Planning to start a business?
To start a business, you need plans that would require emotional, functional, financial and technical committees. Starting a business may vary from person to person, but it is important to identify all the negatives and positives and learn to address them as well.
Not all of us are born to be an entrepreneur, but you can make yourself to become one. In this article, I will share you the 9 things you should consider before starting up a business.
- Choose your business’s type and tax circumstances
Today, there are many entities of business’s types and always consider to select the one that suits your industry and tax circumstances as well. Here are some major types of businesses that you should know about:
- Service business. This type of business offers intangible products such as professional skills, advice, expertise, and other similar products. For example school, banks, accounting firms, law firms, repair shops, and salons.
- Merchandising business. They are also known as ‘buy and sell’ businesses. The owner buys products at wholesale price and sells the same at retail price. Usually, the profits are made by selling the products at higher prices than their purchase costs. Example of merchandising businesses are distributors, convenience stores, grocery stores, and other reseller businesses.
- Manufacturing business. The manufacturing business is far from merchandising business, as the name implies, they manufacture new products by purchasing other products or material for external businesses. The production process in manufacturing business combines labor, factory overhead, and raw materials. There is a transformation of the products purchase into manufactured goods and then be sold to customers.
It is also important to consider choosing the appropriate forms of businesses organization for tax, liabilities, and legal purposes, here is the list of basic forms of business ownership:
- Sole Proprietorship. This type of businesses owned by only one person, it is least costly easy to set-up among all forms of ownership. If the business cannot pay the creditors, the group can come after the owner’s personal assets. It often adopted by small business entities.
- General Partnership. This form of business ownership is managed by two or more persons that both contribute resources to the business in order to work. The profits of the business are divided based on the number of owners. All partners have an unlimited liability on general partnerships while in limited partnerships, the creditors of the business is not allowed to go after the personal assets of the limited partners.
- Corporation separates the legal personality from its owners. For example, shares of stocks are the representation of the ownership in Stock Corporation. The stockholders have limited liability however, they have limited involvement in the company’s operations. The group that controls the activities of the corporation are the board of directors which is an elected group of the stockholders.
- Write a one-page business plan
One way to grow and start a small business is to keep things simple and focus not only the low monetary costs but your time as well. Some people who want to grow their business and to be an entrepreneur may be tricked from creating the world’s biggest and most robust business plan. Those plans are needed only if you’re seeking investment or for financing. It is advisable for small business owners to start out with by testing their ideas or plans before they move on to the next business strategies or investing lots of time and money.
Here’s how to create your own simple business plan that will serve as an overview of your small business you’re planning to start.
- Determine your vision and mission. Your vision would answer the question: ‘what will the end result of your business?’ Your mission should also answer and explain the question: ‘why does your company exist?’
- Determine your objectives. This will base on your mission and vision. Objectives will define and explain how would you accomplish your mission and vision – what are your goals or activities to achieve it?
- Determine your strategies. This answers the question: ‘how are you going to achieve your objectives?’
- Write and Outline a simple action plan. Make a list of smaller task-oriented actions the will help you achieve your business’s objectives.
3. Assess your different business ideas.
Conducting market research can determine if your business idea is going to work. Surveying potential customers, thorough analysis of your competitors, and researching information on the industry are the things that should include on your market research. Analyse your SWOT analysis or the Strengths, Weaknesses, Opportunities, and Threats to your business idea with an unbiased and open mind. If you the proposed business venture resulted in a high probability of failure then it should be the time to alter your strategies.
- Determine how much budget you will need to start the business.
Some business experts suggest small business owners keep the cost as low as possible, however, it is still needed for you to determine how much budget will you need to get started and how much you’ll be able to spend. If you’re involved in sole Proprietorship, you need to come up with a realistic number and assume whatever your budget should be. Realistic overage amounts mean an additional 20% tacked on for incidentals that will help you plan your burn rate or the amount of cash you’re spending a month over month. This will determine how long you can stay in business before you need to turn a profit.
It is advisable to set up your business in the first 1 – 2 months with profitability. However, reserve a budget to ensure your business growth if things go leaner than expected.
- Surround yourself with the reliable support team and learn from them.
It is a great idea to build your support team composed of trusted and reliable advisers to help you face any start-up issues and give you an assistance as you grow your business. The support team may include accountant, lawyer or an industry organization.
Always listen to what they have to say, be a sponge and absorb the things have to do with your entrepreneurial goals. Start to work out the ideas you lean by writing things down and keeping essential notes from different resource to come up with a detailed plan. The collective insight you get from them will reflect how your possible consumers will react.
- Seek legal support.
Depending on your state or location, your business needs some legal paper works which might cost you a lot of money. Accounts include business entity fees, state incorporations, municipality licensing and so much more. Before starting a business, it’s a good idea to make an early research about the different filing fees around your city, county, or state.
It is also wise to start your business will a sole proprietorship, this could reduce the number of paper works and other up-front expenses as well. However, be aware of the risks of being a sole proprietor such as personal risk. Talk to your attorney or a tax professional to help you decide about your business’s short-term, long-term goals, and weighing the benefits and risks. Once you’ve proven in the first 3 – 6 month of business, you can always file for a business entity as long as you’ve got a feasible, unceasing model.
- Keep the funds separate for your personal accounts.
When starting a business, always remember to take care of your money. Not separating the funds from your personal account can make the tax time and financial matters so confusing. To set up a free business checking account go to your bank or credit union. This will need some paper works, an initial deposit for the financial institutions and a sole proprietor licensing information.
- Create your own business website.
Building a website is one of the most effective online marketing strategies. This will allow you to reach more customers and commercialize the products and services you’re offering.
Getting a website means securing a URL. Some domain sites offer a paid website domain address of your choice. Popular online storefront or shopping cart offers a do-it-yourself website for a low monthly fee.
- Test your sales
Having enough foundation means you can now start testing your sales. Advertise your products or services in an inexpensive but creative ways. If you’re business offers services, reach out to any small business organization or chapters in your location immediately and ask what resources they can provide you with your business needs. On the other hand, if you’re business focuses on products, go to the local swap meets, farmers markets or other community events to test your product’s viability and acquiring suggestion, feedbacks, and insight from the public as well.
Many entrepreneurs have their own business idea, don’t let your concept or plan snowball into something overcomplicated, just keep it simple. You may end up with an expensive end-product that nobody wants to buy. If you’re a new business owner, always start small and try to narrow your focus.
The key to a successful business idea is creating a simple, quality services or products and that should exceed your customer’s expectations and fulfill promises as well.