your Idea Before you start filing paperwork, take some time to understand your business idea. Who are your customers? What problem does your business solve? Who are your competitors? What makes your business different? The U.S. Small Business Administration recommends starting with market research and competitive analysis1. Market research can help you understand potential customers and their needs, while competitive analysis can help you understand the businesses you’re competing with and identify opportunities to stand out. This research can help you determine whether there is a market for your product or service and give you a better idea of what it will take to compete. 2. Write a Business Plan Once you’ve researched your idea and your market, it’s time to put your plans on paper. A business plan is a roadmap for starting and managing your business. It can help you think through your company’s goals, customers, competition, products or services, marketing strategy, management, and finances. A traditional business plan may include an executive summary, company description, market analysis, organization and management, products or services, marketing and sales, funding requests, and financial projections. The SBA also recognizes a lean startup plan, which focuses on the most important parts of your business and can be much shorter. A business plan isn’t only useful when you’re starting out. It can also help demonstrate to lenders and investors that you’ve thought carefully about your business and its financial future. Here is an example of a traditional business plan and a lean startup plan. 3. Calculate Your Startup Costs Before you open your doors, you’ll probably have bills to pay. Your startup costs will depend on the type of business you’re starting. A brick-and-mortar business, an online business, and a service-based business may have very different expenses. Some common startup costs include:
You can also calculate your break-even point—the point at which your total revenue equals your total costs. Understanding your break-even point can help you determine how many products or services you’ll need to sell before your business begins generating a profit. 4. Figure Out How You’ll Fund Your Business Once you understand your startup costs, you’ll have a better idea of how much funding you’ll need. There are several ways to fund a business. Self-funding allows you to maintain control over your business, but it also means taking on more of the financial risk yourself. Loans can allow you to maintain ownership while providing capital to start or expand your business. Banks and credit unions may consider your business plan, expenses, financial projections, credit history, and other factors when evaluating an application. Investors may provide capital in exchange for an ownership stake in your business and, in some cases, a role in decision-making. Crowdfunding allows businesses to raise money from a large number of people, often through an online platform. The right option depends on your business and your financial situation. 5. Choose Your Business Structure One of the most important decisions you’ll make is choosing your business structure. New York recognizes several types of business structures2, including:
Each structure has different legal and tax requirements. For example, a sole proprietorship is relatively simple to form and gives the owner complete control, but the business and the owner are not separate legal entities. An LLC can provide liability protection for its owners while offering flexibility in how the business is taxed and managed. Corporations are separate legal entities with their own requirements. There isn’t one structure that’s right for every business. Your choice can have important legal and tax consequences, so you may want to consult an attorney or tax professional about your particular situation. 6. Choose Your Business Name Your business name is an important part of your brand, but there are also legal considerations to keep in mind. New York distinguishes between a business’s legal entity name and an assumed name, commonly called a DBA. If you intend to operate under a name other than your legal business name, you may need to register an assumed name. The requirements depend on your business structure. It’s also helpful to understand that a DBA, trademark, entity name, and domain name are not the same thing. A DBA allows you to operate under another name, but it does not provide the same type of legal protection as a trademark. 7. Register Your Business Once you’ve decided on your business structure and name, you’ll need to complete the appropriate registration. How and where you register depends on your business structure and location. New York State’s Business Express is a useful starting point for determining which requirements apply to your business. New York’s official startup guide recommends using Business Express to help navigate the requirements and regulations involved in starting a business. Visit New York Business Express Remember that starting a business in New York can involve both state and local government requirements. 8. Get Your Federal and State Tax IDs Your business may need tax identification numbers at both the federal and state level. A federal Employer Identification Number (EIN) is issued by the IRS. An EIN may be needed for purposes such as filing taxes, opening a business bank account, applying for a loan, or meeting other business requirements. You may also have New York State tax registration requirements depending on your business and its activities. For example, if your business intends to sell taxable goods or services, New York State says you should apply for a Certificate of Authority from the Department of Taxation and Finance. Apply for an EIN through the IRS 9. Find Out What Licenses and Permits You Need Not every business needs the same licenses and permits. Your requirements may depend on the type of business you’re operating, what you’re selling or doing, and where you’re located. New York State recommends using Business Express to identify the licenses and permits that may apply to your business. And because you’re starting a business in Rochester, it’s important to remember that local requirements may apply in addition to state requirements. The City of Rochester provides information about local, state, and federal programs and resources for businesses, including information related to business support and development3. If you’re not sure what your business needs, don’t assume. Take the time to find out before you begin operating. 10. Get the Right InsuranceInsurance is another area where requirements vary depending on your business. New York State says that, depending on factors including your business structure, location, and number of employees, your business may need coverage such as:
You may also want other types of insurance depending on your business and industry. Because insurance requirements can be complicated, it’s worth discussing your specific situation with a qualified insurance professional. 11. Open a Business Bank Account Once you’ve established your business, it’s important to set up a system for managing your finances. The SBA recommends opening a business bank account as part of the process of launching your business. You’ll also want to think about bookkeeping, accounting, tracking your income and expenses, and preparing for your tax obligations. Keeping your business finances organized from the beginning can make it much easier to understand how your business is performing. 12. Get Ready to Operate Once the paperwork is done, the real work begins. You’ll need to find customers, market your business, manage your finances, and continue making decisions about how to operate and grow. The SBA’s business guide includes resources covering everything from managing finances and hiring employees to marketing, sales, taxes, legal compliance, and business growth. But you don’t have to learn everything before you get started. You Don’t Have to Do It Alone Starting a business can feel like a lot to take on. There are decisions to make, paperwork to complete, numbers to understand, and questions that don’t always have straightforward answers. Fortunately, Rochester-area entrepreneurs have access to a number of organizations and resources that can help. The City of Rochester maintains a directory of local, county, state, and federal programs available to businesses, including financing, grants, technical assistance, market research, and other resources. And, of course, that’s where we come in. The Finger Lakes Small Business Development Center, hosted by SUNY Brockport, provides business advice and consulting to entrepreneurs and small-business owners throughout the region. Whether you’re still working on an idea, preparing to launch, or trying to figure out what comes next, you don’t have to have everything figured out before reaching out. If you’re thinking about starting a business in Rochester or the surrounding region, we’re here to help. Visit the Finger Lakes SBDC to learn more and connect with our office 1 https://www.sba.gov/counseling/ 2 https://dos.ny.gov/types-businesses-operating-new-york-state 3 https://www.cityofrochester.gov/departments/neighborhood-and-business-development/business-services-city-state-and-federal-programs
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The Small Business Development Center at SUNY Brockport is part of a partnership program with the U.S Small Business Administration and administered by the State University of New York. Funded in part through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, conclusions or recommendations expressed are those of the author(s) and do not necessarily reflect the views of the U.S. Small Business Administration. All U.S. Small Business Administration funded programs are extended to the public on a nondiscriminatory basis.
