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Start a blockchain services business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your blockchain services business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a blockchain services business?
Theoretically, you only need the cost of computers and internet to develop your initial prototype if starting on your own. You’ll need liability insurance as well, which will vary in costs based on your chosen limits and the services you offer. Finally, you should likely invest in advisors who can give you the right perspective on how the blockchain is changing, both in the legal space and public sphere.
What are the ongoing expenses for a blockchain services business?
Labor is generally going to be the biggest expense for blockchains because the business needs skilled people to design and sell the platform. You’ll also need to account for electricity, insurance costs, and the direct cost of the space you’re using.
Who is the target market?
Practically any industry can use the blockchain, even though it’s most commonly associated with cryptocurrency transactions. Essentially, the blockchain makes it nearly impossible to hack into a company's information, which is increasingly necessary as virtual fraud continues to rise. But more than this, the blockchain also provides a way to communicate at a level we've never seen before through the use of smart contracts. These special if/then statements are so versatile that it can be applied to industry projects in ways we can't yet imagine.
For example, the construction industry can use the blockchain to make it easier to work with multiple vendors. When all action can be seen in the ledger it virtually eliminates confusion about who’s responsible for what. The real estate industry is already using it to coordinate sales and even make investment easier. The blockchain can work with extremely small numbers, meaning a person could buy 2 mm of a property if they so chose!
How does a blockchain services business make money?
Blockchains will typically either set up a SaaS model or charge a one-time project fee. They may also charge to verify transactions across their network. One of the biggest advantages of blockchains is that they can successfully handle micropayments. These transaction fees are typically done via cryptocurrency such as Bitcoin or Ethereum.
How much can you charge customers?
The blockchain is new enough that owners are still puzzling out how to charge for their services. For example, transaction charges have ranged from less than $1 to over $50! If you have direct competitors, look to see what they’re charging to figure out your own pricing. If you’re doing something relatively new, consider calculating how much a blockchain can save a client over time in terms of labor and direct expenses, and then price your blockchain based on these numbers.
How much profit can a blockchain services business make?
Blockchains can be extremely profitable, so long as they can scale their technology to meet the public demand. If you charge $50,000 per project at a profit margin of 25%, you’d need to sell 8 projects to make $100,000 in profits a year.
How can you make your business more profitable?
Consider branching out to new industries to increase business. You can also potentially offer more programming services, such as back-end software to allow businesses to accept cryptocurrency.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your blockchain services business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, and it's easy enough to form by yourself, or check out the top business formation services.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: You can get $200 when you open a Chase business checking account with qualifying activities. Learn more.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a blockchain services business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
A blockchain services business is generally run out of a office. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a blockchain services business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your blockchain services business will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a blockchain services business
Concentrate on the innate benefits that a blockchain can offer to businesses of every variety. If you’re selling your blockchain platform to retail businesses, highlight how the blockchain cuts down on fraud. The best way to get started may be in your very own neighborhood, though you may also want to network on a global scale at the many blockchain conferences held throughout the world. Internet advertising through paid Google ads can also make it easier for potential clients to find your specific services.
How to keep customers coming back
Customers need a platform that consistently works and functions without hiccups. Clients also want simple program so they don’t have to spend months getting everyone up to speed. Offer excellent support to clients should they have questions or need emergency assistance.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Blockchain Services Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
People who understand just how revolutionary the blockchain can be. This invention is being compared to the invention of the internet — and for good reason. The blockchain provides a safe, decentralized way to cut down on fraud, verify huge amounts of data, and speed up communication between multiple parties.
What happens during a typical day at a blockchain services business?
The majority of the day will likely be spent programming and perfecting the blockchain. Owners will also spend time marketing, networking, and developing new ways to serve their customer base.
What are some skills and experiences that will help you build a successful blockchain services business?
Ideally, owners will either be programmers or business-savvy individuals who can manage programmers. It can also help to have some knowledge of project management. It can also help to have some background in sales. Blockchain businesses have to sell technical services to people who may not be very familiar with the overarching concepts.
What is the growth potential for a blockchain services business?
The blockchain is exploding, and it’s only likely to keep going. No matter how experts feel about cryptocurrency, the underlying technology is only getting more popular. As it becomes more universal, it’s not unlikely that we’ll start to see practically everyone switching over to this revolutionary platform!
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a blockchain services business?
The blockchain is so hot right now that putting the word blockchain into your name can make sales soar. You can use this to your advantage so long as you have a viable product underneath the hype. One of the best things that you can do is identify your market immediately. Starting with just one industry can make it easier for you to narrow down your promotional tactics, but you also run the risk of getting pigeonholed.
You can also try thinking outside the box too. For example, the blockchain gives families a way to record their heritage in a logical and indelible way. Or you can look outside traditional business ventures to government ones. Cities such as Berkeley are now turning to cryptocurrency to fund city projects rather than relying on federal funding.
Consider launching a crowdfunding venture to get your business started. While ICOs are the clear choice for crowdfunding, you may be able to garner interest even if you're not planning to start your own cryptocurrency to go with it. Just remember that your efforts will likely be affected by the state of the current market. When crypto is generally up, you'll have a better time securing funding.
How and when to build a team
It's possible to get started on your own, but you likely be able to do it alone for very long. Look for staff members with the technical prowess to build the platform from the ground-up. You should have marketers, legal help, and administrative employees who can tie up loose ends, find new clients, and keep your financial information organized.