The
world is changing rapidly. The availability of technology, the way we buy
products and services, the ease of accessing specialized skills anywhere in the
world, the declining cost of launching a new business.
All
of these factors create opportunities for new entrants to the market and make
this one of the best of times to consider starting your own business. Starting
your own business, will require well developed leadership skills, hard work,
discipline to see a task through, rapid evaluation of what is working and what
is not and a whole lot more. But for
those who have the drive to succeed and the energy to work long hours, the
rewards are well worth the investment in time and money.
Here
are the steps you need to take to make your new business a success.
Problem solve your business idea.
Create
a shortlist of business ideas. Make sure you are really knowledgeable and
passionate about each of them or you have found a gap in the marketplace that
needs to be filled. Wherever your interests lie, it's almost guaranteed that
there's a way to turn it into a business.
Another
option is to open a franchise of an established company. If you choose to go
this route, a lot of the legwork has been done for you. The concept, brand
following and business model are already in place; all you need is a good location
and the means to fund your operation.
Once
you've narrowed your list of ideas down to one or two, do a quick search for
existing companies in your chosen industry. Learn what the current brand
leaders are doing and figure out how you can do it better. If you think
your business can deliver something other companies don't or deliver the same
thing, but faster and cheaper, you've got a solid idea and are ready to create
a business plan.
Prioritize the shortlist of business ideas by
into viable business models. To accomplish this, identify revenue sources, the customer
base, products, or services and details of how the business will be financed
for each idea. This translates the business idea into a preliminary business
model.
Know
your business solution and your customer inside and out. Ensure you are
passionate about what you are starting because you will be spending all your
time with it.
Now for the Business Plan.
Now
that you have your idea in place, there are a few important questions you need
to ask yourself. What is the purpose of your business? Who are you selling to?
What are your end goals? How will you finance your startup costs? All of these
questions can be answered in a well-written business plan.
A
business plan helps you figure out where your company is going, how it will
overcome any potential difficulties, and what you need to sustain it.
The
basic sections you will need to cover are:
1.
What
your business is about and how you will accomplish your goals.
2.
Your
extended goals, and how you will fill your market's needs.
3.
Your
research on your target market.
4.
Organization
and management of your company.
5.
Your
service or product line, including copyright information and R & D
activities.
6.
Strategies
for market penetration and growth.
7.
Estimated
costs and funding request (if you need financial assistance).
Know how much you will need to finance the business.
Starting
any business has a price, so you need to determine how you're going to cover
those costs. Do you have the means to fund your startup, or will you need to
borrow money?
If
you are planning to make your new business your full-time job, it's wise to
wait until you have at least some money put away for startup costs and to
sustain yourself in the beginning before you start making a profit.
Startups
requiring a lot more funding up-front may want to consider venture capital.
This is money, usually in the amount of several million dollars, provided to a
fledgling company by a firm or business with the expectation that the backers
will have a hands-on role in running your business.
Alternatively,
you could use an angel investor, a private individual that will provide up to
about $1 million for a project, or launch an equity CrowdFunding campaign to
raise smaller amounts of money from multiple backers.
Using
a home equity loan or a small business credit card to finance your
startup is a viable solution, but it isn't recommended. A credit card is best
used as a means to keep your business on course, or to make big-ticket
purchases you wouldn't otherwise be able to afford.
Decide on the legal business structure.
Before
you can register your company, you need to decide what kind of entity it is.
Your business structure legally affects everything from how you file your taxes
to your personal liability if something goes wrong.
If
you own the business entirely by yourself and plan to be responsible for all
debts and obligations, you can register for a sole proprietorship. A partnership,
as its name implies, means that two or more people are held liable as business
owners. These are easiest types of businesses to form, and the only difference
is the number of people contributing resources and sharing the profits and
liabilities.
If
you want to separate your personal liability from your company's liability, you
may want to consider forming a corporation. This makes a business a
separate entities apart from its owners and therefore, corporations can own
property, assume liability, pay taxes, enter into contracts, sue and be sued
like any other individual. If you decide to make your business a corporation,
you'll need to choose C or S. The main difference between these is the income
taxing, with an S corporation owner only being taxed on a personal level.
One
of the most common structures for small businesses, however, is the limited
liability corporation (LLC). This hybrid structure has the legal
protections of a corporation while allowing for the tax benefits of a partnership.
Any lawful business can form an LLC, with the exception of businesses in
banking, insurance or a few other specific professional service operations.
It
is up to you to determine which type of entity is best for your
current needs and future business goals.
Register with the government and IRS.
To
become an officially recognized business entity, you must register with the
government. If you are registering as a corporation, you'll need an articles
of incorporation document, which includes your name, business purpose,
corporate structure, stock details and other information about your company.
Otherwise,
you will just need to register your business name, which can be your legal
name, or a fictitious "Doing Business As" name (if you are the sole
proprietor) or the name you've come up with for your company. You may also want
to take steps to trademark your business name for extra legal
protection.
After
you register your business, the next step is obtaining an Employer
Identification Number (EIN) from the Internal Revenue Service. While this
is not required for sole proprietorships with no employees, you may want to
apply for one anyway to keep your personal and business taxes separate, or
simply to save yourself the trouble later on if you decide to hire someone
else. The IRS has provided a checklist to determine whether you
will require an EIN to run your business. If you do need an EIN, you can
register online for free.
Regardless
of whether or not you need an EIN, you will need to file certain forms to
fulfill your federal and state income tax obligations. The forms you need are
determined by your business structure.
It
is also important for entrepreneurs to consider their intellectual property,
and be absolutely certain that they own it before going ahead with their
business.
If
you are working with other people, be sure you understand who really owns your
concepts and ideas familiarize yourself with the basics of the patent laws that
have changed dramatically over the past few years which is now a first-to-file
system.
Build your team.
Unless
you're planning to be the sole proprietor and employee of your business, you're
going to need to hire a great team to get your company off the ground.
Figuring
out how the team will work together is critically important. Defining roles and
responsibility, division of labor, how to give feedback, or how to work
together when not everyone is in the same room will save you a lot of headaches
down the line.
In
the early stages of your business and until revenue and profitability have
reached a repeatable level it is highly recommended that you outsource as many operational
activities as possible. This approach is
made easier in the last 10 years with advances in making technology accessible
to small business that was exclusively available to large businesses in the
past.
Have a Brand and advertise it!
A
great startup idea won't do you any good if people don't know about it. While
there's still a lot of value in word-of-mouth advertising, you're going to need
to do more than just tell your social circles that you're starting a business.
Before you start selling your product or service, you need to build up your
brand and get a following of people ready to jump when you open your business.
A
company website and social media profiles are practically essential for
any small business in today's world. Create a logo that can help people easily
identify your brand and be consistent in using it across all of your platforms.
Use social media to spread the word about your new company. You can even use it
as a promotional tool to offer coupons and discounts to followers once you
launch. Be sure to keep these digital assets up-to-date with relevant,
interesting content about your business and industry as well.
When
you have your business product or service and brand, get out into the market
and testing your product or service to get feedback from real customers.
Once
you have your first few clients, work with them to find the common truth in
your customer base.
Now grow your business!
Your
launch and first sales are only the beginning of your task as an entrepreneur.
In order to make a profit and stay afloat, you always need to be growing
your business. It's going to take time and effort, but you'll get out of your
business what you put into it.
Collaborating with
more established brands in your industry is a great way to achieve growth.
Reach out to other companies or even influential bloggers and ask for some
promotion in exchange for a free product sample or service. Partner with a
charity organization and volunteer some of your time or products to get your
name out there.
There
are also a lot of great tech tools available to help small businesses
reach the next level of growth.
Starting
a business can be risky and challenging, and we have not covered all the issues
that need to be addressed in your particular, but armed with the proper tools
and information, you are on the road to entrepreneurship.