What a great time to start a business in Huntsville.
Bolstered by a welcoming atmosphere and supported by a conducive business ecosystem, Northern Alabama is, by far, an entrepreneurial mecca.
The Small Business Development Center at UAH recently presented a “Starting a Business in Alabama” workshop. Hosted at the Huntsville-Madison County Chamber of Commerce, the workshop presented a comprehensive overview of the steps required for starting a small business in Alabama.
Led by Hilary Claybourne, SBDC director and senior consultant, the two-hour workshop focused on the important things a potential entrepreneur needs to consider before starting that new business venture.
A business often comes into being as a solution to a problem. Would-be entrepreneurs need to make sure that their solution is the right one. And if it is the right solution, will people embrace it? What is the unique value proposition? Are there alternatives? How much are customers willing to pay?
“Who is your customer? Where do your potential customers hang out? Go talk to the customer, don’t just talk to your best friends about your business idea,” said Claybourne. “Just because you think it’s a great idea, doesn’t mean it is.
“Do your primary and secondary market research, evaluate the competition. Find out about things that have failed and why they failed. There’s a plethora of secondary research available; it will arm you to be better at primary research.”
It’s also important for potential entrepreneurs to familiarize themselves with the various legal entities and determine which ones are best for their business.
“I encourage to clients to incorporate,” said Claybourne. “You’re at risk as a small business; you can get sued as a sole proprietor. As a Limited Liability Corporation (LLC) or S Corp, you can define your business. You will have to be able to track the finances. If you’re a sole proprietor, your business is more likely to be audited by the IRS. If you incorporate as an S-Corp or an LLC, the IRS expects you to have business expenses.”
“Partnerships aren’t my favorite business form. Partnerships have twice the liability and half the profits. A (LLC) gives you much more flexibility; it’s easier to modify structures.”
For those seeking financial resources to fund their ventures, “You’ve got to start a business first before you can get a loan,” said Claybourne. She also recommends that startups “do it as cheaply as you can using your own resources first.”
“An exception to that would be planning for the unexpected,” said Claybourne. “To set up a line of credit, just in case something happens. Banks will lend money when your credit is good. So, it’s a good idea to have that line of credit when things are good.
“Realize that you can’t be an expert at everything. Get acquainted with your business ‘Core Four’: You will need a good accountant, business lawyer, banker, and business advisors.”