SELECT A BUSINESS IDEA
Step #1 is deciding on what type of business you want to start. Many people choose to start a business around something they know and are passionate about. The first question every would-be business owner needs to ask about his/her product or service idea: “What problem does it solve or what need does it fill?” There are many reasons why consumers make purchase decisions, but the primary one is need. Market research will help you answer this question.
During the ideation phase, you need to iron out the major details. If the idea isn’t something, you’re passionate about or if there’s not a market for your creation, it might be time to brainstorm other ideas.
Market Research and Feasibility
Market research is the first and most important task you need to accomplish before you start your business, to determine if your idea is feasible. Market research is the gathering of facts and figures to make an informed decision about the market potential for your business, about the prospects for success and the direction your business will take – both at the start and periodically as you continue on your business journey.
Do a quick search for existing companies in your chosen industry. Learn what 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.
Test your business idea
After you develop what seems like a strong business idea, you’ll want to do some research and see what actual customers think. Much of the market research stage involves getting information about who your customers are and what they want or need. You can use a combination of focus groups, online surveys, and phone campaigns to evaluate your buyers. You can also run online ads or content and see what level of engagement they command.
In addition to talking directly with customers, it’s also vital to understand industry trends, economic data, and market statistics—and how all of this information might impact your business idea. All of the findings from your market research will be a crucial part of your business plan.
“The more you know about your industry, the more advantage and protection you will have.” – Tim Berry
WRITE A BUSINESS PLAN
Once you have your idea in place, you need to ask yourself a few important questions: What is the purpose of your business? Who are you selling to? What are your end goals? How will you finance your startup costs? These questions can be answered in a well-written business plan.
This being said, these are the 8 main questions that you’ll want to answer as you go through the process of creating your business plan:
1. What does your business do?
2. Who is your business for?
3. Who are your competitors?
4. What is your unique value proposition?
5. How will your customers find you?
6. What resources will you need?
7. How will your business make money?
8. How long will it take you to make a profit?
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.
ASSESS YOUR FINANCES
Starting any business has a price, you’ll also need to learn how to finance a business. At some point, you’ll need financing to either deal with short-term cash flow challenges or to fund the growth of your business. Although there are some businesses which are completely bootstrapped by profits, that isn’t the norm. Most business owners must obtain business loans or other external alternative funding such as: Angel Investors, Venture Capital Firms or Crowdfunding.
With this in mind, you might choose to finance your business in any variety of ways. You might reach out to friends and family, pursue debt financing in the form of a business loan, or even work with an investor. Regard this topic we will describe more in upcoming topics.
DETERMINE YOUR LEGAL BUSINESS STRUCTURE
One of the many important decisions you must make is what legal structure you should choose for your business.
Your choices for legal entity are sole proprietorship, partnership, corporation or LLC. Which structure you choose will depend on the type of business you run.
The major factors to consider include:
▸ The potential risks and liabilities of your business
▸ Income taxes
▸ Investment needs
▸ The formalities and expenses involved in establishing the business structure
This is the most basic form of business structure, in which you alone own the company and are responsible for any liabilities associated with it. If you plan to operate a service business and won’t be taking on fixed assets or hiring any employees, a sole proprietorship might be the perfect structure for you.
This structure defines a single business in which two or more individuals are owners. There are a few different small business partnership structures you can choose from, including a general partnership, a limited partnership, or a joint venture. Most lawyers won’t recommend partnerships as a business structure because, like sole proprietorships, they don’t offer much protection from liability.
Limited Liability Company (LLC)
Offering the liability protections of a corporation along with the flexibility and tax simplicity of a sole proprietorship or partnership, the limited liability company (LLC) is a “best of both worlds” business structure that has grown significantly in popularity over recent years.
A corporation is a more complex business structure usually reserved for larger companies or those in particularly high-liability industries looking for a little extra insulation. If you expect your business to eventually take on a lot of employees, it could be worth setting up a corporation now. A C-corporation is also the best business structure for raising money from investors.
Ultimately, choosing a structure for your business is one area where your smartest bet is to consult a business attorney for individual advice. It’s an important decision that will have long-term impacts on how you do business, so you’ll want to do your research and make sure that you fully understand the implications of whatever structure you choose.
REGISTER YOUR BUSINESS AND IRS.
After you’ve decided on the legal structure for your company, the next step to discuss in our “how to start a business” guide is registering your business. As we mentioned above, taking care of these legal obligations from the beginning will save you from greater hassle in the long run. To become an officially recognized business entity, you must register with the government.
Get a Business License
Many new businesses require to get a business license or permitting before they can start operating. In some communities, there’s a generic business license for every type of business.
In other areas, certain highly regulated businesses, such as childcare centres and foodservice businesses, need to apply for special types of business licenses or permits. Therefore, you’ll want to make sure that you check the regulations for your industry, state, and municipality to ensure that you get all of the licenses or permits you need to legally start your business.
Open a Business Bank Account
You’ll need to start taking steps with regard to your business’s finances and finally, actually getting up and running. This being said, one of the first important tasks to complete is to choose and open a business bank account. In fact, when it comes to any checklist on how to start a business, this is one of the most important steps not only for getting started, but also for the future of your business’s financial growth.
BUILD YOUR TEAM
Unless you’re planning to be your only employee, you’re going to need to hire a great team to get your company off the ground. Joe Zawadzki, CEO and founder of MediaMath, said entrepreneurs need to give the “people” element of their businesses the same attention they give their products.
“Your product is built by people,” Zawadski said. “Identifying your founding team, understanding what gaps exist, and [determining] how and when you will address them should be top priority. Figuring out how the team will work together … is equally important. Defining roles and responsibility, division of labour, 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.”
BRAND YOURSELF AND ADVERTISE
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 literal or figurative doors for business.
Create a logo that can help people easily identify your brand, and be consistent in using it across all of your platforms, including your all-important company website. Use social media to spread the word about your new business, perhaps as a promotional tool to offer coupons and discounts to followers once you launch. Be sure to also keep these digital assets up to date with relevant, interesting content about your business and industry.
Creating a marketing plan that goes beyond your launch is essential to building a clientele by continually getting the word out about your business. This process, especially in the beginning, is just as important as providing a quality product or service.
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 influencers, bloggers and ask for some promotion in exchange for a free product sample or service.
While these tips help launch your business and get you set to grow, there’s never a perfect plan. You want to make sure you prepare thoroughly for starting a business, but things will almost certainly go awry. To run a successful business, you have to adapt to changing situations.
“Be prepared to adjust. There’s a saying in the military that ‘no plan survives the first contact’ meaning that you can have the best plan in the world but as soon as it’s in action, things change, and you have to be ready and willing to adapt and problem solve quickly. As an entrepreneur, your value lies in solving problems whether that is your product or service solving problems for other people or you solving problems within your organization.” – Stephanie Murray, CEO and founder of Fiddlestix Candy Co.