The Elements of Commerce

When you get down to the actual elements of commerce and commercial transactions, things get slightly more complicated because you have to deal with the details. However, these details boil down to a finite number of steps. The following list highlights all of the elements of a typical commerce activity. In this case, the activity is the sale of some product by a retailer to a customer:

• If you would like to sell something to a customer, at the very core of the matter is the something itself. You must have a product or service to offer. The product can be anything from ball bearings to back rubs. You may get your products directly from a producer, or you might go through a distributor to get them, or you may produce the products yourself.
• You must also have a place from which to sell your products. Place can sometimes be very ephemeral -- for example a phone number might be the place. If you are a customer in need of a massage, if you call "Judy's Massages, Inc." on the telephone to order a massage, and if Judy shows up at your office to give you a massage, then the phone number is the place where you purchased this service. For most physical products we tend to think of the place as a store or shop of some sort. But if you think about it a bit more you realize that the place for any traditional mail order company is the combination of an ad or a catalog and a phone number or a mail box.
• You need to figure out a way to get people to come to your place. This process is known as marketing. If no one knows that your place exists, you will never sell anything. Locating your place in a busy shopping center is one way to get traffic. Sending out a mail order catalog is another. There is also advertising, word of mouth and even the guy in a chicken suit who stands by the road waving at passing cars.
• You need a way to accept orders. At Wal-Mart this is handled by the check out line. In a mail order company the orders come in by mail or phone and are processed by employees of the company.
• You also need a way to accept money. If you are at Wal-Mart you know that you can use cash, check or credit cards to pay for products. Business-to-business transactions often use purchase orders. Many businesses do not require you to pay for the product or service at the time of delivery, and some products and services are delivered continuously (water, power, phone and pagers are like this). That gets into the whole area of billing and collections.
• You need a way to deliver the product or service, often known as fulfillment. At a store like Wal-mart fulfillment is automatic. The customer picks up the item of desire, pays for it and walks out the door. In mail-order businesses the item is packaged and mailed. Large items must be loaded onto trucks or trains and shipped.
• Sometimes customers do not like what they buy, so you need a way to accept returns. You may or may not charge certain fees for returns, and you may or may not require the customer to get authorization before returning anything.
• Sometimes a product breaks, so you need a way to honor warranty claims. For retailers this part of the transaction is often handled by the producer.
• Many products today are so complicated that they require customer service and technical supportdepartments to help customers use them. Computers are a good example of this sort of product. On-going products like cell phone service may also require on-going customer service because customers want to change the service they receive over time. Traditional items (for example, a head of lettuce), generally require less support that modern electronic items.

You find all of these elements in any traditional mail order company. Whether the company is selling books, consumer products, information in the form of reports and papers, or services, all of these elements come into play.

In an e-commerce sales channel you find all of these elements as well, but they change slightly. You must have the following elements to conduct e-commerce:

• A product
• A place to sell the product - in e-commerce, a Web site displays the products in some way and acts as the place
• A way to get people to come to your Web site
• A way to accept orders - normally an on-line form of some sort
• A way to accept money - normally a merchant account handling credit card payments. This piece requires a secure ordering page and a connection to a bank. Or you may use more traditional billing techniques either online or through the mail.
• A fulfillment facility to ship products to customers (often outsource-able). In the case of software and information, however, fulfillment can occur over the Web through a file download mechanism.
• A way to accept returns
• A way to handle warranty claims if necessary
• A way to provide customer service (often through email, on-line forms, on-line knowledge bases and FAQs, et cetera)

In addition, there is often a strong desire to integrate other business functions or practices into the e-commerce offering. An extremely simple example -- you might want to be able to show the customer the exact status of an order.

How E-commerce Works

Unless you have been living under a rock for the last few years, you have probably heard about e-commerce. And you have heard about it from several different angles. You may have:

• heard about all of the companies that offer e-commerce because you have been bombarded by their TV and radio ads
• read all of the news stories about the shift to e-commerce and the hype that has developed around e-commerce companies
• seen the huge valuations that Web companies get in the stock market, even when they don't make a profit
• purchased something on the Web, so you have direct personal experience with e-commerce

Still, you may feel like you don't understand e-commerce at all. What is all the hype about? Why the huge valuations? And most importantly, is there a way for you to participate? If you have an e-commerce idea, how might you get started implementing it? If you have had questions like these, then this article will help out by exposing you to the entire e-commerce space.

Commerce

Before we get into a complete discussion of e-commerce, it is helpful to have a good mental image of plain old commerce first. If you understand commerce, then e-commerce is an easy extension.

Merriam-Webster's Collegiate Dictionary gives a few definitions of commerce:

com.merce n [MF, fr. L commercium, fr. com- + merc-, merx merchandise] (1537) 1: social intercourse: interchange of ideas, opinions, or sentiments 2: the exchange or buying and selling of commodities on a large scale involving transportation from place to place 3: sexual intercourse

We tend to be interested in the second definition, but that third one is interesting and unexpected -- maybe that's what all of the hype is about?

So commerce is, quite simply, the exchange of goods and services, usually for money. We see commerce all around us in in millions of different forms. When you buy something at a grocery store you are participating in commerce. In the same way, if you cart half of your possessions onto your front lawn for a yard sale, you are participating in commerce from a different angle. If you go to work each day for a company that produces a product, that is yet another link in the chain of commerce. When you think about commerce in these different ways, you instinctively recognize several different roles:

• Buyers - these are people with money who want to purchase a good or service.
• Sellers - these are the people who offer goods and services to buyers. Sellers are generally recognized in two different forms: retailers who sell directly to consumers and wholesalers or distributors who sell to retailers and other businesses.
• Producers - these are the people who create the products and services that sellers offer to buyers. A producer is always, by necessity, a seller as well. The producer sells the products produced to wholesalers, retailers or directly to the consumer.

You can see that at this high level, commerce is a fairly simple concept. Whether it is something as simple as a person making and selling popcorn on a street corner or as complex as a contractor delivering a space shuttle to NASA, all of commerce at its simplest level relies on buyers, sellers and producers.

What do I need to know to start up my Online Business?

Starting up a business online is similar to starting up any traditional business.

You'll need to know some basic things in order to get started – what you’ll be selling, as well as your market. If you intend to do business online, it’s also a good idea for you to get familiar with some IT and web skills. Read on to find out more about starting a business.

Know your product or service

What type of business will you start? What will you produce or sell?

This knowledge is essential to any business, online or otherwise. Without a good idea of what product or service you will offer, it can be very hard to move forward with planning and marketing your business.

Your product or service will influence your business structure, too. Depending on what you market or sell, will you only do business online, or will you also have an office space or store to run as well? This can have an impact on your business in terms of staffing, storage space, and rent outlays.

Know your customers

Knowing some information about who you will be selling to can help you define your business. Do some research into your potential (or existing) customers or clients, and their habits - this means checking out who will be buying or using your goods and services, and how they normally do this.

Understanding your customer base, and how to direct them to your online business, is important. Investigate what kind of customers usually buy online, what they are buying, and how they find their goods and services.

Know your plan

Why write a business or marketing plan?

It may be tempting to get on the internet right away and start experimenting with setting up your business. However, a little planning can go a long way in ensuring your online business is a success. Creating business and marketing plans for your online business can help you identify goals and develop strategies for achieving them.

If you’re an established business moving online, you might already have a business or marketing plan – but it could be a good idea to review them to make sure they’re comprehensive.

How do I create a business or marketing plan?

Your basic business plan should be drafted before you go into business, but, once started, you should always be thinking about what you can add to it. It should contain some core information, such as why you want to go into business, and what your goals for the business are. It doesn’t need to be long or complicated – it should be clear and to-the-point.

Your marketing plan’s aim is to help you reach your target market and boost your customer base and bottom line. Drafting your plans can involve thinking about:

• what your business name will be
• how you are going to manage your business
• looking after finances
• developing products and services that meet the needs of your market.

7 Steps to Starting a Profitable Online Business

Q: I am looking to start an online business. This stuff is all new to me and I am not even sure where to start, but my first question is this: Where do I find products to sell? I don't know any distributors. Who do I call? I don't want to look like a dummy. Thanks for any help you can give me. — Dory

A: Consider these startling statistics:

According to Forrester Research retail sales rose 2.5% in 2009. While that is surprising enough, consider this: Online sales rose 11%.

If you are looking to start a business, even a part-time business, you would be hard-pressed, in this economy, to find a sector growing at an 11% clip. Forrester forecasts that e-sales in the U.S. will go from about $173 billion this year to about $250 billion in 2014. That's booming China kinda growth my friends.

So the answer is yes, starting an online business is a smart move.

Here are the pros and cons:

Pros: The cost of entry is low; you have access to global markets; it is an automated, 24/7 profit center; you can look every bit as big as the big boys; the overhead is low (more on that in a minute); and the profit potential is large.

Cons: It takes work to get people to learn of the site; there is no personal contact as with a retail store; creating credibility (and thus customers) can be a challenge; it takes time to get things really cooking; and customers cannot physically see or feel your products.

The pros definitely outweigh the cons.

Here are 7 Steps to Starting an E-Commerce Business:

1. Create a great site: This is No. 1 for a reason. You have to have a great-looking, intuitive, easy-to-navigate site if you are going to be taken seriously by potential e-customers. Your site must look professional. Pictures and content must load quickly. There can be no dead links. Have a robust "About" page.

The good news is that it is easy and affordable to create a great site – look for online hosts that have pre-made templates you can customize.

Web surfers who come to your site will judge it in about three seconds. That's all you've got. You better impress them the moment they hit it.

2. Pick your products: I have a buddy who owns an antiques store. His business success motto is: "It's all in the buying." He knows if he can find the right product at the right price, he will make a profit.

The same is true for you.

Where do you find great, inexpensive products? It depends on what you plan to sell. It may be a matter of spending weekends at yard sales and on Craigslist picking up some good, cheap stuff. If you want a more formal arrangement, there are wholesalers and distributors for almost any product you need.

3. Have an online catalog or store: When you shop online, there is usually a catalog of products to choose from: Tiny pictures with product descriptions. That is what you have to do. Happily, you do not have to create this from scratch. Your e-commerce site host (see below) will offer a store creation tool, with point-and-click ways to add products, pictures, and descriptions.

4. Have the ability to process payments: This issue is two-fold: The financial ability to process credit card payments comes when you have a merchant account. Search for that term online. The physical ability to process such payments is, again, something your host will offer. Search for "online merchant services" or "E-commerce hosting."

5. Market and promote your site: All these steps are important, but this one may be a little more important. People have to find your site. No matter how nice it looks or how cool your products, if no one knows about the site, it is a waste of time, money, and effort.

Master search engine optimization (SEO) techniques. Engage in viral marketing. Tweet. Have a Facebookfan page. Try pay-per-click. Advertise.

6. Fulfillment: You have to deliver what you sell, on budget and on time. Don't forget to add the cost of shipping to your prices.

7. After-sales support: How will you handle returns? What should you upsell? Support is the difference between a one-time sale and creating a customer for life.

The importance of E-Commerce in Today’s Economy

E-commerce has become an essential part of our nations economic growth in the past years.  With the emergence and fall of numerous dot.com companies, the government can no longer consider e-commerce a technological phase.  In June 1999, the Center for Research in Electronic Commerce at University of Texas, Austin was the first to study, and recognize e-commerce as a separate entity (the internet economy) in the nation’s economy. The study determined that the Internet economy generated approximately $301 billion in revenues in 1998 and created over 1.2 million jobs.  This is particularly note worthy since dot.com’s make up only 9.6 percent of all online businesses. (According to the report “Measuring the Internet Economy”.)  Experts continue on to state that with the slowing of the “non-technical” economy, the “internet economy” will slow as well; however, not at the rate the “non-technical” economy will.  Now comes the question as to why?  Unlike the “non-technical” economy that mainly relies on domestic consumers, the “internet economy” has a larger number of elements involved, such as business-to-business transactions, business to consumer, and the international markets.  Needless to say, without the “internet economy” the Untied States would not have enjoyed the economic boom that it has for ten years.

Latest Trends & Consumer reactions

The latest trends of e-commerce include electronic bill pay, digital signatures, online banking just to name a few.  Electronic bill pay is essentially paying your household bills over the internet.  In most cases, it works like this.  The consumer subscribes to an EBP provider, deposits funds (or you allow them access to your bank account) with them and as the consumer receives their bills in the mail, they in turn email them to their EBP provider with the date that they want the invoices paid.  What can go wrong?  Plenty.  Consumers have registered complaints with the Federal Trade Commission stating that the EBP providers were not paying their bills in time.  Therefore, consumers were assessed late charges and damaging credit ratings.  This service has improved since it was first offered a few years ago.  The security has increased and the government now keeps a closer eye on this type of business.

Digital signatures are the latest from the e-commerce world.  This allows consumers to sign legal documents across the country without being physically there.  This latest trend has really taken off in the housing market. Allowing prospective buyers to sign closing contracts with out taking time off is wonderful.  Consumers love this idea.  These contracts are legally binding and hold the same weight in court as if you were there in person. The major draw back to this type of service is identity theft.  This has become an increasing problem through out the year.  Consumers and businesses alike have yet to come up with a viable option to correct this problem. The FTC suggestion was to only do business with the businesses that consumers are familiar.  However, this does not help emerging companies trying to enter the marketplace.

Online banking is the banking industry to compete with on another and with the electronic bill pay providers.  Online banking allows consumers to check their balances, pay bills, purchase certificate of deposits and apply for loans all from the consumers’ home.  This is a wonderful service that the banking industry has offered.  The draw back for consumers is with servers crashing and hackers downloading your banking information. Whereas, the banking industry has taken extreme measures to ensure the consumers privacy no system is hacker proof.  Consumers can protect themselves by not downloading their banking information at the same time (they need to do it at varying times) according to banking experts. 

From the advantages and the disadvantages, the economic weight to the latest trend e-commerce is no longer an emerging force.  E-Commerce is a force that has a strong presence not only in the Untied States but internationally as well.

New Age Business: Ecommerce Entrepreneurship

The news that the Internet has enveloped and engaged the imagination of children and adults alike is old; but small businesses represent a new age in ecommerce entrepreneurship. The idea of selling products and services online was part of the natural progression of the Internet’s evolution. Today, ecommerce solutions make online transactions a normal part of the business cycle. Ecommerce is the strategic placement of business assets before a specified audience to generate income. The ecommerce process makes online business possible through software designed for the Internet, but with most things, the pros and cons of ecommerce are worth reviewing.

The business advantages of ecommerce include access to a wider audience and a reduction in overhead. Small businesses can market their products and services globally and reduce the expense of marketing and advertising to wider markets. The downside of ecommerce includes security concerns and the prevalence of scams. Some consumers are skeptical of sharing personal financial information, which can lessen a business’s market reach. Ultimately, starting an online business offers an exciting venture and executing the appropriate steps can make or break a company’s bottom line.

Steps for Starting an Entrepreneurship

Following a rough guideline for starting an entrepreneurship can certainly lessen any headaches down the road. The most important steps for starting an ecommerce business closely mirror the steps entrepreneurs take when opening a brick-and-mortar company. Competitor analysis, business planning, marketing strategies and the identification of funding sources each play a role in success, but online endeavors require an extra layer of technical work: the integration of a website that serves as the only vehicle for sales. Consequently, sharpening one’s technical skills or working with Web professionals reaps the best results.

Developing a Strong Business Plan

Like any individual trying to reach a destination, a business requires a roadmap that provides structure, direction and a plan to reach financial objectives. The business plan delivers the foundation required to build a strategy to reach a target audience and translate customer contacts into sales. Similar to the lone, lost driver who refuses to request directions, a business will most likely miss an important turn, falter and fail if a strategic plan does not exist. The elements of a business plan define the business’s mission and goals, market, financial strategy and competition. The ecommerce business should include strategies for launching the site and continually engaging the audience through content strategies or other means.

Checking the Competition

The potential competition a business will face plays a significant role in marketing strategies – it can also break the business idea completely in two. Selling a product or service in an already saturated market represents a powerful challenge and may ultimately lead to failure. For example, opening an online bookstore that sells the same books offered by “big-box stores” could potentially end in disaster; competing with a number of established bookstores would require substantial financial resources, brand development and advertising proficiency. Performing a competitor analysis can reveal a wealth of important information. Most importantly, tracking and analyzing the performance of competitor websites adds an extra layer of value to the competitor analysis.

Creating a Financial Plan

The financial resources available to get the business off the ground determine how quickly the business grows. The financial plan includes information about business assets and equipment, industry and economic overviews, funding sources and income projections. In addition, the financial section includes important financial documents, such as a balance sheet and break-even analysis. The financial plan should also include figures for the design, development and maintenance of the business website and ecommerce software.

Gaining Market Support

The marketing process requires diligence, patience and analysis. Gaining market support requires persistence in identifying the appropriate audience and selecting marketing strategies that work. Businesses must have a target market to offer products or services – and a loyal market will support a business’s goals through a number of online activities. Today’s businesses use social networking and media to garner support from a target audience. Social sharing can result in exponential exposure for a business and drive traffic to an ecommerce website.

Developing a Marketing Strategy

The business cannot grow if no one knows it exists. This is where marketing strategy makes an appearance. Developing a marketing strategy involves identifying the target market, determining what they want and fashioning the business to meet the market’s needs. Some common marketing methods include business and product branding or determining a market dominance strategy. In market dominance, the business might identify a niche, or very small market to offer products and services. This strategy can limit the competition and build a sense of trust in the customer base. Developing a strategy relies on a number of factors, including products or services offered, product appeal to a specific age group, or product cost.

Recommended Ecommerce Businesses:

Promoting Ebay Products

E Books- The Silent Sales Machines

Learn to Sell on Amazon

Build a Niche Store

How to Get More Out of the Time You Already Spend Networking

Many people rely on referrals from others as a primary source of business. However, not everyone who relies on referrals is successful. Why is this? I've studied these folks -- and those who are not successful seem to have "surface level" referral relationships.

They know just enough about their referral sources' businesses to get by. They don't actually know a lot about the people themselves. They tend to say vague things like: "He is really nice," "You'll like her; she's a good person," or "Well, if you just meet with him, I am sure you'll like him." If pressed further, they probably couldn't tell you much more about those people -- and they almost certainly have not built enough social capital with them to count on them when they really need something from the relationship (and vice versa).

Building the deep referral relationship -- the kind of relationship that leads to referrals -- is almost completely dependent upon the social capital you have built with someone. Social capital is like financial capital. To amass financial capital, you have to invest and grow your assets. You have to have money in the bank before you can make a withdrawal.

Relationships are very much the same, referral relationships in particular.

Here's a great example of someone who amassed quite a bit of social capital. . . from me!

Alex was what I would call a casual business associate, but from early on after our introduction, every time I spoke to him, he invested in the relationship. He gave me ideas, gave me his time, he even did some work on a website for me. He invested. . . and invested. . . and invested.

I kept asking him how I could help him -- to return the favor and reciprocate for all the kindnesses and great help he'd been to me. His answer every time was, "I don't need anything. I'm happy to do this."

This went on for almost a year. Every two to three months, Alex would show up on my radar and do something for me.

Then, one time, he phoned me and said, "I have a favor to ask. . ." and I stopped him right there before he could say anything else.

"Yes!" I said.

"But you didn't even hear what the favor is!" he said, laughing.

I replied that I didn't have to hear what the favor was. I told him I knew him well enough to know he was not going to ask me something impossible, and that he had invested so much into the relationship that I would do anything in my power to help.

When he told me what he needed, it was easy, a small promotion by me for one of his services. It was such a big thing for Alex, and something easy for me. I was happy to do it!

In my career, a huge number of folks come to me and ask me to promote something for them. The thing is, the majority of those who contact me have never actually met me or had a previous conversation with me. They've never invested in the relationship, yet they want a withdrawal from it!

Before you ask for a withdrawal, make sure to make an investment, and build a deep referral relationship. If you can answer yes to most or all of the following points about a person and her business, you would have a pretty deep referral relationship:

• You trust them to do a great job and take great care of your referred prospects.
• You have known each other for at least one year.
• You understand at least three major products or services within their business and feel comfortable explaining them to others.
• You know the names of their family members and have met them personally.
• You have both asked each other how you can help grow your respective businesses.
• You know at least five of their goals for the year, including personal and business goals.
• You could call them at 9 o'clock at night if you really needed something.
• You would not feel awkward asking them for help with either a personal or business challenge.
• You enjoy the time you spend together.
• You have regular appointments scheduled, both business and personal.
• You enjoy seeing them achieve further success.
• They are "top of mind" regularly.
• You have open, honest talks about how you can help each other further.

You may be shocked at the level of personal knowledge required for a deep referral relationship, and you may want to argue that referrals should be all about business. I completely disagree. Referrals are personal. When you give a referral, you give a little of your reputation away. You need to know the person that is going to affect your reputation. It takes a lot to develop this type of relationship, but those who do will certainly succeed at building a business from referrals.

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3 Rules You Must Follow If You Want Your Company to Be Exceptional

If you want your company to be the best, there are three rules:

1. Be better.

2. Don't be cheap.

And 3. There are no other rules.

That's according to a recently released book co-authored by Deloitte director Michael Raynor and strategist Mumtaz Ahmed, The Three Rules: How Exceptional Companies Think (Portfolio/Penguin, 2013). Raynor, who earned his doctorate from the Harvard Business School, and Ahmed, along with a team of researchers, analyzed a database of 25,000 companies across hundreds of industries spanning 45 years to identify those companies that were statistically "exceptional."

Defining "exceptional" was a project in and of itself, but it began with one question: "How much of a difference is enough to make a difference?" What Raynor's team ended up doing was generating something of an actuarial table for business success. "If somebody says I am 82 years old. Is that person old or not? Well, if they live in the Northern Islands of Japan, that is early middle age because those people live forever. If they are from Tanzania, they are probably the oldest person in the country. What counts as old is a consequence of your context."

Raynor and his team also developed a mathematical algorithm that corrected for age of business, date, amount of debt, size and industry, among other variables. The goal of the analysis was to strip out the effects of luck and variation to come to an answer to the question: "What do managers do to make companies great?" says Raynor, who is based in Mississauga in Ontario, Canada.

After identifying 344 top performers, Raynor and his team, who officially started working on the project in 2007, looked for common traits to define how those exceptional businesses acted.

The team largely came up empty.

However, when Raynor and his team started to look at how those exceptional companies think, the principles started to become clear.

They are as follows:

1. Better before cheaper. Differentiate yourself from your competition based on quality, not price. While you may achieve some level of success undercutting your competition with cheaper prices, you will almost never become exceptional on a price-based model.

2. Revenue before cost. It will be more valuable to your company to drive your revenues higher than it will be to drive your costs lower. Cutting costs may result in some degree of success, but, most likely, your company won't sustain an exceptional level of greatness.

3. There are no other rules. Technology, talent, markets, people -- it can all change. But don't mess with Rule 1 or Rule 2. 

Exceptional companies include long-haul trucking company Heartland Express and teen clothing retailer Abercrombie & Fitch. The companies are all publicly traded companies, larger than the sorts of companies that many young entrepreneurs may have on their hands. But Raynor says the three rules still apply to younger, smaller companies, if with a modicum of compassion in the application.

Consider the rules "a compass, rather than a map," says Raynor. "You are lost in the forest and somebody says civilization is North. If I hand you a compass, I have done you a favor. You still have to be creative. You can't just walk straight north, you will bump into a tree, walk off a cliff, do whatever it is you do. And so sometimes you have got to go East, West, double back South even and really pay attention to cost for a while, but you want to make sure that over time, you are pushing your company in one direction versus another."

Very often, new startups are especially cash strapped. And Raynor recognizes that. But the rules of putting quality and revenue first still apply on a comparative level.

"If you want to have higher profits than your competitors, the way to do that systematically is not to have lower costs than your competitors," he says.

Raynor cautions that this doesn't mean businesses should put "gold-plated Aeron chairs and Godiva chocolates in all the conference rooms," but that businesses should figure out where they are better than their competition and exploit that gap with higher prices or higher volume, not lower costs.

"It is all about your relative position. If you want to be relatively more profitable, you want to have relatively higher volume and/or relatively higher price" than your "relevant" competition, he says.

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10 Steps to Starting a Business

Starting a business involves planning, making key financial decisions and completing a series of legal activities. These 10 easy steps can help you plan, prepare and manage your business. Click on the links to learn more.

Step 1: Write a Business Plan

Use these tools and resources to create a business plan. This written guide will help you map out how you will start and run your business successfully.

Step 2: Get Business Assistance and Training

Take advantage of free training and counseling services, from preparing a business plan and securing financing, to expanding or relocating a business.

Step 3: Choose a Business Location

Get advice on how to select a customer-friendly location and comply with zoning laws.

Step 4: Finance Your Business

Find government backed loans, venture capital and research grants to help you get started.

Step 5: Determine the Legal Structure of Your Business

Decide which form of ownership is best for you: sole proprietorship, partnership, Limited Liability Company (LLC), corporation, S corporation, nonprofit or cooperative.

Step 6: Register a Business Name ("Doing Business As")

Register your business name with your state government.

Step 7: Get a Tax Identification Number

Learn which tax identification number you'll need to obtain from the IRS and your state revenue agency.

Step 8: Register for State and Local Taxes

Register with your state to obtain a tax identification number, workers' compensation, unemployment and disability insurance.

Step 9: Obtain Business Licenses and Permits

Get a list of federal, state and local licenses and permits required for your business.

Step 10: Understand Employer Responsibilities

Learn the legal steps you need to take to hire employees.