Our culture is full of success stories of businesses that seem to start spontaneously in someone’s garage or a college dorm. We are drawn to this narrative of genius ideas and bursts of inspiration because it’s a more appealing story than someone who lays down the groundworks with a solid plan.

While we all want to believe that having that one great idea will lead to a great business, the reality is that most people need some kind of a business plan in order to test out ideas and execute them successfully. No small business can sustain itself for long without covering the basics.

Think of a business plan as a tool that can help you straighten out your thoughts and priorities. First and foremost, it’s a document written for you and your company. The process of writing the plan can guide you to think about areas of the business you may not even have considered. In doing so, you’ll be able to get an even clearer vision of your company, understand what’s practical and what’s idealistic, and set you on a path toward starting a sustainable business.

The Small Business Administration (SBA) separates business plans into two broad categories: traditional vs lean startup. 

• Traditional: This type of business plan is more detailed and comprehensive, and takes longer to write. The benefit of having a traditional business plan is that you can present it to investors, stakeholders, and banks who will often request the document from companies. 

• Lean startup: The lean business plan is shorter (as long as one page if you want), focuses on the basics, and can be modified and changed easily over time. If you’re still at the early stage of starting a business, you may want to start out with a lean business plan to clarify your company’s objectives and expand it as you go.

We’ve developed our own approach that combines the best elements of both the above––the Startups Made Simple Business Plan.

What is the Startups Made Simple Business Plan?

The truth is, most startups and small businesses don’t need an exhaustive, detailed business plan. When you’re starting out, time is of the utmost essence. The last thing you want is to spend hours polishing a pristine document that at the end of the day will only remain a document. 

Small businesses require a lot of flexibility and testing, especially during the early stages when you’re just starting out. That’s why the Startups Made Simple Business Plan focuses on getting your ideas out quickly so that you can test them and make adjustments based on your learnings.

The idea is to quickly go through your ideas to see which ones are really worth testing––you don’t want to waste time testing something out and spending valuable resources when a simple plan would’ve shown you it wouldn’t be practical––then execute quickly, learn fast, and improve fast. We do this because, at the end of the day, small businesses need speedy execution to grow. Planning alone won’t cut it by any means.

So below is a checklist of the essential items your business plan should contain.

• Vision: What’s at the heart of your business idea and how you see your company scaling over time
• Elevator pitch: A core understanding of your company, succinctly summarized so anyone can understand it easily
• Target market: A clear understanding and articulation of the audience or customer you’re trying to reach, including demographics, interests, and needs
• Tests to run: A list of items and strategies you can execute to test the validity or quality of your ideas and start establishing your company, i.e. surveys, website, mockups 
• Back of the napkin math: Simple, quick calculations regarding your current and future expenses to give you a tangible number to work with rather than chasing arbitrary profits
• Reverse engineer: A practice of envisioning the end product and working backward to see what steps you’d need to take to make that happen
• Worst case scenario: Imagining the worst thing that could happen so you can prepare and come up with a backup plan 

Let’s dive into some of the key points on this list.

State Your Company Vision

If you can’t quickly and concisely explain what your company does, it might be a sign that you need to work on your idea. Just as movies and TV shows have loglines to hook viewers into their contents, your vision of the company should be a quick summary that lets the reader know what’s at the core of your idea.

Tip: Don’t worry if you can’t come up with a clean elevator pitch from the start. It’s normal for your company description to be messy and long in the beginning, but through the process of refining your vision, you’ll gain a better understanding of your ideas and narrow down the complexities into a clear, easily understandable idea.

Define Your Target Market

Product-market fit (PMF) is one of the biggest reasons businesses fail. You may have a great product but if no one wants them––for reasons ranging from a too small market to unrealistic prices––you don’t have a business. This is why any business plan should specify the audience you’re trying to reach with your product.

Thinking about who your product is for and why and how it would benefit them can help clarify your company goals. Defining your target market is one of the most important things you can do in advance to avoid troubles down the road. Other details might be easier to swing or modify as you go, but skipping on product-market fit can have disastrous consequences for businesses unprepared to meet the reality of the market.

Tip: Sometimes you can’t know whether you have the right PMF until you go out and test. Whether through building prototypes, sharing your products for free, or surveying different types of potential customers, have a game plan for how you can test out your target market in advance. 

Think About the Cash

Even if you’re not writing up a detailed business plan for an investor, thinking about the cash flow and funding of the company will help you prepare for the more practical side of the business. After all, ideas and visions are great, but without the money, it’ll be harder to execute them. 

Here are some questions you can ask to think about this area:

• Are you planning to raise funding for your company? How? 
• How much capital do you need to start your business? 
• What will your business model be and how do you envision your income stream? 
• How are your competitors or other companies in the market conducting their businesses?

Tip: Businesses often incur expenses that are easily overlooked. To avoid the problem of tacking on unforeseen expenses on your bill, do a quick, calculation of your current expenses (bills, rent, food, office, contractors, suppliers, etc.) to find out how much cash you’ll need to keep the business running. This will also help you set a more realistic price for your product and can potentially help you cut down unnecessary expenses to keep things lean at the start.

Plan for Long-Term Items

In the eagerness to start a business, certain long-term items can easily be overlooked. That’s why it’s important to remember to include them in your business plan. Whether this is the time it might take to manufacture your product, or a long-term lease on your office or warehouse space, thinking realistically about this in advance can save you a lot of headache down the road.

Tip: Give yourself ample buffer for the items on this list. We have a tendency to overestimate our abilities to get things done and underestimate processes that often turn out more costly and time-consuming than we expect. Businesses are always prone to unforeseen expenses such as a supplier running out of materials, weather affecting a delivery, or a machine breakdown that delays production. Especially when starting out, we may not consider these items and get blindsided when they happen. 

Share, Test, and Repeat

The Startups Made Simple Business Plan is not a perfectly polished piece of document. Rather, it’s a tool that can help small businesses launch their ideas in a realistic but efficient way, allowing for plenty of testing and mistakes along the process.

Share your business plan with colleagues, customers, or whoever you want feedback from. Show them your mockups or prototypes if you can. Use survey tools to reach more people. When you find that something doesn’t work, go back and modify your strategy and plan. Then repeat this process over and over until you’re confident you have a solid, viable product that’s ready for a market debut.

Most of all, don’t be discouraged by negative feedback or ideas that don’t work out. This is all a natural part of the process––one mistake means one step closer to success. Always have a backup plan so that you don’t bank all your cash and resources into a single idea. At this stage, it’s more important to try out your ideas and see which ones will stick rather than betting only on one horse that you’re not yet familiar with.

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.

You want to protect yourself and run your business in the easiest way possible. A good way to ensure this is to think carefully about which state you’ll incorporate in. In this article, I’ll share insight regarding how to incorporate your business somewhere other than your home state and why it might be beneficial for you.

In this article, we’ll cover:

• Why you would choose another state to incorporate your business
• Liability protection
• Convenience
• Restriction on type of business if it is in another state
• Pros and cons of incorporating a business in Delaware, Nevada, Wyoming and New Mexico
• Incorporating side projects or another business in different states

Why you would choose a state other than your current state to incorporate a business

It does make sense to choose your home state to incorporate a business in many cases, if not most. Although, there are a lot of reasons to incorporate other places. The two big reasons to incorporate in another state come down to liability protection and convenience.

For most business types that aren’t state-only licensed, you are able to incorporate outside the state you reside in.

Liability Protection & Convenience

The protection your business is supposed to provide your personal assets is called your corporate veil or your LLC veil. It’s one of the reasons you incorporate in the first place. You want the protection. You don’t want to lose your cars, house, or other assets.

If you’re in California and have a business entity incorporated there, about 25 to 50 percent of the time, the courts will pass right through your business entity and go straight for your personal assets.

They can even go for the assets of other people in your corporation.

This is an extremely important factor to consider, along with convenience, when decided where to implement your corporation or LLC.

States like New York and California have non-business-friendly courts and laws. However, Delaware, Nevada, Wyoming, and New Mexico have business-friendly laws and courts that will help protect yourself, protect your personal assets, and frankly protect your directors and officers as well.

Most business types can incorporate in other states, even ones that would surprise you like restaurants. The ones that can’t be incorporated across state lines usually require some sort of professional type entity from your home state, like a doctor’s office. But almost every other business that’s not professionally licensed, or some kind of a state-only licensed business, should be just fine incorporating in another state.

So, we’re talking restaurants, t-shirt businesses, manufacturers, service businesses, software–whatever–almost all of these can choose a different state than where they’re currently formed.

Here are some of the pros and cons of operating in each of the most business-friendly states.

Pros and cons of incorporating a business in Delaware

Delaware is known for being extremely business-friendly. They have a large business court infrastructure just for dealing with business cases quickly, and if you ever want to have a funded startup, VCs will almost certainly require that you set up a Delaware C-Corporation.

Around 90% of the Fortune 5000 are incorporated here! Obviously, there are some very good reasons why.

One of the biggest reasons is their massive Chancery Court system that specializes in quickly dealing with corporate legal issues. The infrastructure is there to support businesses quickly and efficiency with strong business protection and a strong business veil.

Large companies like Uber and Facebook may get sued 100 times per day. Delaware has the capacity to handle issues at a large scale, and that’s why this is the top choice for big business.

Pros of Delaware

• Use the business-friendly chancery court
• Prestige of owning a Delaware corporation
• Protection of personal assets
• Efficiency from

Not everything about Delaware is perfect for incorporating every business, however. Someone has to pay for that massive court system, so fees to incorporate here are pretty high.

You’ll also have to maintain a registered agent in Delaware (this is a service we provide for all 50 states). Then you also have to pay their “franchise tax” and file expensive annual reports.

The general complexity of filing and maintaining a Delaware business entity is a challenge as well, and most small companies don’t need this extra work, especially with some of the other states we’re going to talk about.

Cons

• Adds another level of complexity
• Have to pay franchise tax
• More expensive in general

Fun fact: you can get expedited filings of various levels in Delaware, up to a 2-hour filing for $500 extra!

Pros and cons of incorporating a business in Nevada

Nevada built an extremely friendly shareholder set of laws. As recently as a year or two or go, the veil had only been pierced in Nevada once. Nevada represents the “wild west” in terms of business law, in sharp contrast to nearby California. This libertarian approach makes it extremely pro-business with a strong business veil.

Pros

• Shareholder friendly laws
• Strong protection
• Don’t report certain things to the IRS

Of course, by incorporating in a state so lax that prostitution is legal, you may get a bit of a stigma, depending on your type of business. Let’s just say that a Nevada-addressed corporation doesn’t carry the prestige that a Delaware one does.

Because of the rush of companies wanting to incorporate in Nevada for their lax approach to business regulation and taxes, the state has made filing a bit more expensive, so that’s another downside to the state.

Cons

• Some scammy operations
• Negative stigma
• More expensive to incorporate here

Fun fact: all other states have reporting arrangements with the IRS, however the Nevada Secretary of State, department agencies, and taxation agencies do not. So that means they don’t report certain things to the IRS, which basically is a way for the IRS to figure out what you’re doing. This is huge for business privacy.

Pros and cons of incorporating a business in Wyoming

Wyoming created the LLC in the late 70s, based on a simplified corporation business entity concept that existed in Europe at the time. There was no such thing as an LLC not that long ago.

Wyoming also adopted extremely favorable laws for business, similar to Nevada. However, incorporating and managing a Wyoming business is much, much cheaper. It’s about ⅓ the price to incorporate and LLC in Wyoming, and about ⅙ to incorporate a C-Corp. Yearly management fees are much cheaper as well. This is one of the cheapest and safest states you can choose for your business.

Pros

• Very low cost of operations
• Speed to incorporate is very fast
• Strong protection

Cons

• Not super popular
• More difficult to go get a local bank account
• Certain stigma

Fun fact: a lot of people don’t know how great an opportunity it can be to incorporate in Wyoming, it’s called “Switzerland of the Rockies” and “Dick Cheney’s House of Secrets” in some circles because of the favorable business setup.

Pros and cons of incorporating a business in New Mexico

The New Mexico LLC comes with real privacy right out of the box. With an LLC in New Mexico, you don’t have to file an annual report. In fact, you don’t even have to register your name on the business, just a registered agent, which you can hire (we can help with that). There doesn’t have to be proof of any ownership by anyone!

Pros

• Doesn’t list anyone on their formation documents
• Unparalleled privacy
• No record of who you are

As usual, nothing is perfect. If you’re not listed as the owner of your business, a bank will have a hard time verifying you own it and it could be a challenge to set up your business banking with this entity.

Cons

• Banks will have a hard time verifying who you are

Fun fact: since New Mexico doesn’t require an annual report, when you file you get essentially a lifetime filing!

States to be avoided

States that tend to lean toward the left generally have less protection for businesses. More liberal states tend to be more likely to rule against a corporation and try to pierce the corporate veil.

The worst states for this of course are:

• California
• New York

In general, a more conservative state, like Texas or Tennessee, is going to be fairly pro business.

Starting a side project in another state

If you’re thinking of starting a project on the side, it could be great for you to research and look into a side entity. This gives you flexibility and the benefits we’ve discussed if you incorporate in one of the states above. You can set up one side LLC to manage all of your projects under, and when they take off you can split them off into their own, separate entity. We’ve written about this specifically here.

To Recap

• Incorporating in another state can be really great, but it depends on the type of business and specific needs.
• If you want privacy, incorporate in New Mexico.
• If you want protection, incorporate in any of the states mentioned, especially Delaware and Nevada.
• If you want to save money, incorporate in Wyoming.
• Incorporating in a different state is incredibly easy with MyCompanyWorks!

Don’t underestimate the potential of a side project (or “side hustle” as they’re commonly known): many multi-million dollar companies started as side projects. Twitter, Craigslist, Slack, Groupon all started as a side project.

Typical Side Company Setup

Most people simply work on their side project while they still have a job and then if it takes off or at least becomes “ramen profitable” (where you are able to at least feed yourself with your side hustle income) then they create a company (register an official business).  

However, there are risks with doing it this way, especially if you have many business ideas. First, since your initial work isn’t within an official incorporated business (a Corporation or LLC, an entity that is separate from yourself) you might expose yourself to liability.

For example, you might have some beta users or first customers of your side business but since you aren’t an incorporated entity yet, you may be held personally liable for the business and these customers may be able to come after your personal assets in a lawsuit (home, cars, etc.). This is the infamous “customer slipped on your driveway then sued you” nightmare scenario (or if your technical product messed up their computer or network, for example). Continue reading “How to Create a Company to Manage (and Protect) Your Side Projects”

“A person of intellect without energy added to it, is a failure.”

~Sebastien-Roch Nicolas De Chamfort

Commentary: Lots of people have great business ideas and/or are extremely intelligent. This is great – but if you do not apply your intelligence, take action on your ideas, then it is simply an intellectual exercise.