Tasks like naming the business and creating a logo are obvious, but what about the less-heralded, equally important steps? Whether it’s determining your business structure or crafting a detailed marketing strategy, the workload can quickly pile up. Rather than spinning your wheels and guessing at where to start, follow this 10-step checklist to transform your business from a lightbulb above your head to a real entity. Show
How to start a small business
1. Refine your idea.If you’re thinking about starting a business, you likely already know an idea of what you want to sell online, or at least the market you want to enter. 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, only faster and cheaper), or you’ve got a solid idea and are ready to create a business plan. Define your “why.”“In the words of Simon Sinek, ‘always start with why,'” Glenn Gutek, CEO of Awake Consulting and Coaching, told Business News Daily. “It is good to know why you are launching your business. In this process, it may be wise to differentiate between [whether] the business serves a personal why or a marketplace why. When your why is focused on meeting a need in the marketplace, the scope of your business will always be larger than a business that is designed to serve a personal need.” Consider franchising.Another option is to open a franchise of an established company. The concept, brand following and business model are already in place; you need a good location and the means to fund your operation. Brainstorm your business name.Regardless of which option you choose, it’s vital to understand the reasoning behind your idea. Stephanie Desaulniers, owner of Business by Dezign and former director of operations and women’s business programs at Covation Center, cautions entrepreneurs against writing a business plan or brainstorming a business name before nailing down the idea’s value. Clarify your target customers.Desaulniers said too often, people jump into launching their business without spending time to think about who their customers will be and why would want to buy from them or hire them. “You need to clarify why you want to work with these customers – do you have a passion for making people’s lives easier?” Desaulniers said. “Or enjoy creating art to bring color to their world? Identifying these answers helps clarify your mission. Third, you want to define how you will provide this value to your customers and how to communicate that value in a way that they are willing to pay.” TIP: To refine your business idea, identify your “why,” your target customers and your business name.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 no market for your creation, it might be time to brainstorm other ideas. 2. 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. A lot of mistakes are made by new businesses rushing into things without pondering these aspects of the business. You need to find your target customer base. Who is going to buy your product or service? What would be the point if you can’t find evidence of a demand for your idea? Free download: Here is our business plan template you can use to plan and grow your business.Conduct market research.Conducting thorough market research on your field and demographics of potential clientele is an important part of crafting a business plan. This involves conducting surveys, holding focus groups, and researching SEO and public data. Market research helps you understand your target customer – their needs, preferences and behavior – as well as your industry and competitors. Many small business professionals recommend gathering demographic information and conducting a competitive analysis to better understand opportunities and limitations within your market. The best small businesses have differentiated products or services from the competition. This significantly impacts your competitive landscape and allows you to convey unique value to potential customers. Consider an exit strategy.It’s also a good idea to consider an exit strategy as you compile your business plan. Generating some idea of how you’ll eventually exit the business forces you to look to the future. “Too often, new entrepreneurs are so excited about their business and so sure everyone everywhere will be a customer that they give very little, if any, time to show the plan on leaving the business,” said Josh Tolley, CEO of both Shyft Capital and Kavana. “When you board an airplane, what is the first thing they show you? How to get off of it. When you go to a movie, what do they point out before the feature begins to play? Where the exits are. During your first week of kindergarten, they line up all the kids and teach them fire drills to exit the building. Too many times I have witnessed business leaders that don’t have three or four predetermined exit routes. This has led to lower company value and even destroyed family relationships.” 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. When you’re ready to put pen to paper, these free templates can help. 3. Assess your finances.Starting any business has a price, so you need to determine how you will cover those costs. Do you have the means to fund your startup, or will you need to borrow money? If you’re planning to leave your current job to focus on your business, do you have money put away to support yourself until you make a profit? It’s best to find out how much your startup costs will be. Many startups fail because they run out of money before turning a profit. It’s never a bad idea to overestimate the amount of startup capital you need, as it can be a while before the business begins to bring in sustainable revenue. Perform a break-even analysis.One way you can determine how much money you need is to perform a break-even analysis. This essential element of financial planning helps business owners determine when their company, product or service will be profitable. The formula is simple:
Every entrepreneur should use this formula as a tool because it informs you about the minimum performance your business must achieve to avoid losing money. Furthermore, it helps you understand exactly where your profits come from, so you can set production goals accordingly. Here are the three most common reasons to conduct a break-even analysis:
Watch your expenses.Don’t overspend when starting a business. Understand the types of purchases that make sense for your business and avoid overspending on fancy new equipment that won’t help you reach your business goals. Monitor your business expenses to ensure you are staying on track. “A lot of startups tend to spend money on unnecessary things,” said Jean Paldan, founder and CEO of Rare Form New Media. “We worked with a startup with two employees but spent a huge amount on office space that would fit 20 people. They also leased a professional high-end printer that was more suited for a team of 100; it had key cards to track who was printing what and when. Spend as little as possible when you start, and only on the things essential for the business to grow and succeed. Luxuries can come when you’re established.” Consider your funding options.Startup capital for your business can come from various means. The best way to acquire funding for your business depends on several factors, including creditworthiness, the amount needed and available options.
You can learn more about each of these capital sources and more in our guide to startup finance options. Editor’s note: Looking for a small business loan? Fill out the questionnaire below to have our vendor partners contact you about your needs. Choose the right business bank.When you’re choosing a business bank, size matters. Marcus Anwar, co-founder of OhMy Canada, recommends smaller community banks because they are in tune with the local market conditions and will work with you based on your overall business profile and character. “They’re unlike big banks that look at your credit score and will be more selective to loan money to small businesses,” Anwar said. “Not only that, but small banks want to build a personal relationship with you and ultimately help you if you run into problems and miss a payment. Another good thing about smaller banks is that decisions are made at the branch level, which can be much quicker than big banks, where decisions are made at a higher level.” Anwar believes that you should ask yourself these questions when choosing a bank for your business:
Ultimately, the right bank for your business comes down to your needs. Writing down your banking needs can help narrow your focus to what you should be looking for. Schedule meetings with various banks and ask questions about how they work with small businesses to find the best bank for your business. [Read related article: Business Bank Account Checklist: Documents You’ll Need] Key takeaway: Financially, you will want to perform a break-even analysis, consider your expenses and funding options, and choose the right bank for your business.4. Determine your legal business structure.Before registering your company, you need to decide what kind of entity it is. Your business structure legally affects everything from how you file your taxes to your personal liability if something goes wrong.
Ultimately, it is up to you to determine which type of entity is best for your current needs and future business goals. It’s important to learn about the various legal business structures available. If you’re struggling to make up your mind, discussing the decision with a business or legal advisor is not a bad idea. Did You Know: You need to choose a legal structure for your business, such as a sole proprietorship, partnership, corporation or LLC.5. Register with the government and IRS.You will need to acquire a variety of business licenses before you can legally operate your business. For example, you must register your business with federal, state and local governments. There are several documents you must prepare before registering. Articles of incorporation and operating agreementsTo become an officially recognized business entity, you must register with the government. Corporations need an “articles of incorporation” document, which includes your business name, business purpose, corporate structure, stock details and other information about your company. Similarly, some LLCs will need to create an operating agreement. Doing business as (DBA)If you don’t have articles of incorporation or an operating agreement, you will need to register your business name, which can be your legal name, a fictitious DBA name (if you are the sole proprietor), or the name you’ve come up with for your company. You may also want to take steps to trademark your business name for extra legal protection. Most states require you to get a DBA. You may need to apply for a DBA certificate if you’re in a general partnership or a proprietorship operating under a fictitious name. It’s best to contact or visit your local county clerk’s office and ask about specific requirements and fees. Generally, there is a registration fee involved. Employer identification number (EIN)After you register your business, you may need to get an employer identification number from the IRS. While this is not required for sole proprietorships 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 if you decide to hire someone. The IRS has provided a checklist to determine whether you will require an EIN to run your business. If you do need an EIN, you can register online for free. Income tax formsYou must also file certain forms to fulfill your federal and state income tax obligations. Your business structure determines the forms you need. You will need to check your state’s website for information on state-specific and local tax obligations. “You might be tempted to wing it with a PayPal account and social media platform, but if you start with a proper foundation, your business will have fewer hiccups to worry about in the long run,” said Natalie Pierre-Louis, licensed attorney and owner of NPL Consulting. Federal, state, and local licenses and permitsSome businesses may also require federal, state or local licenses and permits to operate. Your local city hall is the best place to obtain a business license. You can then use the SBA’s database to search for state and business type licensing requirements. Businesses and independent contractors in certain trades are required to carry professional licenses. A commercial driver’s license (CDL) is one example of a professional business license. Individuals with a CDL can operate certain types of vehicles, such as buses, tank trucks and tractor-trailers. A CDL is divided into three classes: Class A, Class B and Class C. You should also check with your city and state to find out if you need a seller’s permit that authorizes your business to collect sales tax from your customers. A seller’s permit goes by numerous names, including resale permit, resell permit, permit license, reseller permit, resale ID, state tax ID number, reseller number, reseller license permit or certificate of authority. It’s important to note that these requirements and names vary from state to state. You can register for a seller’s permit through the state government website of the state(s) you’re doing business in. Jordan says that not all businesses need to collect sales tax (or obtain a seller’s permit). “For example, New York sales tax generally is not required for the sale of most services (such as professional services, education, and capital improvements to real estate), medicine or food for home consumption,” Jordan said. “So, for example, if your business only sells medicine, you do not need a New York seller’s permit. But New York sales tax must be collected in conjunction with the sale of new tangible personal goods, utilities, telephone service, hotel stays, and food and beverages (in restaurants).” Key takeaway: Register key documents like articles of incorporation or an operating agreement, a DBA, an EIN, income tax forms, and other applicable licenses and permits.6. Purchase an insurance policy.It might slip your mind as something you’ll “get around to” eventually, but purchasing the right insurance for your business is an important step to take before you officially launch. Dealing with incidents such as property damage, theft or even a customer lawsuit can be costly, and you need to be sure that you’re properly protected. Although you should consider several types of business insurance, there are a few basic insurance plans that most small businesses can benefit from. For example, if your business will have employees, you will at least need to purchase workers’ compensation and unemployment insurance. You may also need other types of coverage, depending on your location and industry, but most small businesses are advised to purchase general liability (GL) insurance, or a business owner’s policy. GL covers property damage, bodily injury, and personal injury to yourself or a third party. If your business provides a service, you may also want to consider professional liability insurance. It covers you if you do something wrong or neglect to do something you should have done while operating your business. 7. Build your team.Unless you’re planning to be your only employee, you’re going to need to recruit and 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. “People build your product,” Zawadzki 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 responsibilities, division of labor, 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.” 8. Choose your vendors.Running a business can be overwhelming, and you and your team probably aren’t going to be able to do it all on your own. That’s where third-party vendors come in. Companies in every industry, from HR to business phone systems exist to partner with you and help you run your business better. When you’re searching for B2B partners, you’ll have to choose carefully. These companies will have access to vital and potentially sensitive business data, so finding someone you can trust is critical. In our guide to choosing business partners, our expert sources recommended asking potential vendors about their experience in your industry, their track record with existing clients and what kind of growth they’ve helped other clients achieve. Not every business will need the same type of vendors, but there are common products and services that almost every business will need. Consider the following functions that are a necessity for any type of business. Taking payments from customers: Offering multiple payment options will ensure you can make a sale in whatever format is easiest for the target customer. You’ll need to compare options to find the right credit card processing provider to ensure you’re getting the best rate for your business. Managing finances: Many business owners can manage their own accounting functions when starting their business, but as your business grows, you can save time by hiring an accountant, or comparing accounting software providers. 9. 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.
Also, keep these digital assets up to date with relevant, interesting content about your business and industry. According to Ruthann Bowen, chief marketing officer at EastCamp Creative, too many startups have the wrong mindset about their websites. “The issue is they see their website as a cost, not an investment,” Bowen said. “In today’s digital age, that’s a huge mistake. The small business owners who understand how critical it is to have a great online presence will have a leg up on starting out strong.” 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 is just as important as providing a quality product or service, especially in the beginning. Ask customers to opt into your marketing communications.As you build your brand, ask your customers and potential customers for permission to communicate with them. The easiest way to do this is by using opt-in forms. These are “forms of consent” given by web users, authorizing you to contact them with further information about your business, according to Dan Edmonson, founder and CEO of Dronegenuity. “These types of forms usually pertain to email communication and are often used in e-commerce to request permission to send newsletters, marketing material, product sales, etc. to customers,” Edmonson said. “Folks get so many throwaway emails and other messages these days that, by getting them to opt in to your services transparently, you begin to build trust with your customers.” Opt-in forms are a great starting point for building trust and respect with potential customers. Even more importantly, these forms are required by law. The CAN-SPAM Act of 2003 sets requirements for commercial email by the Federal Trade Commission. This law doesn’t just apply to bulk email; it covers all commercial messages, which the law defines as “any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service.” Each email violating this law is subject to fines of more than $40,000. TIP: Create a strategic marketing campaign that combines various marketing channels, like a company website, social media, email newsletters and opt-in forms.10. Grow your business.Your launch and first sales are only the beginning of your task as an entrepreneur. To make a profit and stay afloat, you always need to work on 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 and ask for some promotion in exchange for a free product sample or service. Partner with a charity organization, and volunteer some of your time or products to get your name out there. While these tips will help launch your business and get you set to grow, there’s never a perfect plan. You want to ensure you prepare thoroughly for starting a business, but things will almost certainly go awry. To run a successful business, you must adapt to changing situations. Free download: We’ve created a sales plan template you can use to scale customer acquisition.“Be prepared to adjust,” said Stephanie Murray, founder of Fiddlestix Party + Supply. “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.” FAQs about starting a businessHow can I start my own business with no money?You can launch a successful business without any startup funds. Work on a business idea that builds on your skill set to offer something new and innovative to the market. While developing a new business, keep working in your current position (or “day job”) to reduce the financial risk. Once you’ve developed your business idea and are ready to start on a business plan, you’ll need to get creative with funding. You can raise money through investments by pitching your idea to financial backers. You could also gather funding through crowdsourcing platforms like Kickstarter, or set aside a certain amount of money from your weekly earnings to put toward a new business. Finally, you can seek loan options from banks and other financial institutions to get your company up and running. What is the easiest business to start?The easiest business to start is one that requires little to no financial investment upfront, nor should it require extensive training to learn the business. A drop shipping company is one of the easiest types of new business to launch. Dropshipping requires no inventory management, saving you the hassle of buying, storing and tracking stock. Instead, another company will fulfill your customer orders at your behest. This company will manage the inventory, package goods, and ship out your business orders. To start, you can create an online store by selecting curated products from the catalog available through partners. When is the best time to start a business?Each person’s ideal timeline for starting a new business will be different. First and foremost, you should start a business when you have enough time to devote your attention to the launch. If you have a seasonal product or service, then you want to start your business a quarter before your predicted busy time of the year. Spring and fall are popular times of year to launch for nonseasonal companies. Winter is the least popular launch season because many new owners prefer to have their LLC or corporation approved for a new fiscal year. Skye Schooley contributed to the reporting and writing in this article. Source interviews were conducted for a previous version of this article. What is the name given to the process of building a business with very little funding?Bootstrapping refers to the process of starting a company with only personal savings, including borrowed or invested funds from family or friends, as well as income from initial sales. Self-funded businesses do not rely on traditional financing methods, such as the support of investors, crowdfunding or bank loans.
What is the name given to the process of building a business with very little funding Mcq?bootstrappingAns: D6.
Which method of business start up involves little resources and sweat equity?Bootstrapping describes a situation in which an entrepreneur starts a company with little capital, relying on money other than outside investments. An individual is said to be bootstrapping when they attempt to found and build a company from personal finances or the operating revenues of the new company.
What is meant by crowd funding?Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. Crowdfunding is a form of crowdsourcing and alternative finance. In 2015, over US$34 billion was raised worldwide by crowdfunding.
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