Business is the activity of making one's living or making money by producing or
buying and selling products (such as goods and services). Simply put, it is
"any activity or enterprise entered into for profit. It does not mean it
is a company, a corporation, partnership, or have any such formal organization,
but it can range from a street peddler to General Motors."
Having
a business name does not separate the
business entity from the owner, which means that the owner of the business is
responsible and liable for debts incurred by the business. If the business
acquires debts, the creditors can go after the owner's personal possessions. A
business structure does not allow for corporate tax rates. The proprietor is
personally taxed on all income from the business.
The
term is also often used colloquially (but not by lawyers or by public
officials) to refer to a company. A company, on the other hand, is a separate legal
entity and provides for limited
liability, as well as corporate tax rates.
A company structure is more complicated and expensive to set up, but offers
more protection and benefits for the owner.
How to start Business
Here are 10
steps that are required to start a business successfully. Take one step at a
time, and you'll be on your way to successful small business ownership.
Step 1: Do Your
Research
Most likely you
have already identified a business idea,
so now it's time to balance it with a little reality. Does your idea have the
potential to succeed? You will need to run your business idea through a validation
process before you go any further.
In order for a
small business to be successful, it must solve a problem, fulfill a need or
offer something the market wants.
There are a
number of ways you can identify this need, including research, focus groups,
and even trial and error. As you explore the market, some of the questions you
should answer include:
- Is there a need for your
anticipated products/services?
- Who needs it?
- Are there other companies
offering similar products/services now?
- What is the competition like?
- How will your business fit into
the market?
Don't forget
to ask yourself
some questions, too, about starting a business before you take the
plunge.
Step 2: Make a Plan
You need a plan
in order to make your business idea a reality. A business plan is
a blueprint that will guide your business from the start-up phase through
establishment and eventually business growth, and it is a must-have for all new
businesses.
The good news
is that there are different types of business plans for different types of
businesses.
If you intend
to seek financial support from an investor or financial institution, a traditional
business plan is a must. This type of business plan is
generally long and thorough and has a common set of sections that investors and
banks look for when they are validating your idea.
If you don't
anticipate seeking financial support, a simple
one-page business plan can give you clarity about what you hope
to achieve and how you plan to do it. In fact, you can even create a working
business plan on the back of a napkin, and improve it over time. Some kind of
plan in writing is always better than nothing.
Step 3: Plan Your
Finances
Starting a
small business doesn't have to require a lot of money, but it will involve some
initial investment as well as the ability to cover ongoing expenses before you
are turning a profit. Put together a spreadsheet that estimates the one-time
startup costs for your business (licenses and permits, equipment, legal fees,
insurance, branding, market research, inventory, trademarking, grand opening
events, property leases, etc.), as well as what you anticipate you will need to
keep your business running for at least 12 months (rent, utilities, marketing
and advertising, production, supplies, travel expenses, employee salaries, your
own salary, etc.).
Those numbers
combined is the initial investment you will need.
Now that you
have a rough number in mind, there are a number of ways you can fund your
small business, including:
- Financing
- Small
business loans
- Small
business grants
- Angel
investors
- Crowdfunding
You can also
attempt to get your business off the ground by bootstrapping,
using as little capital as necessary to start your business. You may find that
a combination of the paths listed above work best. The goal here, though, is to
work through the options and create a plan for setting up the capital you need
to get your business off the ground.
Step 4: Choose a
Business Structure
Your small
business can be a sole proprietorship, a partnership, a limited liability
company (LLC) or a corporation. The business
entity you choose will impact many factors from your business
name, to your liability, to how you file your taxes.
You may choose
an initial business structure, and then reevaluate and change your structure as
your business grows and needs change.
Depending on
the complexity of your business, it may be worth investing in a consultation
from an attorney or CPA to ensure you are making the right structure choice for
your business.
Step 5: Pick and
Register Your Business Name
Your business
name plays a role in almost every aspect of your business, so you want it to be
a good one. Make sure you think through all of the potential implications as
you explore your options and choose your
business name.
Once you have
chosen a name for your business, you will need to check if it's trademarked or
currently in use. Then, you will need to register it. A sole proprietor must
register their business name with either their state or county clerk.
Corporations, LLCs, or limited partnerships typically register their business
name when the formation paperwork is filed.
Don't forget
to register your
domain name once you have selected your business name. Try
these options if your ideal domain
name is taken.
Step 6: Get Licenses
and Permits
Paperwork is a
part of the process when you start your own business.
There are a
variety of small
business licenses and permits that may apply to your situation,
depending on the type of business you are starting and where you are located.
You will need to research what licenses and permits apply to your business during
the start-up process.
Step 7: Choose Your
Accounting System
Small
businesses run most effectively when there are systems in place. One of the
most important systems for a small business is an accounting system.
Your accounting
system is necessary in order to create and manage your budget, set your rates
and prices, conduct business with others, and file your taxes. You can set up
your accounting system yourself, or hire an
accountant to take away some of the guesswork. If you decide to
get started on your own, make sure you consider these questions that are vital
when choosing accounting
software.
Step 8: Set Up Your
Business Location
Setting up your
place of business is important for the operation of your business, whether you
will have a home office,
a shared or private office space, or a retail
location.
You will need
to think about your location, equipment, and overall setup, and make sure your
business location works for the type of business you will be doing. You will
also need to consider if it makes more sense to buy or lease
your commercial space.
Step 9: Get Your Team
Ready
If you will
be hiring employees, now is the time to start the process. Make
sure you take the time to outline the positions you need to fill, and the job
responsibilities that are part of each position. The Small Business
Administration has an excellent guide to hiring your first employee that is useful for
new small business owners.
If you are not
hiring employees, but instead outsourcing work to independent contractors, now
is the time to work with an attorney to get your independent
contractor agreement in place and start your search.
Lastly, if you
are a true solopreneur hitting the small business road alone, you may not need
employees or contractors, but you will still need your own support team. This
team can be comprised of a mentor, small business coach, or even your family,
and serves as your go-to resource for advice, motivation and reassurance when
the road gets bumpy.
Step 10: Promote Your
Small Business
Once your
business is up and running, you need to start attracting clients and customers.
You'll want to start with the basics by writing a unique selling
proposition (USP) and creating a marketing
plan. Then, explore as many small
business marketing ideas as possible so you can decide how to
promote your business most effectively.
Once you have
completed these business start-up activities, you will have all of the most
important bases covered. Keep in mind that success doesn't happen overnight.
But use the plan you've created to consistently work on your business, and you
will increase your chances of success.
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