How to Start a Business
The great thing about countries like America is that if you come up with a good idea, product or service, you can easily sell it to the masses. Starting a business is a great way to make a living, accomplish something in life and make the lives of others better. If you are thinking of starting a business, here are some tips.
Decide on the Business to Start
Probably the most important decision you can make is to decide what your business should be. Whether you would like to open a car dealership, donut shop, taxicab service or online e-commerce site, what you decide to sell or service will most definitely affect your business planning. Many entrepreneurs have a great idea that they know will reap millions, while others find opportunities that seem like good money makers. In order to decide which business to start, make sure you put lots of thought into the process. There are plenty of things to look at. If after a few weeks your idea doesn’t sound so intriguing, you can always change gears and choose something else. However, if you don’t put a lot of thought into a business and put lots of time and money into it, you can run the risk of losing your investment.
Deciding on the Type of Entity
Besides deciding on what type of business to start it is also good early on to figure out which type of entity your business will be. Four main types of business entities are:
Sole Proprietorship – This is the simplest type of entity to form. In effect, the business is you alone as an individual and taxes are paid through an individual tax statement. However, you are personally liable for any damages from your business.
Partnership – A partnership is formed when two individuals come together. It is very similar to a sole proprietorship and just like a sole proprietorship anything that goes wrong either by you or your partner, both will be responsible.
Limited Liability Company – A limited liability company is a quasi corporation with some aspects of a sole proprietorship. In an LLC, you as an individual do not hold any liability, which is an advantage if something goes wrong. In addition, members of an LLC (which can include only one member) can pay taxes as individuals.
Corporation – A corporation is a separate legal entity. If something goes wrong, individuals are not liable – only the corporation. Unlike sole proprietorship, corporations are taxed separately. Corporations are little more complicated to create and manage, but for large businesses they are have lots of advantages.
Creating a Business Plan
A business plan is essential to creating a well thought-out business. A business plan can be defined as a roadmap for your business’ success. In a business plan, you lay out and organize many components of your business. Components can include the products and services that you want to sell, how you will market your business, the mission of your business, the management of your business and so on. There are tons of resources online to help you write a business plan and while the process is time-consuming, it is essential to creating a well though-out business model that can ultimately succeed in the market.
Business Organization
You will probably go over your business’ organization in the business plan, but in this part of setting up your business, you will need to actually put it together. This means that those highly qualified executives who will give you insight will have to be hired and an organized structure must be in place so that your business can achieve its goals.
Putting Together Financing
In order to make money, you must first have some money on hand. Financing is essential to starting a business. The type of business you would like to start will determine the amount of money that you need. There are plenty of businesses that can be started with less than $500; others can cost millions of dollars to start.
Financing can come in many ways and include personal savings, credit cards, small business loans, venture capital, angel investors and so on. Before you start the financing process, figure out just how much money you need to effectively start your business. In addition, figure out how long your business will be up and running before it can start generating revenue. Some businesses can be active for months or even years without generating revenue, others start generating revenue immediately.
Obtaining Licenses, Permits and Insurance
Before you can open certain businesses, you must first have the necessary licenses, permits and insurance. For instance, if you would like to start a small restaurant, you must have licenses from your town or state to prepare food. In addition, if you may require specific permits. If you are opening up a barber shop, you will need a specific license for that and may need specific permits to operate in a specific town or state.
In addition to license and permits you may also need to purchase insurance. Things can sometimes go horribly wrong and to protect yourself from financial ruin, businesses take out insurance. In fact, many states or towns require certain businesses to have insurance in order to apply for a license or permit.
Finding a Location
Now that you have a lot of the internal aspects of your business under control, it is now time to look for a place to locate your business. If you have an e-commerce web site, finding a location is quite simple. You will just need to register a domain name, find web hosting and build your website. If you are trying to open up a restaurant, your physical location will be key to the set up of your business. You might have to search for a location for months before deciding which one suits your type of restaurant and food best. If you are looking to open up a manufacturing plant, then too, location is crucial. There are plenty of things to take into consideration. Is the right labor available? What are the state’s environmental laws? Are there any available distribution networks in close proximity? And so on.
Buying Materials, Products or Tools
Now that you have a location set up, you can get ready to sell your products and services. If you are selling a product, you will need to buy inventory of that product, as well as display cases and other business fixtures in order for your business to be inviting to customers who enter it. If your business is a car mechanic shop, you will need to equip it with quality tools and computers used to fix vehicles. If you are a business that is focusing on providing a service, you will need to set up your commercial space in order to provide your customers the service in a comfortable, clean and professional environment.
Hiring Labor
Hiring labor is essential to performing a high quality service, building a quality product and administering to your business. Good labor can be hard to find, so start early and make sure you put in a lot of effort on picking the right people. Who you choose as labor will ultimately reflect who you are as a business.
Marketing & Advertising
Now that you have everything in place, it is time to get the word out about your new business. This usually entails marketing and advertising. Marketing is finding markets and customers that might be interested in your products, opening up new markets and in general focusing on specific demographics that are most likely to be interested in your products. Advertising is taking your marketing information and letting everyone know your message, product or service to select or mass markets in order to drum up interest in your business.
Opening Your Business
Finally, you have everything in place and are now ready to open your doors for business. All the hard work you have done doesn’t stop here; in fact it is just beginning. Keeping a business up and running takes tremendous effort and can be tremendously rewarding as well.