A minority-owned business is a business that is 51% owned, controlled, or operated by an American citizen who is socially or economically underprivileged. The individual can be an Asian, Hispanic, African, or Native American. Women-owned and veteran-owned businesses can also be certified as minority-owned.
A minority-owned business enjoys better opportunities and grants from the government, private sector, and lending institutions. Looking to start one? We have compiled five tips to help you start a minority-owned business. Here’s how to go about it.
Come Up with a Great Business Idea
Choosing a business idea is the first step in your entrepreneurship journey. Depending on the sector you want to venture into, the process can be fast or slow. Take your time to research the needs of customers, the gap you want to fill, your skills and experience, and the resources you have at your disposal. You also need to test the viability of your business idea and the market outlook to avoid spending money on a business that won’t produce the desired returns.
Develop a Business Plan
Once you have a business idea, it’s time to actualize it by creating a business plan. A business plan helps you set and achieve short-term and long-term goals. In addition, a good business plan helps you attract investors.
A business plan outlines your unique value proposition, the company profile, market research, leadership, products or services you will offer, and marketing strategies. The plan should also highlight your financial projections and how you will secure funding.
Register the Business
Registering a business gives it an identity and shows its legitimacy to customers. When registering a company, you need to have a business name. Avoid ambiguous names or those that could limit the growth of your business in the future.
The next step is choosing your business’ location because it will influence the registration process–different states have different business registration requirements. Lastly, select your business’ legal structure and incorporate the company. You can choose to start a limited liability company, a sole proprietorship, or a corporation.
Obtain the Certification
The above three steps are enough to start a business in the US. However, if you want your minority-owned business to be recognized and enjoy privileges, you need certifications from various entities. These include.
● National Minority Supplier Development Council (NMSDC): this corporate membership organization will certify your business and integrate it into the corporate and public-sector supply chain.
● Small Business Administration (SBA): The SBA’s 8(a) Business Development Program certifies your business as minority-owned to give you an upper hand in securing government contracts.
● Department of Transportation (DoT): The DoT certified minority-owned businesses under its Disadvantaged Business Enterprises (DBE) program. After certification, your startup gets a better chance of securing a contract with the DoT or its associated entities.
After having your business certified as minority-owned, it’s time to launch it. Start looking for business financing sources. You can approach angel investors, venture capitalists, or apply for small business loans. You can also use your savings, borrow funds from your family, or get a short-term loan.
Short-term loans are an excellent source of startup capital because you secure a significant amount of money payable after a while. They include car title loans and microloans. Short-term
loans are more affordable than long-term ones. Choose affordable funding so you can comfortably pay back the money.