How to Start a Minority Business

Starting any new business can be a scary venture, but government agencies are available to assist you with everything from creating a business plan to obtaining financing for your minority business. According to the Business.gov website, nearly every U.S. state has a Minority Business Development Center (MBDC) that can assist entrepreneurs and business owners in their local communities to start, grow and manage their businesses, leading them down the highway of successful business ownership.

Things You'll Need

• Business plan
• Federal ID number
• State Tax ID number
• License or permits as applicable

Instructions

Start a Minority Business

1. 

   Be sure to have all the pieces before you begin

   Write a business plan. You need to outline the steps in a concise manner that will help you to build the minority business. If you require assistance in writing a business plan, there are agencies available to help you. Start with the U.S. Small Business Association (SBA) as it can outline the steps required to complete the plan for your minority business.

2. 

   Target the largest piece of your pie

   Research your target market. It is important to understand your customer base in order to determine how you will reach them. This is where the MBDC can be of the greatest assistance, and you should reach out to the agency for assistance in identifying how best to reach your target audience.

3. 

   Budget your money

   Make a budget. A budget involves more than outlining the initial financing required to open the minority business. Outline exactly what the monthly expenditures will be, including utilities, rent and payroll. According to the SBA, "There also may be financial difficulties until the business becomes profitable, which could take months or years. You may have to adjust to a lower standard of living or put family assets at risk in the short-term." Writing the budget will help you to anticipate the financial difficulties and prepare for them until the business begins to turn a profit.

4. 

   Choose your name and business type

   Determine your legal name and business type. A good place to start is through the Business.gov website, which has a state-by-state listing of the requirements for small business entry by differing business types (such as sole proprietorships or limited "S" corporations).

5. 

   Your EIN is your unique business number

   Apply for a Employer Identification Number (EIN). You must complete an application with the Internal Revenue Service to obtain a Employer Identification Number (EIN). You can visit the IRS on the Internet to complete the application process. The number is required before you open a bank account or apply for any appropriate licenses or permits. You will also need this EIN to file your state taxes.

6. Register with your state to pay tax. Paying taxes is the American way of doing business. Once you receive your EIN from the federal government, you can register with the state in which you will be doing business to obtain the tax identification number that will be used for worker's compensation, unemployment and disability insurance.

Tips & Warnings

• You have taken the first steps to opening and owning your minority business. Continue to promote, advertise and build the business. Success or failure depends upon your participation and perspiration.

• Develop a financial net to protect your minority business if there are difficulties with startup costs or unexpected financial hardships. Keep applying for all of the federal grants and low-cost financial options available for your minority business. A good starting point is on the business.gov website at: http://www.business.gov/financing

References

• U.S. Dept. of Commerce: Minority Business Development
• U.S. Small Business Association: Write a Business Plan
• Business.gov: Business Incorporation
• Internal Revenue Service: EIN
• Business.gov: State taxes

Resources

• USDA: Rural Development
• U.S. Small Business Assoc: Economic Recovery
• U.S. Small Business: Startup Loans