June 27, 2018
Starting your own business requires more than just hanging a shingle and praying for profits. Focus on the following to give your business a solid beginning and a good shot at success.
A business plan must explain exactly how your company will make money. If you can't detail a path to profits on paper, it will be almost impossible to do so in reality. Especially if you're seeking outside funding, a business plan is crucial (required, in most cases) for convincing potential lenders and investors that your idea is sound.
A business plan defines your goals in very specific terms and should include: a market study, pricing information, promotional strategy, growth milestones, income statement, and cash flow analysis.
Funding can come from friends and family, "angel" investors (wealthy individuals eager to finance promising start-ups), venture capitalists (see businessUSA.gov), credit unions, banks, vendors, and the Small Business Administration (SBA), which is a government agency.
Committing your own money is a common first step for many small business owners, and it shows potential investors that you're serious about your venture.
If you break your leg, do you try to fix it yourself? Unless you're stuck on Mount Everest, you probably head straight for a doctor. Well, trying to start and run a business without the services of an attorney or accountant is like setting your own broken limb.
When choosing an attorney, find one who can act as both a legal and a business advisor -- someone who can make you aware of federal labor laws and state regulations as well as contract issues and liability concerns specific to your particular type of business.
A tax accountant can provide tax planning services, help set up systems to keep accurate financial records, and ensure compliance with tax laws.
Form of Ownership
The formal structure of your business will dictate how you and the company will be treated under the legal and tax codes, so it's important to consult an attorney and a tax accountant before making a final decision on this. Types of business entities include corporations, partnerships and sole proprietorships, each of which offers distinct advantages and disadvantages.
License and permit requirements differ by state and by the nature of the business, so consult your local Chamber of Commerce and Small Business Administration (SBA) office for guidelines.
Adequate business insurance not only includes coverage that replaces your assets in the case of theft, fire and flood, but also liability coverage that can protect you when you get sued because the all-natural vegetable-based hair dye you're selling turns someone's mane zucchini green.
Update your policy as you acquire new assets, build inventory, or change your products and services significantly.
Proper location can be critical for a retail store that depends on customer foot-traffic, but other businesses may be run from a home office. Before setting up shop at home or signing a lease for commercial space, be sure that your choice complies with local zoning laws.
Equipment and Technology
What kind of specialized equipment will you need to run your business? Think about what telecommunications and computer capabilities will be needed and whether it would be more cost-effective to buy or lease. Also consider buying used furniture and supplies if your budget is tight.
Staffing and Benefits
Hire with care. Don't forget to do background reference checks. A little work on the front end will help you avoid major personnel problems down the road.
You're more likely to keep your good employees if you offer them certain benefits, like medical and dental coverage, life and disability insurance, a retirement plan and paid vacation. Even if you're going it solo, you should provide these benefits for yourself.
First impressions count, so it might be worthwhile to spend some time and money on developing your company's "identity." Graphic designers and printers can help you design and produce your business cards, stationery, brochures and other communications materials.
Of course, this checklist isn't exhaustive. Every business is unique, so do plenty of research before taking the plunge. Seek out other business owners and learn from their experience.