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Steps to Starting a BusinessThe inspiration for starting a business comes from previous work experiences, education, training, hobbies, talents, personal interests, or recognizing an unanswered need or market opportunity. Starting a business is the stage after having a dream and having a plan. This article discusses the necessary steps people must take after they have decided to start a small business. After making this decision, you will need to do a lot of planning and organizing before you actually can become a business entity. START OF BUSINESS CHECKLISTSteps to starting a business include: * writing a business plan, * determining capital needs, * deciding on a business name, * deciding on the structure of the company, * learning about licensing and certificate requirements, * opening a business bank account, * pricing your products or services correctly, * purchasing business insurance, * setting up a office, * buying stationery and business cards, * installing telephone lines, and * getting a post office box.
WRITING A BUSINESS PLAN.Starting a business requires a well thought out plan to build profits and ensure success. A business plan is a look at where you are and where you hope to go. A business plan should look at the future and detail the steps to take to get to where you want to be. It communicates business goals and will help keep the business on track. It should address how the business will be operated, managed, and capitalized. The plan also can be used to obtain outside capital from investors or lenders if needed. A business plan, therefore, should be well researched, thorough, professional, realistic, and revised as needed. It should include * a description of the business, * a marketing plan, * a financial management plan, and * a management plan. The description of the business should include a summary of the goals-both long-term and realistic short-term goals-and principle objectives of the business. It also should include information about the type of business it is (eg, service, retail, manufacturing); an explanation of its products or services; details about the location, which should be based on your customers' needs; and specifics on the days and hours of operation. The marketing plan should identify customer needs, target markets, and how the business will satisfy those needs. This plan should provide information on market growth and its potential for continued growth and expansion, a definition of market segments, strategies to maintain market share and promote sales, methods for pricing products or services, information about the competition, and a plan for advertising or networking to promote the business. The financial management plan is a vital part of the business plan. Many businesses fail because of mismanaged finances or a lack of money to keep the business going. This section should contain information on the required start-up investment, additional funding that may be necessary in the future, profit-and-loss forecasts and cash flow analysis for several years, and a detailed examination of the amount of sales required to break even or turn a profit. The management plan describes the day-to-day management required to operate a business. This part of the plan should include biographical information about the manager(s) of the business, the number and type of staff members needed, compensation plans, employee benefits, and any employee recruiting or retention plans.DETERMINE CAPITAL NEEDS.Money for starting a business is critical. Start-up costs include equipment, professional and licensing fees, inventory and handling costs, and other costs. Factor into these costs money needed to live on before you can expect to draw a salary from your business. This is an important step because the reason most businesses fail is under-capitalization. Capital for starting a business could be obtained from the following sources:* lending institutions (eg, local bank), * the Small Business Administration, * state or local programs for small businesses, * family members, and * credit cards. DECIDE ON A BUSINESS NAME.What's in a name? Everthing. The image of the business you are starting is wrapped up in the name. The business name helps customers understand what the company does. The name should be something customers can remember easily or relate to in some manner. After naming the business, register the name with the state business office. You will need approval from the state before you can use the business name. Contact an attorney when you begin starting a business to help you with this process or contact the state for assistance on how to do it yourself.DECIDE ON THE STRUCTURE OF THE COMPANY.One of the key decisions to be made when starting a business is deciding on the type of company ownership. The type of ownership determines how the business will be structured. The four most common forms of legal ownership for small businesses are sole proprietorship, partnership, corporation, and limited liability company. Each form of business has its own set of benefits and disadvantages; therefore, in making your decision, it may be helpful to consult an accountant and attorney to help you select the right form of legal ownership. This decision will be based on the* vision, size, and nature of the business; * desired level of control; * type of business operation; * business' vulnerability to lawsuits; * types of tax advantages and disadvantages; * capital needs; * earnings distribution; and * legal restrictions. LICENSING AND CERTIFICATE REQUIREMENTS.Government regulations are an important consideration when starting a business. The government is a silent partner in your business, and they can be a major irritation when their procedures are not followed.Obtain business licenses and/or permits that may be imposed by state and local governing authorities, as well as federal authorities. To accomplish this, * check with the state to determine whether you are required to have a business license; * check with the local government to determine which licenses your business will need -- city or county, or both; * check on applicable city zoning regulations and ordinances; * find out whether any federal permit or license is needed to operate the business; * obtain a Federal Employer Identification Number from the local US Internal Revenue Service office; and * obtain a state sales tax number from the state government offices. OPEN A BUSINESS BANK ACCOUNTAfter obtaining a federal tax identification number, start a business bank account with a local lending institution. This establishes a relationship with the lender and will be a benefit should you have financial needs as your business grows. Any business transactions now are separate from your personal banking account and will be easier to control and manage. It may be helpful to consult an attorney or accountant to determine the implications and potential tax consequences of this.PRICE YOUR PRODUCTS OR SERVICES CORRECTLY.This step is vital when starting a business. Pricing is based on the cost and time involved in operating a business and meeting customer expectations. Knowing competitors' pricing also will help determine the right price for your product or service. An accountant can help you determine the appropriate formula to verify that your pricing is set correctly. Evaluate all pricing initiatives on an ongoing basis. To begin, make sure you have set your product or service pricing correctly, and create price lists or service contracts to share with customers.PURCHASE BUSINESS INSURANCEStarting a business without adequate insurance is a dangerous proposition. Ensure that your business insurance coverage meets your needs. Contact your insurance agent regarding insurance needs, including increasing or adding insurance coverage for * office equipment; * liability insurance for products sold to customers; * property insurance needed to replace or rebuild, as well as limitations or waivers coverage; * paying fixed expenses if you cannot operate the business due to damage caused by such things as fire, weather conditions, or vandalism; * "key man." insurance to cover you if you are so critical to the operation of the business that it cannot continue in the event of your illness or death; or * "non-owned automobile coverage" if you use your personal vehicle on company business-this policy covers any damage incurred during business use.SET UP AN OFFICE.It is important when starting a business to plan where and what you will need to set up office space. Carefully organize and locate the office to facilitate your ability to conduct business. Also ensure that you have the right equipment and items to perform daily business activities, including * a computer; * a fax machine; * a printer; * a desk, filing cabinet, chair, and storage units; and * the necessary office supplies and software.BUY STATIONERY AND BUSINESS CARDSProfessional-looking stationery and business cards are a must when starting a business. These can be ordered through most office supply stores or, if you have the right equipment and paper, you can make them yourself. Do not be frugal when it comes to these items. Think carefully about how the stationery should look and what it should communicate to others about the business. Also, make sure that the format and design of all of your business documents are consistent. A graphic designer, desktop publisher, or professional print shop can help you develop stationery that appropriately represents your business.INSTALL TELEPHONE LINESAnother important step in starting a business is establishing a dedicated business telephone line. This gives the business a published telephone number. It also simplifies tracking business telephone expenses for tax purposes. You may find that your call traffic is sufficient to justify the purchase of a multi-line phone system.GET A POST OFFICE BOXLastly, just like the other image issues involved in starting a business, a mailing address projects an image. If you are not comfortable receiving mail at your home address, or don't want your customers or client to know that your office is in your home, you should consider setting up a post office box for your business address. This can be done at your local post office or a business that helps you with your mailing needs.
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