I recently had the pleasure of interviewing Shreyans Kokra, an India-born US founder of Canvaloop, a company helping to combat global warming through sustainable fashion. The company, which my company incidentally helped incorporate, manufactures jeans wears using hemp as their main source for fibers and textile production
In the interview, Shreyans and I discussed how he got started with the idea and how he has nurtured it to become a company helping to address the issue of pollution in an industry reputed to be the second most polluting industry on the planet after Oil.
Like Shreyans, perhaps you have a brilliant solution to a real problem experienced by many. You’re pumped and can’t wait to build a company and start monetizing it.
Well done! You have found a viable business idea. You should launch a company and get it started already? Right? Well, not so fast.
Like every successful venture, the process of turning an idea into a working company requires time, careful planning, and working with the right partners.
So how then do you turn your business idea into a company in a matter of days? Read on.
Is there a Market for your Business Idea?
The first step to launching a successful company is to determine the viability of such a business. That is, does it have the potential to truly succeed? Does it solve an actual problem people are dying to solve? A problem they will literally beg you to take their money to solve for them. Is there a market for it?
In addition, you have to create a buyer persona for the business. If you have determined that the business solves a real problem, then the next question is for whom? Who is your ideal customer? Figuring this out will help you determine where your solution fits in the market, how it helps your target audience and how you can get it in front of the right people.
Also, in doing this, you have to figure out the size of the market. If the potential market size is too small, you’re never going to be able to build a sustainable and scalable business.
It also helps to research existing businesses, if any, that already provide this solution. What are they doing right or wrong? Do they have a good number of customers they serve? Do they have good revenue figures?
By answering these questions, you will be able to better determine the potential of your business idea and decide if it is worth the effort or not.
Draft a Financial Plan for the Business
The next step is to put together a financial plan. This guide will prove very useful before and when you start running the business, especially if you intend to secure outside investment.
The financial plan will provide a forecast of how the figures will add up both in the short and long term.
It should include informed estimates of overhead costs, cash flow, income, and profit/loss statements among other important metrics, usually projected over one to five years.
While these figures will be largely theoretical, it is important that you do sufficient research so the numbers are as close to reality as possible.
In addition, taking the time to create this plan will give you better insight on how your business will function. To verify your projections, create a financial model that also examines your market size and what KPIs you need to reach to turn a profit.
Build a Minimum Viable Product (MVP)
Now that you have a viable business idea and financial plan, it is time to test the waters.
To do that, you will need to build a product that already works (viable), but still needs continuous improvement (minimal).
The MVP allows you to onboard early adopters to try out the product and share feedback on how to make it better with you.
The information you gather from these early adopters will help you figure out what works and what doesn’t. You might also find that the feedback may be entirely different to what you had expected.
This feedback is invaluable in that it helps you build the right product your target customers want to and can afford to pay for before you launch officially. You would agree it is pointless building a product nobody wants.
With the new information you have, you may decide to make certain changes, some of which may be fundamental, to your business. “Pivoting” your business model helps to prevent potential failures you may encounter in the future.
Time to Incorporate The Company
Now that you have developed and tested the MVP, it’s time to formally set up your business. The best way to form a legal company is to use a reputable company formation service.
The right business formation company will help you complete all the paperwork, set up a business bank account, and make sure you stay legally compliant.
While you can set up a business in every country in the world, you are better off doing it in a country that offers you the best odds of success — the United States.
With a U.S incorporated company you can access:
- Payment gateway providers like Stripe and PayPal to accept payments from customers worldwide
- Low or zero taxes if your business has no US-connected income. More on this here.
- Customers who can afford to buy your products and services
- Venture Capital, especially as most American investors prefer to invest in companies with a US presence.
- Accelerators that provide you with the right support and resources you need to scale your business fast. Most US accelerators require startups to have a US parent company.
- Starting a business in the US makes it easier to obtain a visa or permanent residency. Great for those who want to make America their home.
What You Need to Set Up Your Business in the United States
The process of forming a company in the united states can be pretty straightforward if you work with the right partner.
There are two main stages to incorporating your company in the U.S:
The incorporation phase consists of the following:
- Deciding a name for your business
- Deciding where you want to incorporate your business in the U.S; Delaware, Wyoming, Nevada, etc.
- Check that your business name is available in the selected U.S state
- Deciding what type of business you want to start: LLC or C-Corp.
- Finding a local registered agent/formation company to help you register the business
- Complete different incorporation forms etc.
After you’re done with this process and your company is successfully registered, you will need to:
- apply for a tax identification number or EIN, and wait to get a response from the IRS.
- open a bank account
- pay annual fees and any other required fees
- engage a tax consultant and legal advisor to, among other things, make sure you’re compliant with any city, county, state, and federal requirements
During this stage, you will require some documents which provide clear and necessary information about operations, the board of directors, issuance of stock, and other vital details about your company.
Some of those documents include:
- Certificate of Incorporation
- Stock Certificates
- Indemnity Agreement
- Initial Action by the Board of Directors
- Stock Purchase Agreement
- Stockholder Consent
- Stockholder Consent of Indemnification Agreement
- Technology Assignment Agreement
- Unanimous written consent
It is important to always have these documents drafted and safely secured to prevent tax liabilities, civil liabilities, personal liabilities, protect the personal assets of the owners, and generally keep your corporation in good standing with the state of incorporation.
All this costly, time-consuming work can take several weeks and you still may not get it right.
The good news is you don’t have to do it the hard way.
Firstbase.io To The Rescue
Firstbase.io can incorporate your business in the United States in 48 hours from the comfort of your home.
Backed by Y Combinator, Carta Ventures, CEO of TransferWise, and many others, Firstbase.io is the easiest, fastest, and most convenient way to launch a company in the U.S today.
In addition, founders who incorporate their businesses through Firstbase also access over $100,000 in perks.
If you do not live in the U.S or are not a citizen, then you need not worry either as Firstbase.io has partnered with Mercury and other banks to help you set up a bank account for your business without stepping foot on the U.S soil.
You have validated your business idea, found a market, created an MVP, and incorporated the company, now you can go ahead and launch the business.
As with every successful business venture, effective marketing and sales, solid strategy, strong execution, and excellent customer service are very important during this stage and throughout the life span of the business, even if it is a franchise business.
To truly succeed, you need to work with the right business partners and a formidable team who want to see you succeed.
So there you have it: four critical steps to help you turn your business idea into a company in days.
Have you recently launched a business or are you planning to soon? Let’s hear your thoughts in the comments below.