Ranked by CNBC as the most business-friendly state in America, Delaware is a great place to start any type of business. But if you have never started your own business before, you may wonder: where do you even begin? From choosing an initial idea to writing a business plan and marketing your business, it is difficult to ensure you are starting a successful business. In this article, you’ll find a handy step-by-step guide to help you start a business in Delaware without a hiccup!
To start a business, you need to have an idea. This idea can be as simple or complex as you want. Below are some questions to ask yourself about your business idea. These questions will help you to land on a good idea and to question yourself whether this idea can be turned into a profitable business.
- Do I have any hobbies or interests?
- Can I turn these interests into a business?
- Can I see myself enjoying the work?
- Is there a gap in the market for my business in Delaware?
- Does my business provide a solution to any problems people may have?
- Are there any similar businesses based in Delaware, and how can I stand out from them?
- What do I need to start the business successfully?
By answering these questions, you can start brainstorming and see whether or not your idea will work. You can also get help from your friends and family and have a brainstorming session with them as well. They may be able to see an angle that you are missing completely.
Choosing your business name is an essential step in forming a business. The name you choose will be the first thing that potential customers will see and hear. Their first impressions of your business will often come from the name, so make sure it is a good one!
In Delaware, some naming regulations also need to be considered, depending on what kind of business you have. For example, you cannot use a name already registered with the state of Delaware. To check if your desired name is available, visit the Delaware Secretary of State’s business entity search.
If you’re battling to come up with a name for the business, try the following methods:
- Use an online name generator
- Create a word dump; this is where you jot down a list of words that pop into your mind
- Brainstorm with friends and family
Writing your business plan is the next step after deciding on a business idea and name. The business plan will contain all your relevant research, information about the business, and financial predictions. Your business plan can also be used to attract potential investors to your business.
A good business plan will answer the following questions:
- What services will your business offer?
- Who is your target audience?
- How do you plan on turning your target audience into paying customers?
- What are the start-up costs?
- How much do you need to earn to break even?
- What other financial details are important to the business?
- What roles will be available in the business, and how do you plan on filling them?
The above information is a good starting point for writing your business plan, but it does not need to follow it necessarily. You can also find plenty of resources online to help you write your business plan.
Starting a business costs money; if you cannot fund the business with your own money, you will need to get funding for the business another way. You can do this through grants, loans, and investors.
Grants are a popular way of getting funds for the business as you do not have to pay the money back. However, you need to meet strict requirements just to qualify for a grant – not to mention the competition you will face when you qualify. Delaware offers grants to businesses through their EDGE grants program. You can visit their site to see if you are eligible.
If you do not meet the requirements for a grant or cannot get one, you could apply for a loan. The state of Delaware has a RUN-DE Loans program for small businesses. You can even take out loans from your local bank. However, these loans will often come with interest, so make sure you read all the fine print before you sign the papers.
If you want, you can even ask for a loan from your friends and family as well. But no matter how close you are, it is crucial to get everything in writing. You don’t want to ruin a personal relationship over monetary issues that may arise over time.
Investors are a great way of getting funding for the business. You could even ask friends and family if they want to invest in your company. Investors often get a say in the business, so weigh your pros and cons to see if it is worth it for you.
Choosing the right business is crucial to the success of your business, as different structures offer different benefits.
This business structure is the simplest one available and does not require much work to get started. A sole proprietorship is a business with only one owner, and there is no separation between the business entity and the owner. Small, low-risk businesses commonly use this structure.
A partnership is very similar to a sole proprietorship in that there is no separation of personal and business assets. However, it differs from the sole proprietorship because there is more than one owner, and they all have equal shares in the business.
A limited liability company, LLC, is one of the most commonly used formal business structures for small businesses. An LLC is such a popular choice because it offers the flexibility of a sole proprietorship or partnership with the liability protection of a corporation.
A C or S corporation is the most formal type of business structure and is commonly used by large businesses with multiple shareholders. Like an LLC, the corporation’s business structure is an entirely separate legal entity from the owners. There are also plenty of tax benefits that corporations may qualify for.
Once you have decided on what business structure to use, you will need to register the business to officially form your business with the state.
No formal registration process takes place when forming a sole proprietorship. You don’t need to register a business name if you conduct business using your own name. However, if you plan to use a different name other than your personal name, you will need to register a DBA with the Delaware Secretary of State.
Like a sole proprietorship, a partnership has no formal registration process. However, it is strongly recommended that all partners of a business should sign a partnership agreement. In fact, the state of Delaware has a free template that you can download and sign. The fee for filing this certificate with the state is $200. Be sure to file a DBA with the Secretary of State, if needed.
If successful, you will be issued a Certificate of Formation.
Like an LLC, you must complete and submit a Certificate of Incorporation with the Delaware Secretary of State. This can be completed online or by mail for $89.
It is highly suggested that you set up your finances and accounting before you begin trading. Setting up your finances involves opening a bank account for the business, applying for a credit card, and setting up payment methods for customers.
You will also need to set up a payroll system to manage their salaries and employee taxes if you have employees. As a top tip, hiring an accountant to take care of all of this for you will leave you with more time to focus on other aspects of the business.
Every business owner will tell you to get business insurance. While there are many different insurance policies you can choose from, consider investing in general liability insurance at the very least.
There are many other insurance policies to choose from:
- Workers compensation insurance
- Professional liability insurance
- Commercial auto insurance
- Commercial property insurance
- Business owners insurance
- Limited liability company insurance
Consult a business attorney or broker if you aren’t sure what to get. They will be able to find the best insurance policy for your business’s needs.
In Delaware, it is a legal requirement that all businesses, even sole proprietorships, apply for a state business license. This business license can be applied for online with the Delaware Department of Revenue Services portal. The business license costs $75 for the first location and $25 for any additional sites.
If you own a partnership, corporation, or LLC, you may need to apply for additional permits through the Delaware Divisions of Corporations.
Building a website for your business is no longer a job reserved for those who can read complicated coding. Now, you can use one web-building website that offers free or subscription-based templates.
There are a few things to remember when building a website.
- Check if your domain name is still available.
- The name of your business should be easy to read, so customers recognize your brand instantly.
- All fonts should be a good size with an easy-to-read style.
- Make sure your website is easy to navigate and clutter-free. Websites that are too busy and cluttered can turn potential customers away, especially if your website is not mobile-compatible.
- Link your website to any social media accounts the business has.
- Include a call to action, like a “shop now” button.
If your business has too many roles for you alone to fill, then you should consider hiring employees to ensure your business runs smoothly. When hiring employees, you will need to take note of their qualifications, experience, and even personality.
New employees must be reported to the Delaware State Directory of New Hire Reporting within 20 days from the hire date. You can notify the state online, electronically, or by mail. There is no fee to report new hires.
The last step in starting your own business in Delaware is marketing the business. Nowadays, there are so many different and creative ways to market your business on any budget. However, to successfully market your business, you need to be consistent as you want to build brand recognition.
Here are the different ways to market your business to get you started:
- Utilize your website
- Build a following on social media
- Create a Google Business Profile and use Google ads
- Advertise on your local radio or television
- Attend business expos and events
- Create flyers to handout
- Run competitions and promotions on your social media
- Create a monthly newsletter
Have any questions? Let us know!