I’m so honored to be invited as a guest author for Lindsey’s blog! I’m the founder and CEO of a student-run fashion nonprofit called Styleta, which collects and sells designer clothing donations online – a virtual Goodwill meets Gilt Groupe. For all of you women who are thinking about blazing your own path as an entrepreneur, here are some tips to help turn your idea into a business.
Always begin by researching your idea and the competitive playing field. A simple Google search (i.e. “designer clothing donation”, in Styleta’s case) can give you a brief snapshot of how many other companies are pursuing similar ideas and who they are. Start keeping a list of these competitors and some of the key metrics that you are interested in, such as annual revenue, target demographic, etc. It’s also useful to set up a Google Alert for keywords related to your startup idea – for me, I track “clothing donation” to see daily updates in the industry. Don’t panic if there are a few other companies in your industry! No competitors may be a sign that the idea doesn’t have enough value while 50 competitors may mean an overcrowded market.
Next, you want to test out your startup concept, ideally with the customer demographic you are targeting to see if the idea has legs. In starting a nonprofit, my job was easier because there was no need to protect the idea. I spoke to as many people as I could in all the industries in which Styleta would operate – retailers and boutiques for clothing donations, individuals about online shopping, and charities on partnerships. With a for-profit startup, it is wise to be more discreet, especially if there are no high barriers to entry. However, you can still create surveys, mock website designs, and even trial websites to test with trusted advisers — sometimes under the protection of a Non-Disclosure Agreement. One of my favorite resources is Weebly.com, a drag-and-click site to easily create functional websites.
- Get Legal:
If you feel ready to continue pursuing your business, it is time to incorporate your company. There are huge debates in the entrepreneurship community about whether to form a C corporation (the big guys like Coca-cola and Microsoft are all C corp’s), an S corporation (similar to C corps but with tax and reporting advantages for small businesses), or a limited liability company (LLC). I won’t go into the details here –there are tax and reporting benefits to all three and entrepreneurs debate over the merits of each form – but I suggest you research the pros and cons and decide on the right fit for your business. There are many firms who can help you incorporate, or you can fill out your own paperwork. However, do apply for a federal employee identification number (EIN) so that you can apply for a business bank account.
- Find the Money:
Getting the startup capital to fund your idea is tough. Nonprofit or for-profit, you will probably pitch to numerous donors/investors before getting a yes. My best suggestion is to begin tapping into your networks, whether from family, work or college alumni network, and keep in touch with supporters. Someone who isn’t in a position to invest may still be a valuable mentor and ally.
Good luck, and best wishes on the success of your startup!