According to the Minority Business Development Agency, minorities now own 8 million businesses in the US, which is a 38% increase from 2007.
While minority-owned businesses are on the rise, equality still isn’t here. If you’re thinking about starting a minority-owned business, you could be part of that drive for equality—and you should know that there are resources to help you along the way. Here’s your step-by-step guide to starting your minority-owned business.
Before you open up shop and invest thousands into your business idea, you need to test it out. This step is arguably the most important, not only because it helps you work out the kinks in your business, but because it helps you determine whether or not your business will work at all.
You’ll want to identify your target customer first, and from there, you’ll want to study them. Who are they? Where do they live? What do they want? What are their habits? What inspires them? You can brainstorm at first, but eventually, you’ll want to get a real focus group together so you can get a sense of how your ideal customer operates and what they want from you. You can do this research yourself, or you can contract a company to perform surveys and market testing for you.
Once you’ve honed in on your customer and figured out what works and what doesn’t, you’ll want to create a business plan. This plan will include everything from a profile of your company and your company’s mission to information on your market research, the product or service you’re developing, and your marketing and sales strategies. It should also detail the funding you require and what you project your finances to look like for your first few years in business.
The first step to making your business official is choosing a name and location. Once you’ve decided on those 2 details, you can go ahead and register your business with the US Small Business Administration.
You’ll also want to determine your legal structure and incorporate your business. Your main options are a limited liability company (LLC), an S corporation, or a C corporation. Review the benefits and drawbacks of the 3, then, decide which is best for you. The process of creating an LLC, S corporation, or C corporation varies by state, so you’ll want to research the process for the state where you’ll be doing business.
Certified minority-owned businesses can access special opportunities for business and funding, so it’s important to get certified early on. The National Minority Supplier Development Council (NMSDC) offers these certifications, and their corporate members include American Express, the Red Cross, Starbucks, and Microsoft.
Your business must be at least 51% minority-owned, you must be a US citizen, and your business must be located within the United States to qualify for certification. You can find out more information on the minority-owned business certification through the NMSDC website.
When it comes to financing your business, you have a variety of options. Popular sources for small business funding include:
Also, a number of funding resources are available specifically to minority-owned businesses. The Minority Business Development Agency sends regular updates regarding loans and grants, and they even give out anMBDA Virtual Business Center grant to minority-owned businesses. While not necessarily a grant, the US Small Business Administration operates the SBA 8(a) Business Development Program, which aims to provide a wide range of support to businesses owned by disadvantaged people.
Once you’ve nailed down the funding you need to get started, it’s time to start creating the product or service you want to sell. This is a huge task, so don’t be afraid to outsource along the way. You might even need to hire a whole team to complete this step, depending on your business idea.
The rule of thumb is to get a minimum viable product out as early as possible. In other words, rather than spending endless hours and all of your funding trying to perfect your product or service before introducing it to a customer, get the most basic version out as quickly as possible so you can see how your customers react and get a sense of how to improve. Otherwise, you could be wasting all of your time and money on a product that doesn’t work for your market.
The final step to starting your business is marketing and sales. Get your product into the hands of as many people as you can. If you have it in your budget, consider hiring a marketing specialist, even if it’s just temporary or part-time.
Luckily, you don’t need to have a massive marketing budget to advertise your brand anymore. Digital marketing allows you to spread the word for next to nothing through social media, blogging, and directing traffic to your website. If you prefer to go local, try grassroots marketing, which is all about pushing your message from the ground up, or growth hacking, which is about leveraging digital marketing to grow quickly. This approach can include staging a PR stunt or throwing a launch event in your community, printing n stickers to paste up around your city, or creating some memes around your brand that go viral.
It’s important to develop a plan for your minority-owned business, but it’s also crucial to experiment to figure out what works best. Balancing these approaches will help you succeed.