According to national rankings, Iowa is one of the top states to operate a business due to its affordability, making it a great state to start a business.
In this article, you will find a comprehensive guide on starting your own business in Iowa from scratch, what business structure to choose, and how to market your business successfully.
Step 1: Choose Your Idea
Behind every successful business, large or small, is a single business idea. Your whole business will be based on this idea. Choosing your business idea can be daunting, but by answering some thought-stimulating questions, you should be well on your way to choosing a good business idea.
Answer the following questions to formulate a business idea:
- What are my passions and hobbies?
- Can these passions be turned into a profitable business?
- Is there a need in the market for my business?
- Are there any businesses similar to mine?
- If so, how do I plan on standing out from them?
- Do I see myself enjoying or wanting to run the business?
- What consumer problem does my business solve?
These questions should give you an idea if your business idea is viable or if it needs more tweaking.
Step 1: Pick a Name
The name you choose for your business is crucial as this will be the first impression of your business for many potential customers.
When picking a business name, there are a couple of things to keep in mind:
- Your name should be unique from others.
- Your name should be easy to read and pronounce.
- Your name should be relevant to the industry you are in.
- Your name should give consumers an idea of what services you are offering.
Although these above rules are unnecessary, having a good name can make a huge difference in attracting potential customers and clients.
The State of Iowa does not allow businesses to register using a registered name with the Secretary of State. So, to avoid accidentally applying for a name that already exists with the state, search the Iowa Secretary of State’s business entity database.
If you are battling to come up with names for your business, try out the following methods:
- Use an online name generator.
- Host a brainstorming session with friends and family.
- Create a survey on Facebook and ask friends to give their opinions.
Step 3: Write Your Business Plan
Once you have chosen your business idea and name, the next step is to write your business plan. The business plan will have everything you need to know about your business, including all the research, planning, and relevant costs.
A good business plan can also be used as a marketing tool to attract investors to your business, so be sure to include everything that an investor would want to know. This includes profit projections, startup costs, and other important information.
While there are no rules as to what needs to be in a business plan, a good business plan should include the following information:
- Why have you started the business?
- What services are you offering?
- Who is your target audience?
- How do you plan on converting your target audience into paying customers?
- What are your marketing techniques?
- Who are your competitors?
- How do you plan on standing out from direct competitors?
- How much do you need to make to break even?
- What are your startup costs?
- What roles will there be in the business?
- Will you need to hire employees in the business?
- What are your future financial goals and predictions?
There are plenty of free and paid business plan templates available online for you to use if you’re still unsure where to start.
Step 4: Get Funding
To start a business, you will need money for capital; unless you can provide these funds yourself, you will need to get money elsewhere. The best way to get funding for your business is by getting a grant, loan, or an investor.
Getting a grant is one of the best options, as this money does not need to be paid back. They are, however, more difficult to get as they have a lot of requirements that need to be met. Iowa offers business owners many grant programs; you can check out their website to learn more.
The Iowa government also offers many loan programs for businesses to apply for if they do not qualify for a grant. You can learn more here. Alternatively, you can get a loan from a private source like your local bank or even a friend or family member. Make sure to get any loan you get in writing – including if you get a loan from a close family member. The last thing you want is to potentially ruin a personal relationship over monetary issues.
And finally, if you do not want to take out a loan, having an investor take up shares in your business is a great way of getting funding. You can even have your friends and family invest in your business. As with loans, be sure to have all agreements in writing.
Step 5: Choose a Business Structure
The business structure you choose for your business is significant as each business structure has different benefits. There are four main business structures to choose from: sole proprietorship, partnership, LLC, and corporation.
Sole Proprietorship
A sole proprietorship is one of the simplest types of business structures that you can choose. In this structure, there is no separation between owner and business. In a sole proprietorship, there is only one owner. For this reason, this business structure is often the preferred choice for small, low-risk businesses.
Partnership
Much like a sole proprietorship, a partnership is an informal business structure with no separation between business and personal assets. The only difference between this structure and the sole proprietorship is that a partnership consists of more than one owner, who all have equal shares in the business.
Limited Liability Company
A limited liability company, LLC, is one of the most commonly used business structures for small businesses. This is because this business structure is a hybrid between a sole proprietorship and a corporation, offering the best of both worlds. An LLC provides the ease and simplicity of a sole proprietorship and the liability protection of a corporation.
C or S Corporation
A corporation is a formal business structure used by large companies with multiple shareholders. This business structure offers many tax benefits to larger companies and liability protection to its owners.
Step 6: Register Your Business
Once you have decided on a business structure, you will need to register it with the state of Iowa.
Sole Proprietorship
Because a sole proprietorship is an informal business structure, there is no need to register it with the state. However, if you wish to operate under a different name other than your personal name, you will need to file an assumed name with the Secretary of State.
Visit the Iowa State Association of Counties (ISAC) to see what the filing requirements are for your area.
Partnership
You do not need to register a partnership with the state, but if you would like to operate under an assumed name, you will need to file this assumed name.
It is also advised that all partnership owners complete and sign a partnership agreement. This agreement does not need to be submitted to the state. But this agreement can come in handy in the future in the case of disagreements and conflict.
Limited Liability Company
Registering an LLC in Iowa is more straightforward than it may seem. For a small fee of $50, you simply need to submit the Certificate of Organization online. You must create a profile on the portal to complete your submission.
C or S Corporation
Registering a corporation is similar to an LLC. You will need to complete and file the Articles of Incorporation, a form that can be filed online for $20. You can find the required form on the Iowa Secretary of State’s website.
Step 7: Set Up Your Finances & Accounting
Setting up your business’s finances and accounting before you begin trading is strongly advised. To set up your finances, you can start by opening a business bank account, applying for a company credit card, and choosing a payment method for customers to use.
If you have employees, good payroll software is key to managing their salaries and taxes efficiently. Hiring an accountant to assist you with your business’s books is a good idea.
Step 8: Get Business Insurance
Having a good business insurance policy is highly recommended. While there are plenty of insurance policies to choose from, you should at least invest in a general liability insurance policy. This is a broad insurance policy that covers the day-to-day running of a business.
There are many business insurance options, so consult a business attorney or broker if you’re unsure which one you should get. They will be able to find the insurance that best fits your needs.
Step 9: Obtain Any Permits or Licenses Needed
Iowa does not issue general business licenses. But depending on the nature of your business, you may need to apply for specific permits and licenses before you can trade legally. Visit the Iowa Business License Search to learn more about what licenses you may need.
While Iowa does not issue licenses, you must register with the Iowa Department of Revenue for a Sales and Use Tax permit if you sell products that collect sales tax.
Step 10: Build a Website
Having a website for your business is a must-have in today’s technology-driven world, and building one has never been easier. So many different web-building options are available online for free or for a small fee.
Here are some things to keep in mind when designing your website:
- Check if your desired domain name is still available.
- Make sure your business name is easily visible for viewers to read.
- Keep all fonts neat and easy to read.
- Avoid overloading the page with images and GIFs.
- Make your website mobile-compatible.
- Include a call to action button.
Step 11: Hire Employees (If Any)
Hiring employees is a good idea if you need assistance in running your business. The state of Iowa requires all new hires to be reported to the Iowa Department of Human Services within 15 days from their hire date. You will need to create an account with the Department of Human Services to do this.
Step 12: Market Your Business
Marketing your business is the final step in starting a business and one of the most crucial. Marketing your business can be done in many ways and on any budget. The key to good marketing is consistency.
Here are some ways to market your business:
- Advertise and engage with customers on your website.
- Use social media.
- Attend markets and local events.
- Hold giveaways.
- Create a Google business profile to advertise there.
- Hand out promotional flyers.
The possibilities are endless when it comes to marketing your business successfully.