Opening a business bank account is a simple four step process that can typically be completed in less than an hour, if you have prepared beforehand. You can open a business bank account either online or in-person, but doing so online will typically take longer and could require additional documentation. 

Before you open a business bank account you’ll need to provide an employer federal tax identification (FEIN or EIN) and your legal registration documentation. If you haven’t yet incorporated your business, MyCompanyWorks can do this for you with a simple three step process that only takes you a few minutes to order online.

You can open your business bank account by following these four steps: 

Step 1 – Determine What You Need in a Business Bank Account

There are many things you should consider before you move forward with opening a business bank account. First of all, what type of bank account do you need? While most businesses start with a business checking account, a savings account might also be a consideration if your situation dictates. The fees your bank will charge should also be a strong consideration on which type of account is right for you. 

The most common types of business bank accounts are: 

• Business Checking Account: This is an account you can freely move money in and out of as your business needs occur. If you have lots of transactions that you need to make with deposits and bill payments then this is the account that is most likely right for you. This is also the most common type of business bank account.
  
• Business Savings Account: This is an account that you can make deposits to where you’ll earn extra money every month for keeping it in your account. You’ll be limited on the number of withdrawals you can make though, so this is only for businesses not looking to make frequent payments out of the account.
  
• Free Business Checking Account: This type of account operates just like a normal checking account but there are no maintenance fees and may not have a minimum account balance requirement. These accounts are typically online business checking accounts so it is right for newer businesses that don’t need a physical branch nearby.

Once you’ve determined the account that you need then you should determine how much you’re willing to pay every month for maintenance and security. Having a physical branch nearby is important for businesses that take on a lot of cash that needs to be deposited on a consistent basis. If you just need a business checking account to sign up for affiliate programs for your online business or to get your business off the ground then an online free checking account may suffice. 

Step 2 – Find the Right Bank for Your Business

Now that you know the type of account you’re looking for, you can narrow down which bank you’d like to work with. Oddly enough, the bank choice is made by proximity more than anything else for the majority of small businesses. Most businesses just want a bank with a name they can trust that is close to their base of operations. This makes transactions easy in the event the business owner has to go into the bank. 

While many business owners are satisfied with proximity, you probably should consider other things when choosing the right bank to partner with. There are a number of factors that should be considered when picking the bank, such as the banking fees and other costs. The factors we recommend include: 

• Bank Network: How convenient is the bank’s network to your operations? Are there plenty of free to use ATMs and deposit locations that meet the needs of your business? This is especially important to investigate if you’re opening a business bank account with an online provider without close proximity to a branch location because you need to know where you can withdraw funds from without paying a fee.
  
• Online Experience: How easy is it to transact business using an online website or phone app? Considering how much business is transacted online these days, this should be an absolute must that meets the demand level of your business needs.
  
• Costs: How much are the fees? Are you going to be paying a maintenance or security fee, and if so how much do you pay? Do your fees increase if your balance dips below a certain amount? These are all important things you should ask before signing on the dotted line and making your first deposit.
  
• Integrations: Small businesses typically use an accounting software like Quickbooks. Your bank should make your life easier, not more difficult. So, you should make sure that whatever accounting software you need, it integrates with your bank. If it doesn’t then you, or your accountant, will likely regret it later.

Once you’ve taken these things into consideration, and all other important aspects of the banking relationship that is important to you, then you’ll be ready to make a decision. Remember, the right bank doesn’t need to have a big name to be the right partner for you. For example, many credit unions and online banks have been great partners for businesses of all sizes. 

Step 3 – Gather the Right Documentation

Before you open a business bank account you’ll need to make sure that you’ve correctly incorporated your business. The bank will ask for your corporate documents before you’re able to make your first deposit. Having the right documentation with you at the time of application will speed up the entire process, and enable you to walk away with a business bank account the same day you apply, in many cases. 

The documentation that you’ll need to gather could include (call the bank before you visit to make sure you have it all): 

• Employer Identification Number (EIN)
• Social Security Number (if you’re an unincorporated sole proprietorship)
• Business Licenses
• Business Name Filing Document (if applicable)
• Partnership Agreement (if applicable)
• Articles of Incorporation or Organization (and appropriate banking resolution)
• Explanation of Your Business
• Funds to Deposit
• Some online banks may require more documentation to verify your identity

You can obtain most of this by incorporating your business ahead of time. MyCompanyWorks has been trusted to complete more than 60,000 business formations and counting. In just three easy steps you can be on your way to receiving all of your documentation so that you can immediately open a business bank account. 

Step 4 – Deposit Funds With Your Bank

Once all of your documentation is verified, the bank will process your application and open your account. To finalize the account opening process you’ll be required to deposit funds into your new business bank account. Many banks will not require a certain deposit amount while others will require up to $1,000 as the minimum opening deposit even if they don’t require a minimum balance during the life of the account. It’s important to check with your bank before going through the process so you’re prepared to finalize this portion of the process. 

Once your funds are confirmed into your account then you’ll be able to immediately access them through the checks that your bank will provide. Some banks will immediately provide a debit card while others will send them in the mail within 7-10 business days. The length of time it takes for your funds to show up in the account will depend on the bank you choose and the method you choose to deposit your funds with. For example, cash will be available a lot faster than a wire transfer from another bank (even if it’s your personal bank). 

Benefits of Opening a Business Bank Account

There are many benefits for both you, as a business owner, and for your business when you open a business bank account. The most important one is that you should always keep your personal and business funds separated. This can protect you from personal liability in the event that something goes wrong in your business. For example, if your business files for bankruptcy in the future then mixing your personal funds with your business funds could put your personal assets at risk and attainable by the business’s creditors.

Other than the legal ramifications of opening a business bank account, you can also benefit from being able to easily pay your business’s bills and making it easy to pay your employees. It keeps your money safe and allows you to start building a banking relationship that you could utilize for needed loans to grow your business in the future. 

Getting Started

If you’re ready to take advantage of the benefits of having a business bank account, you can get started today by registering your business. MyCompanyWorks will do this for you and you can get started immediately with our simple three step process. All you have to do is select a company type and your state, fill out a quick online form, and then you’ll receive the needed documents to open a business bank account. 

Corporate stock refers to a type of ownership in a legal business entity, such as an C-corporation. Corporations typically issue stock to raise money from investors to fund capital expenditures or future growth. Typically corporate stock is broken up into common or preferred stock. Both can be beneficial depending on what the situation is for your business.

If you’re interested in issuing stock to raise money then you should make sure your business is setup as either an S-corporation or a C-corporation. MyCompanyWorks can help you whether you’re a brand new business or you currently have another entity type, like an LLC, that needs to transfer over. You can quickly fill out the online form to get the process rolling today.

What is Corporate Stock & How it Works

Corporate stock is broken up into shares that constitute an ownership interest or equity in a business. Each share represents a proportionate ownership interest in the corporation. Shares of corporate stock can be purchased and sold in two different ways: either via a single private transaction, typically to a single private purchaser, or to many purchasers through a regulated stock exchange. 

Just because someone owns corporate stock doesn’t mean they have any legal obligations to the business itself. However, all financial benefits of stock ownership must be reported to the IRS as income to the individual. If there is a financial event, such as a dividend paid by the company or a sale of the stock of the company, then the shareholders could benefit depending on the legal rights of any debtor’s of the business. 

There is no set number of shares that a business must issue when deciding to sell or give corporate stock. Many businesses will start out with between 1,000 – 100,000 shares of stock that is typically broken up between common stock and preferred stock. Those owning common stock are shareholders that have voting rights based on the number of shares they own. The number of total shares can increase as the business grows.

Why Companies Issue Stock

Generally a business issues stock in order to prepare for a financial event, such as raising money to grow the business or in preparation of taking the company public. Instead of taking on debt financing, like issuing bonds or taking out a loan, a company will issue stock to raise money through what is called equity financing. 

You may want to issue stock for a number of reasons, including: 

1. If you can’t, or don’t want to, take on debt due to cash flow or credit issues.
   
2. If you need more cash available than debt financing would allow.
   
3. If you lack sufficient assets to take on debt financing.
   
4. If you’re planning to grow quickly and can’t afford to be viewed as a risk due to debt. 

However, you may want to consider not issuing stock and selling shares of the business if you’re worried about giving up ownership of your business. In order to get the shares back you’ll need to buy them back in the future, if the shareholder agrees to sell. If you sell too many shares of your business then you could end up struggling to have the power to make big decisions for the business. 

Types of Stock

Typically, all corporate stock is broken up into either common stock or preferred stock. Common stock can provide a larger increase in value if the business grows but preferred stock typically allows for a more consistent dividend.

Common Stock

Common stock is the most popular and widely used type of stock. This is the type of stock that has all of the traditional power of being a business owner. These shares are allowed voting rights and whomever owns the majority of the common stock controls the decisions that are made within the business. Common stock is often believed to be the type of stock ownership with the best return on investment. Shareholders may earn dividends but they vary and are never guaranteed. 

The two types of common stock are: 

1. Common Growth Stock: This is typically the type of stock referred to when someone wants to issue “common stock”. Shareholders owning this type of stock have voting rights and can receive dividends but the most common benefit is the increase in value per share that shareholders can earn from a fast growing company.
   
   
2. Common Income Stock: This is similar to common growth stock but is considered to be a more secure investment. This type of stock is typically issued by well established businesses. Instead of profiting off of the quick growth of the business, shareholders benefit from high dividends. 

Preferred Stock

Preferred stock also represents ownership of the business but typically does not come with any voting rights. Instead, shareholders are just looking to profit off of the growth of the business without having anything to do with the operations. When dividends are paid out on preferred stock then the business typically guarantees a set amount per dividend in perpetuity. For example, as long as the company hits certain financial parameters, each share pays out a dividend of 5% per quarter. 

Convertible Preferred Stock

Convertible preferred stock operates as normal preferred stock with dividends and no voting rights with one big exception. The owner of this type of stock has the right to trade their shares for common stock by a pre-specified date. This is typically a nice balance for someone that needs income in the present day but who still values the long-term investment of a growth stock. 

Corporate Stock Classes

While common and preferred stock are the two main types that are issued, your business can classify stock any way you would like to. Most of the time this means issuing different classes of stock for the sole purpose of breaking up the voting rights. The most common classes are classified as class A and class B stock. 

For example, you could issue class A common stock and class B common stock. Class A could have 100 votes per share and Class B could have 25 votes per share. This enables you to better control who has the decision-making power with the business as you continue to raise equity financing. 

Which Type of Corporate Stock to Issue

The type of stock your business decides to issue is dependent on what your goals are. If you’re looking to raise money and are willing to pay out a consistent dividend then you’ll likely want to issue preferred stock. However, if you don’t want to pay a dividend or want it to be dependant upon company performance then you may want to consider common stock instead. 

The key thing to keep in mind is that regardless of your strategy or the types of stock you issue there are ways to make sure you keep the controlling interest in the business. You just need to make sure you break up the stock into different classes or only issue the controlling number of common stock shares to yourself. 

How to Issue Stock

If you’re looking to issue stock then you should follow a number of steps to make sure you do it correctly. The key here is that you don’t want to do this on your own. You should consult the proper attorneys that will enable you to legally issue the type of stock that will benefit your needs. 

Here’s six steps you can follow as you look to issue corporate stock: 

1. Form a Corporation: In order to issue stock you’ll want to be either an S-corporation or a C-corporation. You can get started here.
   
   
2. Determine Your Funding Needs: Before issuing stock you should know how much capital you’re looking to raise so that you and your advisors can properly strategize what you need to do. This amount will guide the entire process.
   
   
3. Determine How Many Shares You Can Issue: Before you can issue any corporate stock you need to  know how many shares to start with. The articles of incorporation within your corporation’s registration will provide a maximum number of shares but you do not have to issue all of those shares at one time.
   
   
4. Get Your Business Valued: Getting a business valuation will help you determine the value of each share of stock so you can properly sell the shares.
   
   
5. Determine the Type and Class of All Shares: This is where you work with your advisors to make sure you’re issuing the right types of corporate stock that will help you achieve your business goals.
   
   
6. Check All Securities Laws: Work with an attorney to make sure you’re in compliance with all securities laws. 

Each of these steps requires careful consideration of both the laws and your business’s goals. While issuing corporate stock can be very beneficial to the short-term gains of your business, you may regret issuing stock down the road if you don’t do it correctly. You should also consider alternatives to issuing stock before jumping in and doing it, such as taking out a loan. 

Getting Started

Issuing corporate stock can be a complicated process, but it can help you raise the capital you need to achieve your lofty growth goals. The first step is to make sure your business’s legal entity is a corporation. You can get the process started by filling out a simple online form.

Below is an excerpt from Part One of our book Startups Made Simple: How to Start, Grow and Systemize Your Dream Business. Learn more about the book here.  

When I talk about Energy as it relates to startups, I’m giving it a broad definition to include not only your physical health but also your mental health and things like perseverance, the mental toughness required to get you through the rough spots of being an entrepreneur.

Superpower #1: Health

“The first wealth is health.” – Ralph Waldo Emerson

Say there are two founders that have the exact same set of skills and knowledge but one is healthier than the other. Nine times out of ten, the healthier founder will outperform the other. Healthy founders simply have more mental and physical energy to bring to bear on the various issues that a startup encounters, not to mention they will be sick less and able to bounce back faster from setbacks. You want to prioritize your health and energy first, which will allow you to be more effective in almost every aspect of your life. 

It’s critical that the founder not make the mistake of overworking and ignoring their physical health. Trust me on this. It’s almost a badge of honor how much founders work, but I’m of the belief that founder who works 40 hours a week but is well-rested, “clocks out” at night, takes proper vacations (even if just a 3-day “staycation” around the house), eats healthy, and most importantly, sleeps well, will easily outperform a neurotic founder who works 60 hours a week but doesn’t do these things. There’s much more on this in later chapters. 

Remember: It’s not selfish to focus on your health. It’s actually moral and responsible for you to make sure you’re healthy enough to make sure your company survives and thrives, especially when others are counting on you. 

Mental Health 

Taking care of your mental health is as critical as your physical health (perhaps more). One thing I’ve noticed is how many of the “rock star” entrepreneurs and successful people I admire have worked on their mental game as much as their physical game. 

In the book Tribe of Mentors by Tim Ferriss, nearly 80% of the successful people he interviewed have some form of meditation or relaxation practice. Arnold Schwarzenegger and billionaire hedge fund manager Ray Dalio have credited mindfulness meditation for much of their success. Being able to calm your mind is an incredibly valuable skill and has been a game changer for me personally. I list resources on this in the Chapter Resources. 

Another aspect of mental health that affects a lot of founders is “imposter syndrome.” Imposter syndrome is very common among many high-performing people, and is where you feel like a fraud, feel that you don’t know what you’re doing, and fear that you’ll be exposed as a fake. 

Trust me, this is very common and comes from the fact that you’re usually pushing yourself to learn new things as you grow your skills. Life and business never provides 100% certainty. When I learned that many world-changing geniuses and entrepreneurs also felt like this, it was an enormous relief. 

One interesting thing is that pretty much nobody fully knows what they’re doing, and while that might be terrifying (my first thought: what about pilots!), it’s actually pretty relieving. By the way, pilots have lots of training and sophisticated help via a backup pilot, air traffic controllers, weather, and flight software, so as we discuss later, having systems and a team you trust will help in your startup journey. 

A lot has also been written recently about loneliness and depression among founders. I’d be lying if I said that these things have never affected me or founders I know. If you’re a founder, you’re probably going to encounter times where you feel absolutely alone and nobody else really understands or cares, even your best friends and family. It’s not that they don’t want to help; it’s that they likely can’t possibly understand your specific situation at this time, and that’s totally normal.

Connecting with other founders locally and online is a great way to overcome loneliness. There are now so many communities, organizations, Facebook groups, Twitter personalities, and more that the “startup ecosystem” is now very big and supportive. In the resources section of this chapter, I list some great resources for connecting with fellow founders that can make this journey easier. Actually, one of the reasons I’ve structured this book in such a systematic manner is to overcome a major reason for depression: being overwhelmed and not knowing what to do next.

Hopefully, by breaking down this process into bite-size chunks, we can take some of the overwhelm out of the process. Taking care of your physical health is a big part of fighting depression. Finally, never be ashamed to admit you’re depressed to your doctor, friends and family, and get the help you need. 

This was an excerpt from our book Startups Made Simple: How to Start, Grow and Systemize Your Dream Business. Learn more about the book here or see our previous excerpts here.

One of the most popular ways to protect businesses from potential legal liability is to use multiple business incorporations. This typically entails a business putting assets in different LLC’s or corporations. The biggest benefit to business owners is that if you have a big mess up, or financial loss, in one part of your business it doesn’t have to impact all of your assets. 

How Multiple Business Entity Strategies Work

A multiple business entity strategy typically includes two different types of entities. The first is an operating company and the second is a holding company. The operating company as access to, and typically possession of, the assets but doesn’t have ownership of them. The holding company owns the assets but does nothing else. 

This is beneficial because if the operating company takes on legal liability during the course of their operations, it is very difficult for anyone to get access to the assets the holding company owns. So the business can continue to operate after surviving a lawsuit since the assets are protected because the operating company takes all the risk. 

For example, retailers use this multiple business entity strategy on a per location basis. This is often done by retailers to protect each physical location as its own business, with its own assets. So if one location has a massive slip and fall lawsuit, the results are limited to an impact on that individual entity.

It’s important to make sure that your holding company doesn’t actually do any business outside of creating and funding any needed operating companies. If the holding company starts doing day to day operation activities then the corporate veil can be pierced, causing the holding company to be liable for many wrongdoings. 

If the operating company needs to purchase additional assets after operations have begun, the holding company can act as a lender in order to fund the activity. This should be done with a lien that runs back to the holding company to show the loan, and paid back in the same manner any other business loan would be. This is done so that it doesn’t look like the holding company is responsible for operating activities. 

How to Create a Multiple Business Entity Strategy

The first thing you need to do is to create a holding company. This can be an LLC or a corporation (but not an S-Corporation which is not able to own or be owned by other entities), depending on your personal situation. After consulting with your attorney and/or accountant, you should create and fund your holding company. We recommend using an industry expert to get your business incorporated.

Once the holding company is created then that company should create and fund the operating company, as needed. This way the operating company is directly owned by the holding company so that the holding company can maintain the most important assets. 

This also gives the business owner the added personal protection from any potential debts the business way accumulate. With the holding company funding the operating company, there won’t be any personal guarantees on any debt that is required. This is a huge benefit to owners looking to create and fund businesses without wanting to personally take on debt. 

A Common Legal Mistake With Multiple Businesses

One common mistake that many businesses make is that they only consider the tax consequences of how to set up their businesses. There can be a nice tax advantage in creating a single LLC and then registering different DBA’s (doing business as) instead of creating a unique legal entity for each one. The problem with this is that you don’t get the same legal protections so if one struggles then you could be risking the assets of all the others. 

Assets the Holding Company Should Own

The most basic answer to the question on what assets the holding company should own is that it should own all of the important ones. If you have something you don’t want to lose if everything were to go wrong, then those things should be owned by the holding company. Below is a list of things that you should consider the ownership for. 

1. Real Estate – Office buildings, investment properties, or land. 
2. Proprietary Software – Software you currently sell, or would like to in the future.
3. Patents – Patents for any product you’ve established can be leased to the operating company. 
4. Websites – If the websites are vital to the process or existence of your operating business. 
5. Trade Secrets – Anything that may give your business a competitive advantage and be considered an asset. 
6. Trademarks – You don’t want to have to rebrand your business if your operating company loses the ownership rights to a valuable name. 
7. Any asset that doesn’t have to be owned by the operating company

Thinking about the legal structure when you’re setting up the company assets could save you a lot of unnecessary headaches later. The key thing to remember is that even if the operating company needs an asset in their day-to-day work, it doesn’t mean that entity has to own it. you can always set up the holding company on a consulting or leasing basis to provide the other entities for what is needed. 

Who Should Use a Multiple Business Entity Strategy

A multiple business strategy is typically right for entrepreneurs or businesses with assets from multiple operations. While this isn’t an all-inclusive list, there are a few specific types of situations that will find this strategy to be helpful. Those who should consider using a multiple business entity strategy include: 

• Serial Entrepreneurs: Chances are if you like to start businesses pretty regularly then you’ll have a holding company to house your ownership in each of the businesses. As a serial entrepreneur, most of your businesses likely won’t have anything to do with one another so it wouldn’t make much sense to house them all together. This strategy is a natural fit with this situation.
  
  
• Businesses That Own Real Estate: Regardless of what your core operation might be, owning real estate is a nice way asset to have to secure the future of your business. If something were to go wrong, you wouldn’t want to lose the real estate that has grown in value since you purchased it. Instead, keeping the asset in a holding company and leasing back necessary space to the operating company is a much safer strategy to protect your real estate as the value continues to increase.
  
  
• Businesses Selling a Proprietary Asset: Many businesses are only operating in order to sell something that they’ve created. These days, that routinely means a piece of software that they’ve developed. Keeping the ownership of the software, or other asset, in the holding company instead of the operating company can mean better overall protection and decision making since you know that your most important asset isn’t at risk. Sadly, many businesses have lost those assets during rough times because it was the only asset the operating company could monetize to pay off creditors.
  
  
• Businesses Wanting to Start a New Product or Service: Sometimes businesses decide that their customers have a need that isn’t being met by anyone else. This can result in a new product or service offering. For example, a software company that decides they can adequately consult with the same customers they currently target. These businesses should separate the two operations, as they are different businesses. This is a good operational strategy and a good legal strategy.
  
  

These are the most common instances where you’d want to use this multiple business entity strategy, however there are more. You should consult with a lawyer to know how your legal setup will impact your business strategy going forward. 

Multiple Business Entity Frequently Asked Questions (FAQs)

The multiple business entity strategy can be complicated but if you’re planning on owning multiple types of assets or businesses then it is a vital one to adopt. We’ve put together a few of the most common questions to help you better understand the process so that you can better use it to protect your assets. 

What’s the primary purpose of a multiple business entity strategy?

Asset protection. If you own assets then you want to have a holding company that has no liabilities other than to you personally, and that has no direct interaction with customers of your operating company. 

How many LLCs are too many? 

There isn’t a limit to this legally, but you should use as many as you can operationally and financially manage. We’ve seen retail businesses use an LLC for every single one of their hundreds of locations because that’s what makes the most since for them. 

Can I use this strategy to protect my personal assets? 

Kind of. You can use something very similarly personally where you put your personal assets into LLC businesses to protect yourself, but this strategy is designed to protect business assets more than personal ones. 

How does my operating company get access to needed assets in my holding company?

The holding company can lease assets to the operating company so that proper access to run the business is established. For example, if your holding company owns your office building then the operating company can rent out the space. 

Getting Started

Now that you can see how important it is to protect your assets from any potential liabilities, you can start the process today by either starting your LLC or corporation from scratch or by adding a second entity to make the strategy work. Either way, you should use a business you can trust to get these set up. Use the source over 60,000 other businesses have used and follow our simple three step process today.

You’ve probably searched for online small business ideas because you want at least one of three things: freedom of time, money, or control. 

And if you’re reading this, you’ve probably read a bunch of listicles that throw 36,000 business ideas at you: 

Be a virtual assistant! A babysitter! An Uber driver!

You also probably closed those tabs in frustration because none of them consider the #1 one thing that will make a business succeed: You.

What you actually want to do. Your skills. Your passions.

In this post, I don’t throw 100 business ideas at you because… I don’t know you! Instead, I’ll show you a list of brainstorming questions to generate 100 business ideas that are actually realistic for you to do.

• I provide a high-level framework of what makes a profitable small business idea to get you started
• I show you two overlooked sources that you can mine ideas from, and 
• I take you step-by-step to generate over 100 viable business ideas so you can pick from a list of ideas that actually get you excited

Let’s get into it.

What Makes a Profitable Small Business Idea?

An amazing online small business idea is made of two simple, but important ingredients:

1. A group of 1,000 true fans who can support your work a.k.a. a niche
2. A profitable product or service with skills and knowledge you have that delivers a solution to solve their problems

Let’s break that down:

Ingredient #1: A Group of 1,000 True Fans

The best way to make a million dollars is to serve one million people. Kevin Kelly’s article on 1,000 true fans brings that quote into sharper focus:

If you generate enough value to get 1,000 people to pay you $100 every year, then you have a $100,000/year business.

Once you serve the needs of the initial 1,000 true fans, then you can expand outwards to groups that are adjacent to your initial group.

For example, if you help 10,000 people with $100 worth of products and services and you can gross $1,000,000/ year.

Ingredient #2: A Solution that Solves a Real Problem

The essential principle of business—of occupation in the world—is this: figure out some way in which you get paid for playing.” — Alan Watts

Too many failed entrepreneurs are marketing-driven. They create a product first, then find a problem that that product can solve and customers to sell to. They believe that if they build it, the customers will come. Or that they can just pour more money to sell a below-average product.

Successful entrepreneurs are market-driven. They let their fans tell them how they can help. They validate their product and survey their potential customers for their willingness to put down money for a product before they go out and make it.

Successful entrepreneurs let the market tell them what to make and release to excited customers who line up before the store opens. Failed entrepreneurs tell the market what they want to make and release to crickets.

The Two Overlooked Sources of Online Business Startup Ideas

Source #1: Building a Business on Your Existing Skills

When people search for “business ideas”, they overlook an important source of those ideas: Themselves.

Their obsessions, passions, and strengths.

To help you mine your existing skills for business ideas, here are some brainstorming questions:

• What am I already getting paid to do at my day job?
• What do people usually come to me for help with?
• What comes easy for me that other people struggle with?
• What is an accomplishment or interest my friends get excited about when I tell them about it?

If you want to learn more about how to apply an entrepreneurial mindset to your current skillset. I recommend Michael Gerber’s book, The E-Myth: Why Most Small Businesses Don’t Work and What to Do About It (amazon.com).

Source #2: Buy a Franchise or an Existing Business

Another source that many people overlook when looking for business ideas are proven profitable businesses. 

Investing in an already-profitable business takes away a lot of the setup stress of running an early-stage startup and figuring out a business model. All you have to do, really, is ask how much you really like the business:

• Would I like to do this for several years?
• Am I good at this?
• Is there a proven need for this?
• Would I use this product or service myself?

Bonus points if you’re already a fan of the brand, the business model generates recurring revenue, or if the business is a big player in a growing market!

With these two sources in mind, here’s a step-by-step plan you can follow to get find your small business idea:

A Step-by-Step Guide to Getting the Best Online Small Business Ideas

1. Know Your Why, Your What, and Your Passion

Prime your brain by having a vision, a driving force behind why you want to start an online business. Ask yourself…

What activities give meaning and purpose to your life?

• Is it so that your wife doesn’t have to go to work? (Admiration)
• Is it to be able to help build a school with the charity of your choice? (Contribution)
• Is it so that you can work and travel from wherever you want in the world regardless of what a boss says? (Freedom)

What does your perfect business look like?

• What does it look like?
• What does your perfect business look like?
• What is your endgame?
• How much money do you want to make per year?

You also have to know what you want and don’t want:

• Maybe you don’t want to work with a team and want to be a solopreneur
• Maybe you want a business that runs itself and only requires <5 hours a week of management
• Maybe you don’t want your name on anything because you want to sell the brand for hundreds of thousands or millions of dollars down the road

Whatever your why’s and your what’s are, clarify them and write them down. Remember, a goal not written down is merely a wish!

2. Figure Out What Unique Value You Bring to the Table

Once you know why, how, and what you’re trying to accomplish with your online business idea, the next step is to find an idea that you can do. 

To start, ask yourself:

• What do I like to do?
• What am I good at?
• What is an urgent unmet need or “pain in the ass” (PITA) that I or others I know have?
• What product or service do I gladly spend ungodly amounts of money on?
• Is there something complex in my life that I wish was simpler?
• Am I already good at something that might be a business? What comes easy to me?
• What would I do if I already had $1 billion?
• What do I obsess over on my evenings and weekends?

These questions will help you figure out your passions, strengths, and skills. The intersection of these three things is where your best business ideas lie. These are the possible niches you could create a business in. 

For example, maybe you like to go to tea shops whenever you visit a new city (passion). You also realize that your health-conscious friends have started asking you for tea recommendations beyond the usual Earl Grey and English Breakfast teas they have (strength). Maybe you could start a tea recommendation newsletter for fitness enthusiasts… And eventually, turn that into a monthly subscription box of herbal tea (profitability).

3. Stay on Top of Business Trends and New Markets

Once you know what you want and have an idea of what you can do, it’s time to look at what’s succeeding already to expand your knowledge of what’s possible.

• Read case studies and blogs (Shopify’s blog is an excellent place to start)
• Listen to podcasts that profile entrepreneurs, like NPR’s How We Built This
• Watch documentaries or movies of legendary businesses, like Netflix’s documentary about McDonald’s Ray Kroc
• Check out best-of lists, like INC.’s 5000 Fastest Growing Companies and Entrepreneur Magazine’s Top 500 Franchises
• Notice your everyday life: What restaurants and cuisines are suddenly popping up in your area? What new kind of espresso is becoming popular? What stores and new apps are your friends talking about?

Take as much time as you need for this stage. This is how you prime your brain for the final step of getting the best business ideas.

4. Generate Business Ideas and Filter Through Them

Once you’ve told your brain what you want, it’s time to let it get to work.

For the next 10 days, sit down each morning with a pen and paper. Push yourself to list out 10 business ideas. 

By the end of the 10 days, you’ll have 100 unique business ideas on your hands. 

They don’t have to be good ones. In fact, your first 90 ideas will probably suck. That’s OK. You just have to list out 10 ideas a day for 10 days.

Once those 100 ideas are in front of you, run each one through these filtering questions:

• Are there 1,000 — 3,000 reachable (preferably online) folks who can and will pay for this?
• Does the product have high margins? Better yet, can I make this once and sell it again and again, like a digital product or course?
• Does this product have the opportunity for recurring revenue, like a health supplement or email service provider?
• Does this product take advantage of status and network effects? In other words, does the product encourage customers to talk to their friends about it because it raises their status in some way?
• Are potential customers excited when I tell them about it?
• Would I use this product myself?
• Would I like to do this for several years?

If you run an idea through these filters and it passes with flying courses, congratulations! You have a product or service that people will want to put down money for. And, more importantly, you’ll have a potential business that will help you achieve independence and freedom of time, money, and control.

Finding an Online Small Business Idea Quickly

If you don’t want to go through the entire exercise and want to skip ahead, here’s what you do: think of 10 interests that you obsess over when you’re not working. It could be…

• Stock car racing
• High fidelity audio equipment
• Scrapbooking
• Photography
• Leather goods crafts
• Acting
• Coffee
• Photography bags
• Drones

..Whatever it is, start with that interest. Dig into communities that are passionate about that. Get involved in the community, whether it’s on Twitter, YouTube, Reddit, or Facebook. Remember: niches!

Finally, learn how you can solve recurring problems that people are talking about — this is the problem part.

This quick method won’t give you as many options as the step-by-step method. If you want more on where you can find business startup ideas, be sure to check out this post on finding business ideas.