Starting a business easily explained in 6 steps
Millions of people across the world starting a business of their own every year. Starting a new business is pretty much like stepping into the unknown; most new young entrepreneurs have no idea what to expect and end up getting disappointed very quickly if things don’t turn out the way they want them to.
The statistic that only 20 percent of new startups last 5 years or more is something most people are familiar with. But for those who survive the hurdles at the start of their entrepreneurship journey, the rewards will have been well worth it – because, ultimately, running a business of your own is far more lucrative than working for someone else and putting in a 9-to-5 shift at an office.
There is absolutely no limit to how much money you can make as a business owner. And it is for this reason that so many people start their own business despite being fully aware of the fact that it is no walk in the park.
So are you ready to start your own business? Read this step-by-step guide to see exactly what it takes to succeed in your first business and to get off to a flying start as an entrepreneur.
Step #1: Brainstorm for the Best Ideas
So what’s your idea for your new business? As you know, every new business begins with an idea. A great business is one that fulfills a need or solves a problem through its products and services and fills a gap in the marketplace, which nobody has thought of before. Can you find a business idea that hasn’t been tried before? Or can you think of the ways to improve upon an existing idea?
For sure, you will always have the option of joining the franchise of a big company such as McDonald’s or Pizza Hut. If you go in this direction, all the thinking will have already been done for you, and all that you’ll need to do is to stick to the business model that has been established by the company. Yes, finding a good location will be your responsibility, as will be financing the operation.
If you are going to start out on your own, here’s what you need to do – search for the established companies in your industry. Find out what makes them tick, and how you can replicate their success.
Do a SWOT analysis – Strength, Weakness, Opportunities, and Threat – on your business idea. Analyze it as objectively as possible and look at it from all angles and perspectives.
Can you deliver a high-quality product or service faster and cheaper? Can you provide a solution for something for which your customers would be happy enough to pay you good money for? How passionate are you, really, about your business idea? These are the things to consider before starting or founding a business.
Step #2: Write a Business Plan
We have discussed writing a business plan for starting a business in another Lesson. Here’s a quick recap of what we talked about. A business plan is a simple document that will help you figure out the direction in which your company is going, what’s the purpose of your business, what are your end goals, how will you overcome any difficulties related to the business, how will you finance it, and most important of all – who is your target
A business plan gives a good idea of what your business is about, its unique selling proposition (USP) and how you plan to accomplish your goals with the business.
Here’s what your business plan will need to have.
- A list of your business goals and objectives
- How you plan to fulfill a need in the marketplace
- Your target audience and the research that you have done on them, their needs and expectations
- The organization of your company and its management structure
- The service provided by you or your product line. Brief information on copyright and patents, if any, and research and development
- A brief overview of your strategies for business growth and market penetration
- An estimate of the business costs and how you plan to get investment for your business
Step #3: Take a Good Hard Look at Your Financial Options for starting a business
In other words, where is your money coming from? Starting a business is not easy. There are many expenses involved with a startup – so how are you going to finance them? Where will you get your investments? Are you going to borrow money? If so, from where?
It is much better to wait until you have built up sizeable financial resources from your present job until you get started with your business. So many small businesses fold up at an early stage in their development because of a lack of capital.
You can start by applying for a commercial loan at a bank. It would really help if you have a good credit score and a solid credit history – this will make it more likely that you will be given a business loan from a bank or other financial institutions at affordable rates. If you don’t have a good credit score, then you will need to look at bad credit business loan providers, who charge a higher interest.
You might want to consider crowdfunding as a way to attract investments for your venture. Crowdfunding platforms such as Kickstarter.com, Indiegogo.com and Rockethub.com are very popular and have funded hundreds of thousands of small business ideas. You may want to consider applying to the SBA or Small Business Administration, a government body for a loan. Lenders such as Kabbage, CAN Capital, etc. are also very popular with entrepreneurs.
You can also seek out an angel investor to fund your business. Wealthy private individuals are always on the lookout for a good, solid business idea to invest in; you should try pitching your business idea to them.
There are other ways to fund a small business, such as a home equity loan, using a small business credit card and so on – which we strongly advise you against, even though they sound tempting. It is very important that you should keep your personal finances and anything related to your business apart.
Step #4: Decide on Your Legal Business Structure
Okay, the next step is to register the business. Before you do that, you should first decide what sort of starting a business it is going to be. The legal business structure is very important and affects everything about the business, from your personal liability if something were to go wrong in relation to the startup, the tax structure and much more.
If you plan to run the business by yourself and don’t intend to hire too many people, and if you are prepared to be held personally accountable for all business debts and obligations, Sole Partnership is what you should apply for.
A Partnership is similar to a sole partnership, except that there are two or more people involved – business partners – who share both the liabilities and profits of owning the business.
Ideally, you will want to separate your personal liability from your business’ liability, which is why you should form a corporation. Forming a Corporation ensures that a business is a separate entity, quite apart from its owners.
So it is the corporation that owns the company property, pays taxes, assumes liability, enters contracts or gets sued in court – not the business owner. The corporation is held accountable, not the business owner.
There are two types of corporations in North America – C and S. What makes them different are that when it comes to taxation, the owner of an S corporation is taxed only at a personal level.
Limited Liability Corporations (LLCs) are the most popular structures for small businesses across North America. LLC is a hybrid structure that gives you all the protection of a corporation as well as the tax benefits of a partnership. Any business can form an LLC as long as it is not involved in banking or insurance.
Once you have decided on a business structure, the next step is to register with the government and the IRS. This is a simple process but requires a lot of paperwork to be completed – it’s better to hire a business attorney to help you out with this. Also, you should trademark your business for more legal protection.
Step #5: You Can’t Do It Alone – Create a Team for starting a business
Starting a business is not something you can do just by yourself unless it is a very small business. If you want to grow your business, you will need to hire employees. A good business owner is someone who knows how to delegate responsibilities to other people, instead of attempting to do everything by himself or herself. So, hire people, build a team, define the roles and responsibilities of the various members of the team, determine a fair and equitable division of labor, and make sure that the entire team works together.
Step #6: Advertising and Marketing
There isn’t much you can do with your business of not too many people know about it. For sure, word-of-mouth advertising is very useful and helps you a lot – but there is only so far it can take you. Eventually, you will run out of people who know you and will talk about you.
That’s why it is important to have a much bigger marketing and adverting plan and to budget it adequately. One of the first things you will need to do is to get your own business website. The website should be designed by a professional and should not appear cheap or amateurish in any way. A professionally designed website makes an excellent impression.
Then you will need to use pay-per-click advertising on Google to market your business. You will also need to make effective use of SEO and get your business website to rank higher on Google’s SERPs (search engine results pages).
Social media marketing is a big thing in business today. Use social media – Facebook, Twitter, Instagram, LinkedIn, etc. – to your full advantage. Set up a profile for your business on each of these social media platforms.
Next, use local business directories and review sites such as Yelp, Google Places to present your business in a positive light. There are a lot of people who check out the user reviews of a business on Yelp and elsewhere on the internet before deciding to use its products or services. So monitor your social media reputation relentlessly.
You have just got started. A good start is half the job, but there’s a lot more that needs to be done. You will need to make profits from your business on a consistent basis and survive for the long haul. You should always look for opportunities to expand and grow your business.
Collaborate with other businesses and brands as long as it is in your interest to do so.