Aspiring entrepreneurs need look no further than Washington state for a great place to start a business. CNBC ranked Washington state the second-best state for business in 2022, giving it high marks in categories such as ability to foster technology and workforce quality.
When exploring starting a business in Washington state, entrepreneurs should plan on taking crucial steps in areas such as preparation, business establishment, and market entry. One tip for the preparation phase is to consider pursuing an advanced business education, such as a Master of Business Administration (MBA) program. The coursework in an MBA program can provide aspiring business owners with critical expertise and can even help an entrepreneur build a network of associates that can help them get their business off to a strong start.
Keys to Starting a Business in Washington State
Viewing the process of starting a business in Washington state as a series of individual steps can help make the process more manageable. According to Washington state’s Small Business Liaison Team (SBLT; a group of Washington state agencies with responsibilities in commerce), key steps for getting a new business off the ground include the following:
- Creating a sound business plan
- Deciding on a business name
- Planning for and hiring employees
- Selecting a business structure
- Setting up business operations
Solid preparation is critical in avoiding some of the common challenges in launching a new enterprise. According to a 2023 report in Entrepreneur, those challenges can include:
- Establishing an efficient workflow
- Growing a customer base
- Locating the right employees for the job
- Managing finances
Following key steps for business creation in Washington state—along with obtaining a solid business education—can enable prospective business owners to navigate those challenges and achieve success.
Ideate and Prepare
Develop a Business Idea
Whether you’re a chef, a florist, or creating a new app, developing a solid concept for your business is essential. Consider whether your business idea solves an existing problem, whether customers will pay for your product or service, and the potential market size. According to a report in CEO Today, Jeff Bezos launched Amazon—one of the best-known businesses to have originated in Washington state—after recognizing the potential for using the internet to sell more books than any brick-and-mortar bookstore was capable of stocking.
Business resource guide Startup Savant suggests that favorable industries for startups include e-commerce, delivery services, supply chain management and logistics, and business-to-business software. In addition, the Washington State Department of Commerce lists industries such as food manufacturing, clean technology, and information and communications technology as examples of the state’s high-growth industries.
Conduct Market Research
To identify what customers want, the U.S. Small Business Administration (SBA) recommends entrepreneurs do market research to analyze factors such as:
- Customer location and income range
- Degree of demand
- Degree of market saturation
- Market size
Determine Location and Style
Selecting a business location that is competitively advantageous and easy for customers to access is another key to success. Closely related to location is working style. Businesses in today’s economy need to determine whether their employees will work remotely, in the office, or follow a hybrid model that includes both remote and in-office work.
Name Your Business
Careful consideration of your business name is also important. Ideally, your business name should be memorable, stand the test of time, and contain an emotional element that moves people. It’s also good to remember that including the name of a specific product in the business name could be problematic if you plan to expand its offerings.
Establish the Business
After completing the initial planning steps, it’s time to formally establish the business. Some of the most important steps in establishing a new business in Washington state are highlighted below.
Choose a Business Structure
As the SBA notes, the selection of a business structure will have a significant impact on things such as taxation and whether personal assets will be at risk. Examples of business structures include the following:
- Sole proprietorship. In a sole proprietorship, a business owner has complete control but there’s no separation between business and personal assets and liabilities.
- Limited liability company. An LLC generally shields business owners from personal liability, and involves profits and losses being reported as personal income without corporate taxation.
- A partnership can be a limited partnership (in which a general partner has unlimited liability and other partners have limited liability) or a limited liability partnership (in which all partners have limited liability).
- A corporation is an entity that is legally separate from its owners and subject to taxation and legal liability.
Register the Business for an EIN
It’s crucial to obtain an employer identification number (EIN) from the IRS when starting a new business. This number is necessary for paying taxable wages, withholding employment tax, and filing tax returns. Not having an EIN can subject a business to tax penalties; having an EIN also helps reduce identity theft and can accelerate accessing credit.
When launching a business in Washington state, business owners also need to register their businesses and obtain business licenses through the Washington State Department of Revenue and the office of the Washington Secretary of State.
Write a Business Plan
Strong business plans guide businesses through launching and managing their operations. They describe the business; include market analysis; detail the organizational structure; and describe its products, services, and funding.
Poor business planning has contributed to some of the most high-profile business failures. For example, an Axios report on the short-lived news service CNN+ attributed the failure of the venture to an unclear business plan. And according to a report by The Motley Fool, the failure of video streaming service Quibi was due, in part, to an unrealistic business plan.
Pursue the Right Funding Structure
Entrepreneurs need to consider the pros and cons of various funding structures for their new business. Most entrepreneurs choose from the options below to find different funding streams that fit their unique needs and circumstances.
Bootstrapping entails using your own funds or credit cards to start a business. While bootstrapping gives entrepreneurs complete ownership, it puts them at risk of significant financial loss.
Obtaining funds from investors can provide an infusion of cash to help get a business off the ground. However, investors will have a say in how the company operates, so entrepreneurs also sacrifice a portion of control over their company.
Bank loans can offer favorable repayment terms and enable entrepreneurs to establish a relationship with a lender. On the other hand, the application process for a loan can be detailed and extensive, and the funding process can be lengthy.
American Express notes that if you’re a military entrepreneur, an entrepreneur starting a women-owned business, or an individual with a disability you may qualify for a business grant. Of course, the biggest benefit of a grant is that it doesn’t need to be repaid. However, the competition for grants can be stiff, and the requirements to qualify can be quite strict.
Bank as a Business
Forming a strong relationship with a bank can help a startup establish a solid financial footing. Individuals who are forming a business should give thought to what they need from their banking relationships—for example, business credit cards, a checking account, or a line of credit—and then research which banks best fit their needs.
Go to Market
After planning for and legally establishing a business in the state of Washington, it’s time to enter the market. As discussed below, several important considerations during this phase can increase your odds of success.
Branding and Marketing
Developing strategies for branding and marketing is critical. Branding involves identifying the features of a product or service that differentiate it from other products or services. A business’s long-term image and reputation also bear consideration as part of branding. Marketing involves efforts to ensure that customers are aware of and understand a business’s product or service; it also encompasses efforts to sustain sales after the introduction of a product or service. Some of the most common marketing strategies involve advertising or social media campaigns, but many others exist.
Business operations are the daily activities a business conducts to support making a profit and increasing the value of the business. Examples include activities in areas such as sales, procurement, or manufacturing. Establishing business operations that can evolve as a business grows will help ensure that those activities can accommodate the challenges associated with expansion.
Business Development and Sales
While some might think of business development simply as actions intended to increase sales, it encompasses much more. Comprehensive business development involves devising broad strategies for business improvement in areas such as creating new products, forming partnerships with other businesses, or improving supply chains. Strong business development can help a business transition from its early stages into a state of continuous improvement and help increase the long-term value of the enterprise.
Embarking on Entrepreneurship in Washington State
With careful preparation, thorough business establishment processes, and a sound plan to enter the market, starting a business in Washington state can be a rewarding endeavor. An excellent way to acquire the business expertise to successfully launch a new venture is to obtain an advanced education in business. Individuals who are interested in acquiring that expertise should explore Washington State University’s Online Master of Business Administration program to learn how it can help them achieve their entrepreneurial goals.
Start developing your foundation for entrepreneurial achievement and working toward your business goals today.