It is apparent that tasks such as naming the business and creating a logo are paramount, but what about the essential, but less-heralded steps? Whether you’re deciding on the structure of your business or creating a comprehensive marketing strategy, the work can pile up fast. You can jump right into this 10-step checklist rather than spinning your wheels and wondering where to start and make sure your business will be more than a lightbulb above your head.
- Before starting a business, it is important to prepare thoroughly, but you have to realize things will almost certainly go wrong. Adapting to changing situations is essential to running a successful business.
- Building a business plan requires conducting extensive market research into your industry and the demographic characteristics of your target clients. Conducting questionnaires, facilitating focus groups, and conducting SEO and public data research are some of the tactics that are involved in this process.
- You need to build up your brand before you start selling your product or service, and get the support of people who will jump on board when you open your doors for business.
Improve your idea.
Perhaps you already know what you’re going to sell online if you’re thinking about starting a business, or at least the market you wish to enter. Find companies in your chosen industry by running a quick search. You should look at the current market leaders and figure out how you can improve your offering. It’s a good idea to think outside the box and think of things other companies do not do.
Explain why you do what you do.
The reasons for launching a business are important. It may be worthwhile to distinguish between the business’s purpose and the marketplace’s purpose in this process. Your business will always be bigger when it is based on meeting a market need rather than on satisfying a private need.
Franchising is a good option.
Other options include opening a franchise with a well-established company. A great location and the means for funding the operation are already in place, so all you need is a solid business model and a good brand following.
Name your business.
The key to understanding your idea, regardless of which option you choose, is to know what your reasoning is. Former Director of Operations at the Convention Center and founder of Business by Dezign, Stephanie Desaulniers, warns entrepreneurs to think twice before developing a business plan and brainstorming a name.
Your objective should be explained.
As Desaulniers sees it, many entrepreneurs do not spend time thinking about their target market and why they will buy from them. You need to pinpoint the major details while you’re conceptualizing. If your creation has no market or you’re not passionate about it, maybe it’s time to brainstorm other ideas.
Creating a business plan is essential.
Once you have a business idea in mind, you need to ask yourself some important questions:
- Your business serves what purpose?
- Do you have any customers?
- What are your goals? How do you intend to accomplish them?
- What financing method will be used to pay for startup expenses?
All of these questions can be answered in an excellent business plan. There are many mistakes created in the business world by new companies who rush into things without considering these aspects. The customer you should target must be determined. Are you planning to offer the public any products or services? In the absence of evidence that your idea is in demand, promoting it will be pointless.
Conducting market research is imperative.
Market research is an important component of any business plan, including a thorough analysis of your industry and target market. Research on public data, search engine optimization, and focus groups comprise these activities. The research helps brands identify the needs, preferences, and behaviour of their target customers, as well as the industry and competition. To better understand how the market works and what the opportunities are, many small business professionals recommend obtaining demographic information and conducting competitor analyses. Through the way they approach their products and services, businesses need to differentiate themselves from the competition. This can strengthen your competitive advantage by making your unique value known to customers.
Exit strategies are important.
When preparing your business plan, you should also consider your exit strategy. It’s important to be able to envision how you might exit the business, so you can look to the future.
Isn’t the first thing they show you at airports the flight attendant’s greeting?
Watch the movie, and the question is: What does the movie trailer mention before the feature begins to play? Fire drills are conducted when your first week of kindergarten and you are instructed on how to escape from the building. Several times I have seen business leaders who haven’t established three or four exit routes in front of them. Consequently, the company value has fallen, and even some family relationships have been destroyed.” An appropriate business plan will help you determine where your business will go, how it will handle any obstacles, and what it needs to survive. Here are some free templates that will make it easier to write on paper when you feel ready.
Make a financial assessment
You’ll need to determine your next steps if you want to get a business started, and you will need to determine what you’re going to pay for those things. Is it possible for you to generate funds for your company from your resources, or will you need to borrow money? Have you put away enough money to support yourself until your business becomes profitable if you are planning on leaving your current job to concentrate on your business? Your startup cost should be determined as early as possible. Starting up costs money and many startups fail before turning a profit. Startup capital is always better than underestimating it, as the business can be slow to generate sustainable revenue in the beginning.
Analyze the break-even point.
An analysis of the break-even point will tell you how much money your business needs. Financial plans must include this element, which helps determine when a company, product or service will generate profits.
The formula is straightforward:
The formula every entrepreneur should use is a useful tool because it helps you figure out the minimum performance you must attain to keep your business from having difficulty generating profits. Additionally, it will help you determine precisely where your profits come from, so you can adjust your production accordingly.
Break-even analysis is commonly done for the following reasons:
Profitability: Profitability is always the most important interest to business owners.
You need to ask yourself: What revenue do I need to generate to pay my rent, my bills and my supplier’s costs? Are there any products that are sold to the public at a profit, and which ones average a loss?
- A service or product’s price. People who think about pricing typically think of how much it costs to create their product and what their competition is charging.
- Ask yourself: Are the variable costs the same as the fixed rates, and are the total costs determined the same way? How much does it cost to buy physical goods? How much does labour cost?
Be careful with your expenses
Make sure you have enough money to launch your business. Keep your business on track by spending money on something that will help you to reach your business goals rather than on items that aren’t necessary. Ensure you are following your budget to ensure you stay on track.
Determine your options for funding.
Starting a new business at a low cost can be accomplished using several means. You need to consider several factors when determining the best way to obtain funding for your business. They include your creditworthiness, the amount you need, and available financing options.
- Small business loans- A bank can provide commercial loans, though these are often difficult to secure. If you need financial assistance, this is a good starting point. Small Business Administration if you cannot take out a bank loan.
- Grants for small businesses-The difference between grants and loans is that grants do not need to be repaid. Businesses must meet specific criteria to be eligible for business grants. These grant opportunities are typically very competitive. If you’re trying to secure a small business grant, look for those which are customized based on your unique circumstances. Several grants are available, including those for women-owned businesses and minority-owned businesses.
- Investing-Venture capital companies may benefit from bringing on investors if they need significant funding upfront. Many investors will give a startup company several million dollars and expect to make a major contribution to the company’s success.
- The process of crowdsourcing-Another option is to run an equity crowdfunding campaign to raise money from multiple crowdsourcers. Numerous companies have benefited from crowdfunding in recent years. This type of platform offers various benefits to businesses.
In our guide to startup financing options, you will find more information on each of these sources of funding.
The best business bank is one that offers services to you.
Your business should pick the right bank based on its size. Marcus Anwar, the co-founder of OhMy Canada, suggests smaller community banks for their familiarity with local market conditions and willingness to work with business owners based on their overall profile and character.
The banks make sure to limit the amount of money they lend to small businesses, unlike big banks that look at credit scores. Furthermore, smaller banks desire to build a personal relationship with their clients and provide assistance if problems arise. Another benefit of smaller banks is that decision-making is done at the branch level, which promotes quick and efficient service.”
When choosing a bank for your business, Anwar recommends asking yourself the following questions:
- Who are the people who matter most to me?
- Are you willing to help me in any way you can in building a close relationship with me?
- How do I want to be seen by large banks? Will I just be another bank account?
What matters most is your business’s needs in selecting the right bank. The act of putting pen to paper can help you narrow your focus to what you should be seeking. Meet with various banks to find the best bank for your business and ask them about their services for small businesses.
Step four is now complete. Formalize your company’s legal structure.
To register, a company must decide what kind of entity it is. In case of a breach of contract, you are legally liable.
- The proprietorship of an individual. When you plan on running the business entirely by yourself and taking responsibility for all obligations and debts, you should form a sole proprietor who should be aware that this option can hurt your credit.
- Creating a partnership. In business partnerships, as its name implies, the owners are held individually responsible. If you find a colleague with complementary skills, you don’t have to do this alone. Adding someone to your team usually helps your business succeed.
- An organization. The best way to separate your responsibilities from the responsibilities of your company would be to form a corporation (S corporation, C corporation, B corporation). Although each type of corporation has its guidelines, this legal structure generally makes a business separate from its owners. Therefore, corporations have the same rights as individuals, including the rights to own property, carry on business, pay taxes, enter into contracts, and sue and are sued. Deryck Jordan, managing attorney at Jordan Counsel, said that corporations are a good choice for new businesses planning on going public or seeking venture capital funding soon.
- Company with limited liability. A limited liability company (LLC) is one of the most common structures for small businesses. The benefits of both a corporation and a partnership can be accessed through this hybrid structure.
The choice of which entity type is best for your current business needs and future goals is ultimately yours. The various types of legal structures that can be used in business are important to understand. It doesn’t hurt to consult a business or legal advisor if you have trouble making up your mind.
Operating agreements and articles of incorporation
The government must recognize your business entity before it can do business. A corporation must have a legal document called an “articles of incorporation”, which includes the business name, the purpose of the business, type of corporation, number of shareholders, and other data about the company. An operating agreement may also be required by some LLCs.
Assuming the role of another company (DBA)
You must choose a name for your business in the absence of an operating agreement or articles of incorporation, which can be your legal name, a fictitious DBA name (if you are a sole proprietor), or a name that you have invented. For additional legal protection, you may also want to trademark your business name.
DBAs are required in most states. An entity operating under a fictitious name, such as a general partnership or proprietorship, may need to apply for a DBA certificate. Ask your local county clerk about specific requirements and fees by contacting or visiting them. Registration fees are generally charged.
The number used to identify employers (EIN)
An IRS employer identification number may be required after you register your business. A sole proprietorship with no employees does not need one, but you may want to file one anyway to keep your personal and business taxes separate, or to save yourself some trouble if you decide to hire someone later. If you intend to run a business you will be required to have an EIN, as the IRS has provided a checklist. Online registration for an EIN is free if you require one.
Forms for income taxation
For your federal and state tax obligations, you also need to file certain forms. Depending on your business structure, you need different forms. To learn more about your state’s local and state taxes, you should visit your state’s website.
While you might want to do it on your own with a PayPal account and social media platform, a properly constructed foundation will result in your business having fewer hiccups down the road, according to Natalie Pierre-Louis, licensed attorney and owner of NPL Consulting.
Related and Unrelated Owners
As a business entity accumulates parents and subsidiaries, we need a corporate registry to list all the legal entities under management, because each entity has its documents, owners, compliance requirements and so forth.
Consider how the corporate registry would look if EastShop and WestShop owned SouthShop, LLC jointly. The four companies listed would be NewCo, EastShop, WestShop, and SouthShop.
OVest Group, LLP; however, the founders and NewCo management will not have any responsibility for OVest as a legal entity should they allow an outside investor to invest in SouthShop. OVest is an unrelated owner, however, they want to make sure that OVest appears to be an owner.
The Company Organization Chart
Visual representations of ownership structures are called organization charts.
The org chart may be simple in some cases, but it may not be in others. When a company is owned by more than one owner, an organization chart should account for generation skip. Entities need to be grouped based on relatedness and unrelatedness.
A hand-drawn org chart is dangerous because ownership details change automatically, which is one reason why it is difficult to update. They are at best snapshots of a time in history.
Conclusion
Building a business requires the use of business entities. The right tool for the right job is not the same for everyone. To select and structure a business entity, a licensed lawyer is required.
