Buzz
If you are certain about your goal to start your own business, the first step is to create a business plan, arrange your finances, and build a website. Once you have completed these, the actual opening of your business will come. While planning the business can be challenging, launching the business and reaping the rewards from your business idea comes with its own set of challenges. A solid start is the foundation for greater success in the long term, and some tips below will help you better understand how to legally establish your business, recruit initial staff, market your business, and hold a grand opening event.
Steps to Follow
Legalize Your Business Operations
Make sure you have your own business plan in place. A business plan is crucial when starting a business. It serves as a roadmap, outlining your business, products/services, market, and plans for growth in the next 3-5 years. It truly is the "big picture" that sets the direction for your business operations.
- Articles on how to create a business plan provide valuable insights for this process, such as identifying potential markets and their success rates, recognizing initial demand and startup costs, identifying potential investors, creating business strategies along with marketing plans, and producing clear and concise documents that end with a "management summary"—a document where you essentially "sell" your business to investors and other interested parties.
- For further guidance, check out articles like how to start a small business, as well as resources on starting a small retail business, such as a bakery, and the specifics of founding a business in a particular region.
- To ensure you’re fully prepared to establish your business, refer to the 10-step checklist provided by the SBA – Small Business Administration. This will be summarized in the steps outlined below.
Define the legal structure for your business. Before launching your business and completing the necessary paperwork, it is essential to determine the legal structure you want to adopt. Generally, you can form a sole proprietorship, partnership, corporation, or limited liability company (LLC). Each type of business structure is governed by its own set of tax policies and important regulations.
- A sole proprietorship is owned and operated by an individual, with no distinction between the individual and the business. This means that all profits, losses, debts, and obligations of the business are your responsibility. Choose this structure if you are the sole owner and want full responsibility for your business operations.
- A partnership is a business structure where ownership is shared between two or more individuals. In a partnership, unless otherwise specified, each member typically shares equal responsibility for profits, liabilities, and management issues. This could be a useful option if your goal is to attract capital and expertise to help launch your business.
- A corporation is a separate legal entity owned by shareholders. This structure is generally not suitable for small businesses.
- A limited liability company (LLC) is similar to a partnership, except that members are protected by limited liability regarding the business’s activities. For example, if an LLC is sued, the personal assets of the members are usually not at risk. If you are concerned about personal liability from lawsuits or debts arising from your business, this may be the best option for you.
Register the necessary legal structure. Each type of business has its own registration process. Some business structures require more steps, while others are relatively simple. You can find detailed instructions on how to register each type of business at the website of the Department of Planning and Investment in Ho Chi Minh City.
- Registering a sole proprietorship is the simplest process, requiring minimal paperwork. In the United States, you may not need to take any formal steps except obtaining an Employee Identification Number (EIN), registering your business name (as mentioned below), and then reporting your business income on your personal tax return.
- Limited Liability Companies (LLCs), partnerships, and corporations require more paperwork and have a slightly more complex registration process. For more details, visit the website or contact the local planning and investment departments in your area (e.g., the Department of Planning and Investment in Ho Chi Minh City).
In Vietnam, when registering a business, the planning and investment department will automatically connect with the tax office and assign a tax identification number to your business. In the United States, you should apply for a tax identification number, also known as an Employee Identification Number (EIN). This number is used to identify your business for tax purposes. Applying for an EIN is straightforward and can be completed in just a few minutes on the U.S. Internal Revenue Service (IRS) website.
- Note that for partnerships or sole proprietorships, obtaining an EIN is not required. However, it is still a wise action to take. Without an EIN, your business will be identified using your Social Security Number (SSN) when it comes to tax matters. Keeping your SSN private reduces the risk of identity theft.
In Vietnam, when submitting your business registration documents, you also automatically register your business name with the planning and investment department. In the United States, you will need to register your company name. Unless you choose to operate under your personal name, such as "Son Nguyen Van A," most states require you to register a "Doing Business As" (DBA) name for legal and tax purposes. A DBA name is registered with the state government or county clerk’s office. Be sure to check the specific requirements for your state online.
- Registering a DBA name usually only takes a few minutes and is particularly useful for sole proprietorships. It allows you to separate your business activities from your personal name. If you establish a sole proprietorship, unless you register a DBA, your personal name will automatically be used for the business.
Obtain a business license. The local government in the province or city where your business operates will require a business license. Typically, these applications can be found on your local website.
- You will need to provide details such as the type of business, address, number of employees, EIN (if in the US), and potentially some revenue-related information (estimated figures will suffice in this case).
- Keep in mind that license requirements often apply to home-based businesses, online businesses, and traditional businesses with separate premises. These requirements may vary by location, so it’s important to contact local authorities to confirm the specific requirements in your area.
Obtain any other necessary licenses. Unfortunately, different regions may require different licenses. These might include a "Home Occupation License" for home-based businesses, an "Alarm Permit" if your business needs a commercial alarm system, or licenses for the use of weapons and other controlled substances.
- Contact the local licensing department or relevant authorities, or consult with the chamber of commerce or business association for further guidance.
Open a business bank account. Keeping personal and business finances separate is crucial to avoid issues with the tax authorities. Maintaining a separate bank account for personal transactions and business transactions simplifies accounting and makes tax-related matters clearer.
- To open a business account, simply reach out to your bank or financial institution.
Consult a lawyer or accountant specializing in small businesses for more detailed guidance. While starting a sole proprietorship is relatively straightforward, it’s essential to seek professional advice if you’re forming a limited liability company (LLC), corporation, or partnership.
- Experts not only assist with completing required paperwork but can also help draft crucial partnership documents. For example, establishing an LLC or a partnership requires documentation outlining each individual’s ownership rights, which must be legally valid.
Preparing to start your company
Define your employer responsibilities. Before you begin hiring, make sure you’ve completed the necessary steps to manage income tax withholding, provide the required work authorization for employees, and arrange workers' compensation insurance along with other essential elements.
- If you’re in the US, one key responsibility is ensuring employees have the right to work. You’ll need to complete the "Form I-9" within three days of hiring a new employee. This document is required to verify the employee’s citizenship and confirm their right to work in the US. It can be downloaded from the U.S. Citizenship and Immigration Services website. Although you don’t need to submit this form to the federal government, you must keep it for at least three years from the date of employment or one year after the employment ends.
- Make sure you’ve registered for Workers' Compensation under the government’s Workers' Compensation Program.
- In the US, when hiring an employee, they must submit a signed W-4 form before starting, and you’re responsible for submitting it to the IRS so that federal income tax can be withheld.
- For more information about contracts and employer responsibilities, check the Small Business Administration’s website at https://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/establishing-business/hiring.
Hire the right people. First impressions are critical for any new small business. Unless you’re doing everything yourself, the people you hire will contribute to at least part of that first impression.
- Ideally, you’ll find someone familiar with your business, like a person who knows how to make pizza if you're opening a pizza shop. However, what’s even more important is finding someone who is eager and enthusiastic to learn. You need people who want to understand how to do things your way (and represent your company) properly.
- However, you’ll need to be flexible. Despite all the planning, once your business takes its first steps into the real world, you’ll need help to nurture it. Look for employees who are excited to contribute ideas and adapt as the business navigates through its initial growth stages.
- Do your part. Review resumes. Call references. Don’t hire someone just to please a relative (save that for when your business is stronger).
- A key question like "Can you give an example of a problem you successfully solved?" may give you insights into the candidate’s ambition, skill set, and work ethic. However, remember these are common questions, and candidates might be prepared with responses. So, if they struggle to answer effectively, it’s a red flag. Additionally, consider posing hypothetical problem-solving scenarios relevant to your small business.
Prepare your business location. Whether it’s a physical or virtual space, the impression you make on your first customers will significantly affect your chances of success.
- If your business requires a physical location, such as a candy shop or second-hand bookstore, set up the space to reflect your vision for the business. For example, you could combine vibrant patterns and decorations with your logo, or even consider personalizing the store with family photos to establish a connection with the business. Hiring an interior designer or decorator might also be a good idea.
- A website presence, if not already, is becoming an essential part of any new small business. Don’t take it for granted. Make sure your website is user-friendly, easy to manage, and aligns with the brand you want to build, especially if your business relies on it. Hiring a professional web designer can be a good investment.
- If your budget is tight and your business doesn’t require a traditional storefront, don’t overspend on a fancy location. A local coffee shop could be an ideal place to meet with clients, or you could rent a meeting space as needed. Wait until your business is stable before investing in a prime location.
Consider implementing a "soft" opening. There's no law stating that your business must have its grand opening on its first operational day. Allow your business to work out any kinks before officially announcing its presence to the world.
- Restaurants are one of the prime examples of businesses that often use soft openings: a trial run with invited guests, perhaps even just close friends and family. However, this approach can work for nearly any small business. Let your company's new team practice with local families, attract friends by offering free nail care services, or encourage a book club to visit and discuss their life insurance needs.
- You could officially open without too much fanfare, maybe a week or two before the major grand opening (the one with significant advertising). While the initial customer base might be small, it will be easier for your business to practice and get everything running smoothly before the bigger crowd arrives.
Promotion
Start early. Don’t wait until you have a confirmed opening date or until the day itself. Be proactive about creating brand awareness and building anticipation. A “coming soon” sign at your soon-to-be business location is a good first step, but that alone won’t suffice.
- Spend the majority of your initial marketing budget on the grand opening, but before that, take advantage of cost-effective options like handing out flyers, sending direct mail to your target audience, and establishing a presence on social media.
- Work on building your brand even before your business space is ready. If you plan to sell handmade jewelry or dumplings, seek out craft fairs or food markets where you can set up a booth and sell products (while promoting your upcoming retail shop). If you're an accountant, you might consider volunteering to offer tax consultation services at a local community center or library (and distribute business cards while you're there).
Set up a marketing budget. The preparation leading up to your opening day and the first few months of operation are critical in determining whether your new small business will succeed or fail. Therefore, make sure you allocate a substantial portion of your budget to initial marketing efforts.
- You could allocate 20% of your first-year marketing budget to the grand opening. This amount should be enough to effectively spread your message at a time when advertising tends to be most impactful. However, avoid putting all your eggs in one basket, leaving your subsequent advertising efforts constrained by a tight budget.
- For instance, you could spend 90 million VND on grand opening ads, which would cover two rounds of media buys. If 90 million is too much, you can combine flyers, direct mail, advertisements (banners, balloons, etc.), and a "moving billboard" at a busy intersection, with a cost of about 30 million VND.
- Of course, we’re assuming that your marketing budget is relatively large, around 450 million VND (since 90 million is 20% of 450 million). Many businesses, however, have smaller marketing budgets (maybe only tens of millions), so always keep in mind the 20% rule for marketing budgets.
Utilizing Traditional Media. If your budget allows, consider using traditional media channels such as radio or newspapers. If television advertising is also within reach, it could be worth trying—diversifying your advertising presence is often a great idea.
- Before dismissing radio ads as outdated, remember that many people still listen to the radio daily, especially while commuting. This makes radio a highly effective advertising method for retail stores and restaurants. Tailor your ads to the program format (Top 40 countdowns, Country Music shows, Talk Shows, etc.) and time of day to maximize its impact.
- While newspapers are more popular among individuals over 35, there is still a significant number of younger adults who read regularly. Newspaper advertising remains a cost-effective way to reach thousands of potential customers.
- Also consider including coupons—these not only incentivize visits to your business but also create a tangible connection between potential customers and your company. Tracking their effectiveness is straightforward: the more coupons redeemed, the more successful the campaign is.
- You may think TV advertising is out of reach for a small business. However, there are options for producing low-budget commercials, sometimes supported by local TV stations. Consider grouping your ads during programs that align with your target audience, such as a legal program for a law-related business or a daily sports news program if you’re opening a golf academy. This way, viewers might perceive you as a major sponsor of the program.
Leveraging Social Media. Even if you don't know the difference between a “tweet” and a “tag,” or if your tailor shop doesn’t need to establish an online presence, make the most of any platform to promote your business. 80% of small business owners are still using social media, especially for marketing strategies.
- The appeal of social media advertising lies in its low cost and direct connection to potential customers. However, keep in mind that the downside is it often requires more time and effort. Be sure to analyze your current customer base and target audience, aligning your brand recognition and messaging across the platforms you use.
- With the increasing number of social media platforms, you might be tempted to spread your business across as many as possible. However, avoid overextending yourself or your business. If your hair salon targets stay-at-home moms in their 40s who frequently use Facebook, focus your efforts there. Posting once or twice a week is enough. After all, you’ll have plenty of other tasks running your business.
- That said, you can still link multiple social media platforms together. Consider this an option if you can manage them without spreading yourself too thin during busy times.
- Having a social media presence is crucial if your business operates online. In addition to social media, consider using online advertising technologies like Google AdWords. AdWords allows your business ads to appear whenever someone searches relevant keywords on Google. You only pay when someone clicks on your ad. This can be especially important for online businesses as it connects you with a broader internet audience. It’s also valuable for traditional businesses due to its ability to reach viewers who are more engaged with the internet than with other forms of media.
Kickoff Your Operations
Choosing the Right Time for Your Grand Opening. As mentioned earlier, there's no rule stating that your Grand Opening must coincide with your business's first day of operations; in fact, it’s often better to wait a few weeks before announcing it.
- Schedule your Grand Opening at a time that fits with your product or service: Saturday morning for a casual restaurant, Friday evening for an ice cream shop, or early evening for a martial arts studio.
Make it a special event. Work to build excitement for the days, and even weeks, leading up to your Grand Opening.
- Use the term 'Grand Opening' in your marketing materials to make it feel more exclusive than just a simple 'starting operations' announcement. Create anticipation by offering prizes, giveaways, performances, and special treatment to customers who visit on that day.
- Hire a photographer to capture the event for use in both traditional and social media. Consider live entertainment, additional staff, or even security if you expect a particularly large crowd.
- If your business or location can't accommodate a large public Grand Opening, consider organizing a similar event, such as a 'launch party,' at a nearby restaurant or banquet hall.
Provide a positive experience for customers. Plan ahead and do everything possible to ensure attendees leave your Grand Opening with a positive first impression of your new business. Simple mistakes like inadequate parking, long food lines, or running out of toilet paper can quickly turn a warm welcome into a negative experience.
- Bring in extra staff to ensure customers don't have to wait too long to be served or acknowledged.
- If parking could be an issue, coordinate with local businesses or community groups, such as setting up overflow parking at a nearby church.
- Send guests home with a token of appreciation, ideally a gift featuring your logo and a discount voucher or special offer for their next visit.
