In 2010, Barack Obama said, “Small businesses are the backbone of our economy and the cornerstones of our communities." Around 70% of U.S. jobs are provided by small businesses, yet the Bureau of Labor Statistics reports that between 20% and 24% of new businesses fail within their first year. After five years, about half have closed, and after 10, nearly two-thirds are history.

However, the independence, personal fulfillment, flexibility, community impact and potential financial rewards of owning a business still persuade over 5 million U.S. entrepreneurs to take the plunge each year. 

Though starting and running a company can be daunting, applying a few relatively simple fundamentals can help set you up for success. Founders and owners of Salt Lake-based Backyard Bookkeeper, Backyard Payroll and SPC Strategies, locals Julie DeLong and Alex Mic-Podar tackle tough questions affecting entrepreneurs today. 

Specializing in bookkeeping system customization and clean up, DeLong has written several articles for Forbes Magazine and Intuit and was an adjunct bookkeeping professor for the University of Utah. 

Mic-Podar has started a total of seven businesses and provides business coaching, executive coaching and consulting services. She is a board member with multiple nonprofits and was a 2023 recipient of the Utah 40 Over 40 award, which recognizes women over the age of 40 for professional success and business contributions. 

This is the first in a four-part article series about how to start and grow your own business.

Q: What is the most important thing to know for current and prospective business owners? What are the first steps? 

Mic-Podar: Number one: start by creating a limited liability company. If someone sues you, they can come for all your assets. But with an LLC, they can only take what the LLC has, not your personal belongings. So protect yourself from the beginning. 

Tracking all business expenses and income from the very beginning helps give you a clear picture of your finances. (Image courtesy Pixabay)

But don’t let the legal hoops get in the way of starting. It doesn’t have to be complicated. People think it takes a lot of money to start a business. It doesn’t.

If you aren’t sure of your business name, just register an LLC named after yourself or something else familiar—you can add business names later as doing business as, which will function as legal aliases for your existing entity. 

Number two: we’re bookkeepers, so we’re going to tell you to track your expenses from the very beginning. Whether you use a spreadsheet or something like QuickBooks doesn’t really matter starting out, but when you start making over $1,000 a month, seriously consider moving to adequate software. 

Number three: think about the future of your finances. Educate yourself about why numbers matter. Numbers tell a story. This is the pitfall of any business within five years: when they start making money, they start spending more, but they’re not thinking about how much money they really have in the bank account. 

Number four: this is the most important point—just start!  

Q: What are some tips for creating a unique business idea that meets a market need?

DeLong: It has to be something you know enough about to be competent. It sits at the intersection of market need, interest and ability. It needs to be something you're interested in and that you are physically capable of doing.

If you're missing one of those ingredients, you're doomed to fail because you're either working in an arena where you don't have enough experience, you aren’t personally invested or you're providing a service nobody wants.    

Know what you’re interested in, what you think you could be good at, and then start looking for areas in the marketplace where there might be a demand for it.

Mic-Podar: A simple way to describe it is just to look around you at the world and ask yourself, “What’s missing?” Look for opportunities where the right business idea could come and make something more efficient or fill a need that no one has filled yet.

Q: How do you determine if there's a demand for something?

DeLong: There's research available, but sometimes it's just hearsay. Talk to people around you. I will periodically hear about industries where service providers are a hot commodity. For example, I learned a few years ago that airplane mechanics are apparently hard to come by. There aren't enough of them. 

Ask yourself what would make things easier for people. Who is it hard to get an appointment with? What problem can I solve? Or what problem needs solving, even if it's not you that solves it? Maybe you put some people together who know how to do what you want.

Mic-Podar: Think about what is missing and be the solution. If, for example, you think your mechanic is lacking and you know you can do better, identify how you can do better. What is the mechanic truly missing to be better? By identifying missing elements, you discover businesses you could start. Maybe you don't even start a mechanic business. Maybe you start a consulting business that focuses on mechanics. 
 

Q: What are some strategies for recognizing my skills and interests? 

DeLong: I once took an office management position and it included some accounting. I learned on the job and discovered I really liked it. One of the most important skills you can cultivate is the ability to learn, and if you're constantly learning and constantly looking for things to learn, then you'll eventually find something you really like. 

There's not necessarily going to be one answer. There will ultimately be multiple things you could do that would be worthwhile and could be profitable. You could end up doing multiple things like Alex.

Q: What are some guidelines for choosing a business name?

DeLong: You want something memorable, unique, catchy and that nobody else has used. 

Mic-Podar: If you want to be found on Google, it’s important that your name has to do with your URL and that your name includes something about what you do. This is a keyword and helps with search engine optimization. If you are a consulting business, make sure your name has something to do with consulting. Or if you’re an e-commerce business, your name should say something about your product. 

Q: Why should I choose an LLC? What about other business entities?

DeLong: A lot of people will set up partnerships, especially husband and wife partnerships. But any structure other than a single-member LLC will require its own separate tax return that is due a month earlier than your regular tax return on March 15, not April 15. The very simplest, cheapest, and easiest choice you can make is an LLC with one owner.

Using an LLC for your business protects personal assets and is the easiest option come tax time. (Image courtesy Pexels)

Even if you add a spouse to that LLC, it’s a partnership, and you need more complex bookkeeping. It needs to have its own tax return, whereas a single-member LLC is just a Schedule C on your personal return. Very easy. 

If you need a partnership, even if it's with a spouse, have a lawyer draw up a partnership agreement. You can try to do it yourself, but it’s bound to create problems.

I know two friends who owned their business 50/50. They created a contract, signed it, and everything. But there were big omissions and inevitably, disagreements. So in the end, even though it was a great idea and a great product, the business self-destructed, and they were left with nothing. 

Corporations come with special rules, extra paperwork, extra returns and extra tax forms. So if you want anything that's more complex, consult a certified public accountant beforehand.

It doesn't matter how great the business idea is or how thorough you think you've been with your own contract. You don't know what you don't know.

Q: How do I officially register my business with the government? How do I get an EIN from the IRS?

DeLong: You create your business entity at the state level. You can create an LLC online. It's really easy in Utah and is less than $100. Go to corporations.utah.gov. The annual renewal is around $20. This creates a separate legal entity under the state of Utah, so it won't be you earning the money—it will be the business.

If you have a physical location, you also need a business license. And, of course, depending on the industry, there may or may not be industry licenses you have to obtain.

An employer identification number is simply a tax ID number that identifies your business as a separate taxable entity to the IRS. All of the business's revenue will be associated with the EIN. You can also set up the EIN online on the IRS website. It is free and easy to do.

Mic-Podar: But if you have the means, consult with a lawyer to make sure you are doing it correctly. There are many law offices that offer this service.

Q: Should I open a physical store location or stay online?

DeLong: It depends on the kind of business. Do you need a place that receives people in person? If so, you need a storefront or home office. Again, if you have a physical storefront or if customers come to your home, you need a business license. Always check with local authorities.

Thinking creatively can help you find an unfulfilled market need and solve problems. (Image courtesy Pexels)

Even if you need a storefront, you don't have to sign a five-year commercial lease. Especially if you're brand new, avoid commercial leases because they lock you in. Unless you file bankruptcy, a lot of times you have to pay the entire value of all five years of monthly payments, even if you go under and aren’t using the space anymore.

Don’t make that kind of financial commitment unless you really have to or you are very sure you have the income to support it.

A lot of places do month-to-month leases. There are co-working spaces. Or find someone who does have a commercial lease and see if they've got an empty office. Get creative. 

Plenty of businesses don't require a storefront, and there are a lot of creative solutions out there. If you're in the e-commerce business, for example, some people can do fulfillment for you. You don't have to rent your own warehouse and do your own packaging. If you're working from home for an online business, you do not need a city license. 

Q: How do I create a marketing plan and develop my brand?

Mic-Podar: A brand comes with time and will evolve, so don’t focus too much on that yet. Also, don’t focus too much on marketing because it includes so many aspects: branding, colors, your website, employee uniforms etc. These days, you can go to ChatGPT and say, ‘this is what I’m selling. Create me a logo.’ You don’t need lots of software.

When you start, focus on your product or service and who your buyer is. Make a plan around your buyers. Sometimes people feel like they need large budgets for marketing, but you don’t. In today’s world, you have social media. You can create content and showcase it easily. There is so much free marketing. 

When we started our business, we had no money for marketing, so I focused on free resources. Instead of buying ad space on a platform, I focused on who my clients were and how I could reach them. I looked for ads seeking bookkeepers and W2 employees and called them. That was my marketing strategy. I cold-called and asked if they’d consider outsourcing. One out of 10 said they’d be interested. 

You can sign up on Wix to create a website. They’ll give you a URL, and AI will create it for you. ChatGPT will write the code, and you just copy and paste it. Or you can sign up for Google Sites if you don’t know how to make a website. It’s free. 

DeLong: Plenty of businesses don’t even bother with a website. They just have a Facebook page. 

Mic-Podar: The main point is don't quit your full-time job tomorrow; start a business on the side, regardless if that is e-commerce or business to business. See where it takes you. 

Then when you see the potential and you have cash flow, slowly step away from your full-time job and spend more time on your business. This is very important—spend time growing your business. Invest your time in it. Your time will be the most valuable asset your business has. 

I know plenty of millionaires who have a full-time job and have hundreds of businesses on the side. There is no wrong way of doing things. Just get it going.