The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.
James Altucher
I think obvious now that you don’t necessarily need a college degree (Am sure you can list some people in this category), a lot of money in the bank, or any business experience to start something that could become the next major success. However, what you do need is a strong plan and the drive to see it through. Maybe this is something you’re really knowledgeable and passionate about, or perhaps you think you’ve found a way to fill a gap in a marketplace.
Like most people I’ve met, you might have the drive already, but, you might not know how to start building this business. I can tell you starting a new business is not easy, it requires a lot of time, effort, and hard work, and at some point, the business might jerk, but if your company survives, the rewards of entrepreneurship are well worth the obstacles you’ll face on the road to success.
When starting a business there’s a lot to consider and plan, and it’s important to prepare yourself for the journey ahead, so in this article, am going to try and explain some keep points you should know or follow when starting a business.
1. Evaluate yourself
Well, the question is, why do you want to start this business? Use this question as a guide to what kind of business you want to start. If it is extra money you want, maybe you should start a side hustle. If you want more freedom from your current involvement(s), then maybe it’s time to leave it and start something new.
Once you have the reason, it is time to start asking yourself even more questions (as listed below) to help you figure out the type of business you should start, and if you have what it takes.
- What skills do you have?
- How much can you afford to spend, knowing that most businesses fail?
- Where is your area of expertise?
- How much capital do you need?
- Are you even ready to be an entrepreneur?
2. Build your idea
If you’re thinking about starting a business, the chances are that you already have an idea of what you want to sell, or at least the market you want to enter. Do a quick research on existing companies in your chosen industry or market. 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 can’t or 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.
If not, that is you don’t really have an idea yet, there are ways to start brainstorming for a good idea which we will cover in an upcoming article.
3. Market research
It’s most likely you have already identified a business idea, so now it’s time to balance it with a little reality. Does your idea have the potential to succeed? You will need to run your business idea through some sort a validation process before you go any further.
In short for a small business to be successful, it must solve a problem, fulfill a need or offer something the market wants. There are a number of ways you can identify this need, including research, focus groups, and even trial and error. As you explore the market, don’t forget to ask yourself some questions too:
- Is there a need for your proposed products/services (the purpose for your business)?
- Who needs it?
- Are there other companies offering similar products/services already?
- What is the competition (3 above) like?
- How will your business enter into the market?
- What are your end goals?
All these questions will help in writing your business plan.
4. Make a Business Plan
As I’ve briefly mentioned above, you need a plan in order to make your business idea a reality, this business plan will guide your business from the start-up phase through establishment and eventually business growth, It’ll help you figure out where your business is going, how it will overcome any potential difficulties and what you need to sustain it.
It’s important that your business plan answers the questions in part 3, including how will you finance your startup costs? these questions will be answered in a well-written business plan.
5. Your finances
Starting any business requires a price, so you need to determine how you’re going to cover those costs. So I will ask, do you have the means to fund your startup, or will you need to borrow money? I’ve seen many articles/videos/podcasts that were titled “How to start a business without money”, but at the end, some money will be mentioned, the truth is you need some money to make money it might not be much, but something to get things going.
So If you need financial assistance, a commercial loan through a bank is a good starting point, although these are often difficult to secure. If you are unable to take out a bank loan, you can apply for a small business loan through the Small Business Administration (SBA) or an alternative lender, or if you can confident about your idea, you could consider an investor or investors. Alternatively, you could launch an equity crowdfunding campaign to raise smaller amounts of money from multiple backers.
6. Business Structure
Before you can register your business you need to decide, what kind of entity business is, it can be a sole proprietorship, a partnership, a limited liability company (LLC), or a corporation. If you want to own the business entirely by yourself and plan to be responsible for debts and obligations, you can register for a sole partnership, as its name implies, means that two or more people are personally liable as a business, if you want to separate your personal liability from your company’s liability, you may want to consider forming one of the different types of corporations.
The business entity you choose will impact many factors from your business name, to your liability, to how you file your taxes. You may choose an initial business structure, and then reevaluate and change your structure as your business grows and needs change. Depending on the complexity of your business, it may be worth investing in a consultation from an attorney or CPA to ensure you are making the right structure choice for your business.
7. Business Name
Your business name plays a role in almost every aspect of your business, so you want it to be a good one. Make sure you think through all of the potential implications as you explore your options and choose your business name. Once you have chosen a name for your business, you will need to check if it’s trademarked or currently in use.
Then, you will need to register it. A sole proprietor must register their business name with either their state or county clerk. Corporations, LLCs, or limited partnerships typically register their business name when the formation paperwork is filed.
8. Register the Business
If you want your business to be officially recognized, you must register with the government. Corporations will need an “articles of incorporation” document, which includes your business name, business purpose, corporate structure, stock details, and other information about your company. Otherwise, you will just need to register your business name, which can be your legal name. You may also want to take steps to trademark your business name for extra legal protection.
After you register your business, you may need to get an employer identification number (EIN) from the IRS. While this is not required for a sole proprietorship with no employees, you may want to apply for one anyway to keep your personal and business taxes separate, or simply to save yourself the trouble later on if you decide to hire someone else. If you do need an EIN, you can register online for free.
You also will need to file certain forms to fulfill your federal and state income tax obligations. The forms you need are determined by your business structure. A complete list of the forms each type of entity will need can be found on the SBA website.
9. Business Location
I can’t stress the importance of a business location enough; this could be an office or a store (unless your operations are carried out online). Your priorities will differ depending on your need, but there are things to consider when choosing a location:
- Your style of operation. Make sure your location is consistent with your particular style and image.
- Demographics. Start by considering who your customers are. How important is their proximity to your location? If you’re a retail store that relies on the local community, this is vital. For other business models, it
might not be. - Accessibility. Is your building accessible? Don’t give customers a reason to go somewhere else because they don’t know where to park.
- Competition. Sometimes having competitors nearby is a good thing.
Other times, it’s not. You’ve done the market research, so you know which is best for your business. - Proximity to other businesses and services. Look at how nearby businesses can enrich the quality of your business as a workplace, too.
- The building’s infrastructure. Especially if you’re looking at an older building or if you’re starting an online business, make sure the space can support your high-tech needs. If you’re getting serious about a building, you might want to hire an engineer to check out the state of the place to get an objective evaluation
- Rent, utilities, and other costs. Rent is the biggest facilities expense, but check out the utilities, as well, and whether they’re included in the lease or not. You don’t want to start out with one price and find out it’s going to be more later
There is one more topic I could’ve covered in this article, which is “Advertisement”, but this would be covered in upcoming articles.
