As a first-time entrepreneur, the business start-up process can seem overwhelming. That’s why we created this localized guide to help new business owners in Houston. From conducting market research and crafting a business plan, to choosing a legal structure and registering your business, we break down the steps for starting your first business in Houston.
Conduct Market Research
You’ve shared your new business idea with select friends and family, all of whom think it’s as brilliant as you do. But before you go any further you need to check in with the market. Conducting market research helps you answer questions like Who is your audience? What need(s) do they have that your product or service fulfills? Who are your competitors in this field? How can you distinguish yourself? Market research is an important ongoing activity for every business, but it’s especially crucial in the beginning. If you don’t get out of your own head and put yourself in the shoes of your potential customers, your business might not take off.
Does all of this sound out of reach for a new entrepreneur on a tight budget? It doesn’t have to be. Just because you don’t have the budget of a large company doesn’t mean you can’t do market research, both now and in the future. A free Internet search is a great place to start; there are a number of online resources that allow you to conduct research without hiring experts.
Create a Business Plan
Now that you know more about your market niche and target audience, you can use that information to write a business plan. As with market research, a business plan helps you get your ideas out of your head and onto paper, where they can be tested for soundness and the potential for success. You’ve already answered the question of “What?” Now it’s time to address “How?”
Search for upcoming workshops in the Houston area and online resources to help you get started. The bottom line, however, is you don’t need to use fancy software to write a business plan. Entrepreneur.com identifies the three primary parts of any business plan as the Business Concept, Marketplace Section, and Financial Section. Within these sections, you need to describe your vision for your business, identify steps you can take to reach your goals, describe obstacles you may encounter (and how you will overcome them), choose an organizational structure (more on that below), and think through the money you’ll need to keep going until you reach the break-even point.
Decide on a Business Structure
Choosing a legal structure for your business may not be as exciting as coming up with the idea and designing a marketing plan, but it’s essential. You can’t have a business without a business structure. Here are the most common options:
- C Corporation: This is the most common business structure, but it isn’t always the most advantageous for small businesses from a tax perspective. However, if you plan to grow your company and take it public, a C-corp structure permits unlimited shareholders.
- S Corporation: Similar to an LLP, an S-corp is a “pass-through” business that avoids the double taxation of a C-corp, but keeps some of the benefits, including liability protection.
- LLC: For business owners who want a pass-through tax arrangement and liability protection with more flexibility to grow and dissolve the business. On the downside, LLC owners pay self-employment tax.
Choose a Business Name and Find a Location
Already have a name in mind? As long as it isn’t taken, you can go with your original name or consider the alternatives. When you’ve decided, it’s time to reserve your business name as a domain and on social media accounts. Is your business online-only or bricks-and-mortar? For the latter, you’ll need to start looking for an affordable location that maximizes visibility and foot traffic.
Register Your Business
Houston’s official government website provides a general business start-up guide, as well as starter kits for specific types of common businesses. In these resources, you’ll find out where to register your business as a legal entity and for tax purposes. You may also want to register with groups like the Houston Metropolitan Chamber of Commerce.
Obtain Permits and Licenses
You’re legally in business and registered to pay taxes. Now you just need to complete this last bit of administrative paperwork before you can start planning your grand opening.
Search the Houston Code of Ordinances for the rules that apply to your industry.
Learn how to apply for a commercial permit in Houston.
There is no general business or contractor license in Houston. The Houston Permitting Center is a one-stop location for all permit and licensing requirements in the city.
Local Banking for Houston Businesses
Partner with a trusted community bank for business loans, deposit accounts and treasury management services. For more than sixty years Central Bank has supported entrepreneurs and established business owners in the Houston metro area. We take the time to build relationships with each of our clients by listening to your needs and creating customized business banking products and services. We can also help you find the vendors or professionals you need to launch your business. Contact us today!