Step 1: Build a Clear Business Strategy

You can’t travel somewhere new without a roadmap, the same way you can’t start a business without a clear plan in mind. Here are some of the basic concepts to consider as you develop your company:

Business idea

As an entrepreneur, you should understand your business inside and out before ever getting into logistics. Nearly half of all businesses fail within the first five years. Knowing how you’ll stand out in an increasingly competitive market should be a top priority to stay ahead of the odds while bringing real value to people. Ask yourself:

• What problem is my business solving?
• Who is my ideal customer?
• Why would customers choose my business over an existing competitor? 
• How will this business generate revenue?
• How could this business evolve and grow over time?

Write down your answers to help clarify your responses. Continue to refine them throughout this process, creating a deeper knowledge of your short-term and long-term goals.

Business model

Business models grow and evolve over time, but choosing one that sustains your business from the beginning is essential when starting out. 

A business model outlines how a business creates value for its customers and generates revenue. While pros and cons exist for each, some of the most popular types of business models include:

• A subscription-based business model (ex: magazines, apps, gym memberships, ect)
• A product-based business model (ex: clothing, food, furniture, ect)
• A service-based model (ex: cleaning service, landscaping, car wash, ect)

No matter the structure, business models should seek to bring value to customers above all else. These examples are in no way conclusive to the countless models used by successful companies. Instead of copying and pasting, choose a structure that makes sense for your industry, making sure it can support your customers and business as you grow. 

Market research

Market research is the process of gathering information about your target customers, competitors, and industry. This goes beyond knowing just the general demographic of your clientele. Is there demand for your product? Where do your customers live? What are their common issues, their hopes, their dreams? Why is your product exactly what they need?

Treating your target audience as real people, not just vague data, can help uncover the problems your customers actually want solved. For example: 

• WITHOUT DEEP MARKET RESEARCH: Russell is an entrepreneur selling tennis shoes especially designed for marathon runners. He understands basic demographics, like gender, age, and income level for his target audience. Despite this, his business struggles. Russell discounts the price of his shoes and invests in more aggressive marketing to counter dwindling sales.
• WITH DEEP MARKET RESEARCH: Diane is an entrepreneur selling tennis shoes especially designed for marathon runners. She understands basic customer demographics, like gender, age, and income, but wants to go deeper. She decides to interview hundreds of marathon runners and learns that an overwhelming amount of people dislike shoes with poor traction. Knowing these pain points, she implements them into her design and marketing. Sales skyrocket, and Diane’s customers feel understood. 

Push beyond surface level knowledge and go deeper into market research. Helpful ways to gain a deeper understanding of your customers include surveys, questionnaires, in-person interviews, existing studies, economic data, and competitor analysis. 

Geography

In the same vein as market research, location will reveal itself the more you understand your business idea. Though the Internet has given some freedom to entrepreneurs, success for service and retail based companies are still dependent on location, sometimes even making or breaking businesses. This is true on a state, city, and neighborhood level. To understand both the bigger picture and the granular details of potential locations, consider: 

• State: What is the cost of doing business? What taxes will my business be subject to?  Is there a strong customer base? How competitive is the market? 
• City: Does this city's population match my target customer? Is there infrastructure to support my business? What is the talent pool like? What networking opportunities exist?
• Local: What neighborhoods have the most foot or vehicle traffic? How easy is the location to access? What businesses are nearby? Is the area growing or declining in population?

Step 2: Understand the Ohio Business Landscape 

Ohio is a perfect ground for building a new business. Recently ranked #1 for CNBC’s annual America’s Top States for Business report, Ohio features competitive low income tax, sturdy infrastructure, and a growing population that creates ample opportunities for entrepreneurs.

To better understand Ohio’s market, here are some basics about Ohio’s business landscape, industries, and popular cities to set up shop.

Thriving Ohio industries

Robust industries exist in Ohio, with rich histories in sectors like:

• Manufacturing
• Healthcare
• Logistics/distribution
• Professional services
• Construction
• Agriculture/food

Many industries in Ohio are also newer but rapidly growing, like technology and AI, creating a perfect blend of strong foundations and innovation. Whatever the industry you may be entering, know the support and network opportunities are abounding in Ohio. 

Major Ohio hubs

Deciding where in Ohio to open your business is dependent on every entrepreneur's individual goals and industry. Below are some factors for five major Ohio cities and aspects to take in when deciding which place is right for you:

Cleveland

Pros: Rich history of manufacturing, healthcare and service industries; large (and growing) customer base; relatively affordable

Cons: High competition with established industries; neighborhood quality varies; slower tech industry growth; older infrastructure

Columbus

Pros: Tech industry booming; local support and networking opportunities; quality talent pool

Cons: Increasing competition; rising costs; overly corporate landscape

Cincinnati

Pros: Geographically convenient for surrounding markets; high startup support; steady economy

Cons: State labor laws can quickly become complicated; high property taxes; increasing competitive landscape

Akron

Pros: Access to manufacturing materials; low cost of doing business; growing tech industry

Cons: “Shadow of Cleveland” talent drain; fragile infrastructure; rising compliance costs

Toledo

Pros: Inexpensive cost of doing business; strong manufacturing roots; large infrastructure capacity

Cons: Declining population and labor pools; cultural dissatisfaction; less networking opportunities

Not every city will be right for every company. Though these metro areas can each hold opportunity, don’t be afraid to look into outside suburbs and smaller cities, like Dayton, Youngstown, Canton, Lima, and more. 

Step 3: Set Up Your Business

With an idea, goal, model, and place in mind, setting up your business and staying compliant is the next step in the process. Here’s where to start:

Business structure

Business structure matters significantly for long-term obligations and potential liabilities. Simply put, business structures determine the authority of a business, who’s responsible when something goes wrong, and the legal expectations surrounding profits and losses. Below are the most common types of business structures:

• Sole proprietorship: A simple structure where the business is owned and operated by one person. The owner and business are generally not separate legal entities.
• Partnership: A business owned by two or more people who share responsibility for the business. Partnerships can take several forms, including general and limited partnerships.
• Limited liability company (LLC): A flexible structure that can provide owners with personal liability protection while allowing for beneficial tax treatment. 
• Corporation: A separate legal entity owned by shareholders. Corporations can be more complex to establish and maintain but may be appropriate for businesses seeking outside investment or planning significant growth.

Knowing which structure to choose is dependent on your business type and will vary according to owner priorities. For a good rule of thumb: If you're starting a low-risk, one-person business and want to keep things simple, a sole proprietorship may be enough to get started. If you're concerned about personal liability, an LLC may provide more protection. If you're starting with multiple owners or plan to raise large outside investments, a partnership or corporation may be worth considering depending on your goals.

Name

Choosing the right name for your business may seem like a simple task, but it’s not something that should be put on the back burner. Names carry weight; your business name can shape how customers perceive your brand and help you stand out from competitors. 

For coming up with a name that resonates with you and consumers, here are some examples of iconic companies with simple formulas you can follow:

• Naming after the founder (ex: Disney, Ford, Chanel)
• Naming after a feeling: (ex: Calm, Headspace, Free People)
• Naming after a made-up word (ex: Google, Kodak, Spotify)
• Naming after what you want your customers to feel (ex: Lululemon, Dove, Energizer)
• Naming after what your company does (ex: PayPal, DoorDash, LinkedIn)

Before you get too attached, make sure to check available domain names and business records. Clarity, something easy to pronounce, and memorability should also be considered to make sure your name is as unforgettable as possible.

Registration

Depending on your structure, you may need to register with the Ohio Secretary of State. For example, Ohio LLCs are formed by filing Articles of Organization with the Secretary of State. You may also need to register a trade or fictitious name if you plan to operate under a name different from your legal business name.

Before starting operations, check Ohio’s requirements for your specific business and industry to make sure you have any necessary licenses, permits, or tax registrations.

EIN

An Employer Identification Number (EIN) is a federal tax ID issued by the IRS. Typically, you’ll need an EIN if you plan on hiring staff, opening a business checking account, or opening an LLC or partnership.

After filing your business with the state, you can directly apply for one at the official IRS website for free. Though an EIN isn’t required for sole proprietorship or a single member LLC, you may want to consider obtaining one to keep your business and personal accounts separate.

Banking

Once your business is established, open a separate business bank account. Keeping business and personal finances separate makes bookkeeping and tax reporting easier and helps maintain the distinction between you and your business.

Research account fees and transaction limits that make sense for your current business. As your business grows, you can always reassess your banking needs.

Step 4: Understand Your Legal and Regulatory Requirements 

Taxes

Only after you’ve established your business can you register for state and local taxes. Not every tax will apply, though generally Ohio requires:

• Sales tax: Generally required tax on businesses selling services or goods.
• Employer withholding tax: Required tax for business with employees
• Industry specific taxes: Taxes required by your specific industry 

Registering for taxes in Ohio can be accomplished through the Ohio Department of Taxation, where you can learn your specific state requirements depending on your business. Through this resource, you can also make important filings and payments through the Ohio Business Gateway portal.

Municipal taxes may also be applicable to your business, though this can vary city by city in Ohio. To make sure you’re compliant depending on which location you start your business in, check your local tax laws and apply through the Regional Income Tax Agency (RITA). 

Licenses

Licenses in Ohio depend on your provided service or product, and definitely isn't one size fits all. Certain industries and professions require state-issued licenses to legally provide specific services, like healthcare, construction, cosmetology, accounting, engineering, veterinary services, and others.

To understand licensing requirements related to your industry, the eLicense Ohio system is a great resource to understand state and professional regulations and standards.

Permits

Similarly with licensing, permits will vary depending on industry and where your business is operating.

The Ohio Business Gateway offers resources to understand which permits are required by location in Ohio for major industries. For example, Cleveland has its own system of licenses and permits, including permits for things like street work, construction, food vendors, outdoor restaurants, and other activities. Columbus likewise has its own building and zoning permitting process. 

Insurance

Depending on your needs, business insurance can help you cover unexpected costs, lawsuits, property damage, and other risks. Common types include general liability insurance, professional liability insurance, commercial property insurance, and workers' compensation coverage.

You don't necessarily need every type of insurance. Talk with an insurance professional about the risks associated with your particular business and determine what coverage makes sense. A great place to start in the Ohio Department of Insurance. 

Employees

Bringing on employees comes with additional responsibilities for your business. You'll need to understand requirements for payroll, tax withholding, workers' compensation, unemployment, and employee records, among others.

If you plan to hire, make sure you're properly registered as an employer and understand both federal and Ohio employment requirements before bringing someone onto your team. You must also report your new hire by filling out a New Hire Reporting form from Ohio.gov. 

Step 5: Secure Funding 

How much does it really cost to start a business?

Although there isn’t a straightforward answer to this question, some businesses are naturally more expensive to open and operate than others. How you intend to fund your business all depends on your individual situation, leaving you with a few options: 

Bootstrapping

Bootstrapping involves using your personal finances to start and grow your business. Bootstrapping offers several benefits: entrepreneurs remain in control of decisions, retain more of the profits as they grow, and create a lower barrier to entry. However, bootstrapping can be risky, especially for businesses with high startup and operation costs, like restaurants, medical practices, or brick and mortar retail stores.

Loans

Loans, either SBA loans, traditional business loans, lines of credit, or equipment financing, are another common way entrepreneurs can cover startup costs. Similarly to bootstrapping, loans offer entrepreneurs more freedom and ownership over their capital, plus the ability to build up their business credit. However, not everyone may qualify for a business loan; loans require full repayment, whether or not the company is successful, which can be a gamble no matter what industry you’re entering. Not only that, interest increases the total owed cost, meaning you’ll be paying more in the long run than you originally borrowed.

Personal loans are also an option entrepreneurs can consider, where money is taken out in an individual's name, not their business. For entrepreneurs just starting out, personal loans can be easier to access and qualify for, though borrowing limits are lower and can create higher personal financial risk.

Investors

With many startups, looking to investors is a common way to get businesses off the ground and running. Partnering with venture capital offers a lot more than just finances. Many VCs also serve as incubators for growing businesses, offering mentorship and other kinds of assistance, like marketing or network support. Unlike bootstrapping and loans, however, VCs can quickly become restrictive if entrepreneurs aren’t careful with who they partner —because investors take more stake in your company, business decisions aren’t fully your own, sometimes creating a lack of control.

Grants

Supported by governments, non-profits, or large corporations, some grants are specifically designed to help entrepreneurs start their own companies. Not only do you not have to repay capital, but entrepreneurs stay in control of their business and continue to retain full ownership. Grants may seem too good to be true, but downfalls still exist. Grants are highly competitive and difficult to secure, meaning entrepreneurs almost never rely on them in full. Some grants also come with restrictive uses, alongside long application processes and careful documentation that can quickly become tedious.

Each funding option comes with its own set of down pros and cons. To help in the decision process, ask yourself: 

• How much money do I realistically need to start?
• How long am I willing to wait for capital?
• Am I in a financial situation to support myself if things go wrong?
• How is this money being used?
• Am I willing to give up partial ownership?

There isn’t a single best way to raise funds. Countless businesses have succeeded through each of these methods, and the right choice depends on your unique circumstances and goals.