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Caiden Roos

Professor Bell

English 1201

02 May 2021

Starting a Business

Many people in the United States have come up with a "million-dollar idea." This idea

would be something so extraordinary that it would be a necessity for everyone to have. Far too

many of these ideas never come to fruition; the people who come up with the idea get confused

about all of the requirements to start a company. While starting a business can be confusing,

there are a few different things that can be done to have success; you must have a good idea,

funding to start and support the business, have all of the legal necessities in line, develop a good

team behind you, be able to maintain a work-life balance, and be able to react to unexpected

situations.

Although some of the laws surrounding starting a business have changed over time, a lot

is essentially the same. Also, a lot of the regulations change depending on the state you are in, so

for this paper, I will be examining the state of Ohio.

Many entrepreneurs have an idea that they believe will be very successful, while others

have not considered starting a company until the opportunity arises. A great example of this is

the COVID pandemic, as business applications in the United States are up 43.3 percent over this

time last year (Hannon). Much of this is from entrepreneurs looking for a business opportunity;

many products are in demand that were not a year ago, so businesses have been started to fill the

demand. Additionally, some people have been laid off from their jobs due to the pandemic,

which gives them more time to start a company(Hannon). It is essential when starting a company
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to search for ideas or products that will be in demand so that sales will follow(Sugars).

Entrepreneurs must be looking for opportunities when starting a company.

Funding is necessary to be able to get the business off the ground; without funding to

make the product the business will be over before it has even started. Funding is essential to be

able to purchase your product or to have your product made. Money is also necessary to

advertise your product in order to reach a more extensive customer base. There are a few

different options for finding funding for your business; you can fund it yourself, use

crowdfunding, use a venture capitalist, or get a small business loan.

If the business is self-funded, there are a few positives that come with it and a few

negative aspects. It is possible to fund it from personal savings, out of a 401k or retirement

accounts, or even from family and friends (SBA). The appeal of this is that if things do not work

out with the company there is less liability. Additionally, equity in the company is not given

away. Some drawbacks are that the borrower of the money may feel responsible for paying back

family members, which may cause stress.

The second option is to use a crowdfunding platform. People who crowdfund are not

technically investors because they do not receive any share in the company, and they do not

expect a financial return. It is more similar to pre-ordering because it is expected that they will

receive your product once it is in production. Crowdfunding is a great option though because the

business owner retains their entire company and if something goes wrong and they are not able

to make the product they are under no obligation to provide it to the people who gave them

money (although there may be some angry emails) (SBA).

The next option is to use a venture capitalist. This option is when an investor provides

money in exchange for a share of the company or even an active leadership role. This is not ideal
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though because the business owner loses some of their leadership role and some of their

company. The appeal of venture capitalists is that you can get all of the funding you need in a

single deal; it is much quicker and easier. Venture capitalists usually invest their money in

several installments, so as milestones in the company are reached more money becomes

available (SBA).

Some people may advise staying away from venture capitalists, although there are

hundreds of success stories. One of the largest companies that started with a venture capitalist is

Whatsapp. Whatsapp was started with an initial investment from Sequoia Capital; they invested

$60M initially in 2011. The company took off and was eventually acquired by Facebook in 2014.

Sequoia turned a $60M investment into $3B when the company was sold. Whatsapp is now a

very successful company even though they started with a venture capitalist.

The final option is a small business loan. Small business loans allow the owner to retain

full ownership of the company while still getting the funding they need. In order to be eligible

for the loan, a lot of planning is required, and the business's financials should be projected for at

least the next five years(SBA). The downside is that interest needs to be paid, so financially the

company loses a bit of money in the future in exchange for funding at the beginning.

Once funding has been secured it is essential to ensure that all of the legal necessities are

in line to keep the company legal. This is one of the most confusing portions of starting a

business, although it is one of the most crucial steps in order to keep the company legal. If these

steps are not followed, there is a chance that the company could get shut down for violating a

law.

The first requirement is to register with the Ohio Secretary of State if the company is

based in Ohio. Then on the federal level, a federal employee identification number needs to be
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obtained. This identification number makes it so that a bank account can be opened in the

company's name. Also, the company needs to be registered with the Ohio Department of

Taxation (LaRose). The above requirements are necessary in order to operate any business in

Ohio.

If the business has one or more employees some additional requirements need to be met.

It is required for businesses to report newly hired employees to the Ohio New Hire Reporting

Center. Additionally, the business has to have worker's compensation set up in case employees

are injured at work. Depending on the business that is being started licenses and permits may be

required to do business in Ohio (LaRose). A few additional requirements are required if the

company has employees, but if these steps are followed, a successful and legal company can be

formed.

The next thing that needs to be done is to form an excellent team to work for the

company. It can be easy for the company's founder to want to focus on building it themselves but

that needs to be avoided. It takes a team to cover all of the bases such as marketing,

manufacturing, finance, and operations (Zwilling).

When picking employees it is crucial to understand what kind of culture is desired in the

company so that people who will fit in well can be picked out (Zwilling). It is also important to

find employees who will work well in a team with other people. It may be tempting to hire

family members or people without the required skill set, but it should be avoided in the long run.

Employees must be able to see the goal and work towards it together; this requires everyone to

contribute and work hard.

Once a team of exemplary employees has been assembled, it is important to keep them

motivated towards the company's goal. Having clear expectations and clear milestones for the
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team gives the employee's manageable goals to achieve (Zwilling). It is also essential to ensure

that the employees have relationships with one another; fighting co-workers is distracting and

causes loss in productivity. Having everyone united and working towards a common goal can

boost the company's productivity.

A great example of a company that was able to stay in business because of its employees

is Johnson and Johnson. In 1982 several Tylenol capsules were laced with potassium cyanide,

leading to multiple deaths. Their reaction was to pull all Tylenol off of the shelves nationwide

and as a result, they were able to maintain their reputation. The culture of trust that the company

has resulted in their quick response of pulling Tylenol off of the shelves. This decision was not

made by the CEO but by a brand manager. This shows how the company's culture allowed them

to continue as the best-selling painkiller brand in the United States.

The next thing that is of utmost importance in the start-up phase of the company is

maintaining an effective work-life balance; there are a few different ways to do this. Many

business owners have been tempted to devote every waking moment to start a company, but it is

important to make sure that other things are not being neglected. Exercise, sleep, and time with

friends and family are often forgotten about (Thomas).

In order to overcome the challenges of balancing starting a company and life, one thing

that can be done is to come up with a manageable schedule. There needs to be an apparent

boundary between work time and family or free time (Thomas). If the tasks for one day are

accomplished, do not work ahead on the following days, spend time on another important

activity that is not work-related.

The next aspect of having a successful small business is being able to react to unexpected

situations. Many different scenarios could occur and disrupt business; employees can take sick
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days, business could slow down or even pick up dramatically, or even something as broad as the

COVID- 19 pandemic can affect business. The company needs to be able to react to these

situations in order to stay open and successful.

No one expected the COVID pandemic to turn into what it currently is; therefore, it is a

perfect example of an unexpected circumstance. When faced with uncertainty or difficulty

entrepreneurs need to have extreme persistence to be successful (Zhao and Wu). Walt Disney

persisted with his dream even after two bankruptcies and became highly successful. In order to

be successful in unexpected situations, entrepreneurs must possess persistence and must be

highly motivated.

Persistence is vital because when starting a company there will always be difficulties and

challenges that will need to be overcome. The business could face money troubles, it could be

pulled in an undesirable direction by co-founders, or just changes in the economy. Even nascent

entrepreneurs need to show persistence because it may reflect an attitude over time (Zhao and

Wu). If entrepreneurs can overcome small challenges when they are first starting out it is a sign

of future success in the long run. The other side of persistence is staying on the same course over

time; the entrepreneur needs to keep the company on the path that they decide is best, even when

difficulties arise.

Staying motivated in the face of adversity is also an essential trait of successful

entrepreneurs. Entrepreneurs will only stay motivated if they believe that their idea is good. If

these entrepreneurs were looking for employment at an already existing company, they would

evaluate the values and goals of the company before applying (Zhao and Wu). Entrepreneurs

must make sure that their own company is one they would work for by considering the

workplace's goals, values, and atmosphere.

Even with a great idea, many businesses fail. According to the Small Business

Administration, 20% of start-ups fail in the first year, 50% fail within five years, and 77% are out

of business by ten years. (Schaefer). The prospect is even grimmer this year with the loss in sales

due to COVID- 19. There are a few different mistakes that are commonly made, if these can be

avoided the company will have a much greater chance of success.

Before the company is even started, the first thing is to make sure that it is being started

for the right reasons. If the goal is to make a lot of money or not have a boss, there is a decent

chance the company will not survive; as we talked about earlier, passion and persistence for the

product must be present as well (Schaefer). The next thing that may happen is that there is not

enough of a market for the product; if no one is interested in buying the product, it will be tough

to scale the business and keep it open.

Additionally, when raising funding, it is important to thoroughly research and understand

how much money will actually be required to get the company off the ground. If enough capital

is not raised, the company will be over before it has really begun (Schaefer). Location is also a

significant factor when starting a business; there are many different reasons why location is so

important. Making sure that there is enough traffic that it will be seen, making sure it is easy to

park, make sure that the building is in decent condition and will not require costly repairs. If the

location is good the business will have a much better chance of surviving.

Advertising or the lack thereof is another significant reason why businesses fail. Social

media is an often-overlooked platform for advertisement. Social media is free, and it is easy to

reach a large and local audience. Additionally, no matter the size of the business, it is essential to

have a professional-looking website, without a website it will be difficult for people to get

information. Advertising is an overlooked but very important aspect.

Forming a business may be challenging at times, but when successful it can be one of the

most rewarding ventures in one's life. Entrepreneurs have the opportunity to start a successful

business and achieve financial freedom. There are multiple steps that must be taken in order to

have a successful company; if even one of the steps outlined above is forgone it could be

detrimental to the company. It is exceedingly crucial that companies are started in order to keep

society moving forward and prospering.

Works Cited

Hannon, Kerry. "In a Terrible Time for Small Businesses, Some Start-Ups Are Thriving." New

York Times, 4 Jan. 2021, p. B2(L). Gale In Context: Opposing Viewpoints,

link.gale.com/apps/doc/A647370249/OVIC?u=dayt30401&sid=OVIC&xid=8782985f.

Accessed 6 Mar. 2021.

Insights, CB. "The Top 5 VC Bets Of All Time." CB Insights, Medium, 2 Apr. 2018,

medium.com/@CBinsights/the-top-5-vc-bets-of-all-time-72bff048e661.

Jacobsen, Darcy. "5 Companies Whose Great Cultures Saved Their Bacon." Workhuman

Resource Center, 8 Apr. 2014, www.workhuman.com/resources/globoforce-blog/5-

companies-whose-great-cultures-saved-their-bacon.

Larose, Frank. "Starting a Business." State of Ohio Government Website, 2019,

www.sos.state.oh.us/businesses/information-on-starting-and-maintaining-a-

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__cf_chl_jschl_tk__=ba94caa14dfcf688299bb717a843f83c759349e6-1614959961-0-

ATKm6BB6P-_cHuV2iDE6dUfMrLIev-

_T00E6SDLgx74TVO7CdhynuFSVucYCJPuexour6IUsKssPp_SrEkdOOfxNtgl8cmP0i9

kphsUAqPktOWtO1ptz11Slb9fKtIHh5vWm43CYHDhclEbqk88qghUesohk_MtkUtDqu

LWGARS3c2ZoUyNqIhXkK_Pg0POsfNs2WGCZCXFBjtgIMgYDctAo5siugaunsvb_JO

N1-b85hCLX1Q7sAoCpUQOD3UC_X3c-

mPnig4L87jgNCR3TAEgMLmwPEolnbVMB8HXoWkxIRlMII5g1ysiMcHXWhW0dc6

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SBA, Small Business Administration. Fund Your Business, Small Business Administration,

2020, www.sba.gov/business-guide/plan-your-business/fund-your-business.

Schaefer, Patricia. "Why Small Businesses Fail: Top 8 Reasons for Startup Failure." Business

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Thomas, Dave. "How to Overcome the Challenges of Starting a Business." Business.com, 2 Oct.

2020, www.business.com/articles/the-4-biggest-challenges-to-starting-a-business-and-

how-to-overcome-them/.

Zhao, Haifeng, and Sibin Wu. "The Power of Motivation-Goal Fit in Predicting Entrepreneurial

Persistence." Social Behavior and Personality: An International Journal, vol. 42, no. 8,

2014, p. 1345+. Gale In Context: Opposing Viewpoints,

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Accessed 6 Mar. 2021.

Zwilling, Martin. "7 Steps to Building the Team You Need to Start Your Business." Inc.com, 14

Sept. 2017, www.inc.com/martin-zwilling/7-steps-to-building-the-team-you-need-to-

start-you.html.