There are many reasons why people choose to start up their own small businesses. A self-owned business may mean the possibility of doing something enjoyable, of capitalizing on a great opportunity, of making a good income, or having a better work-life balance. But all the excitement and enthusiasm of the most well-intentioned entrepreneur can, and often does, lead to failure.
This may seem puzzling at first, but the truth is that the success of a new business usually boils down to having the right information at the right time and then knowing what to do with that information, and obviously the sooner this process starts, the better. For this reason, first-time entrepreneurs should be familiar with the basic steps of small business start-up before they start their ventures. That way, they can establish good habits right from the beginning.
So for anyone who is thinking of going the entrepreneurial route, the following is a brief, step-by-step guide to small business start-up. It covers some of the most important, yet often overlooked, aspects of starting a new venture:
Step 1: Know What Small Business Start up Resources are Available and How to Get Them
Thanks to the internet, most of the information a would-be entrepreneur will need to start a business is widely available, and best of all, it is usually free. Entrepreneurs can begin their search by checking out the following sites:
- The Small Business Association- The SBA has a series of comprehensive articles, resources, programs (including several free online courses) posted on their website. Everything is designed to help small businesses start up and run effectively.
- The National Foundation for Independent Business- The NFIB is an advocacy organization for small and independent businesses. Here entrepreneurs will find advice and resources for running a small business. Members receive discounts on many business products and services.
- SCORE- This organization offers business advice, mentoring, courses, and other information.
- SME Toolkit- This organization offers free software, business forms, interactive tools, training, information, and more to help small businesses.
Step 2: Deciding What Business to Start
Entrepreneurs should make sure that the venture they choose is in line with their experience, their available resources and time, their personality, and their income needs. There are several sites that provide assessment forms consisting of a series of questions and points of consideration to help people choose the most suitable business ideas. This site has a list of different assessment forms: breitlinks.com/careers/.
Step 3: Seek Out Professional Guidance or Mentoring
At various points throughout the start-up process, the budding entrepreneur is going to need the advice and assistance of several different professionals. Examples include: an attorney to offer advice on all the legal matters pertaining to the ownership and management of a small business; an accountant to assist in the area of small business finance and tax management; and finally some kind of business consultant to offer advice in areas, such as business management, human resource management, and IT.
Step 4: Choosing the Appropriate Business Structure for a Small Business
Unless one is buying a per-existing business or franchise, one needs to decide what will be the corporate structure of the business. Will it be a sole proprietorship, a partnership, or a corporation? The decision will define several important things: tax status, who has ownership in the business, and what the extent of the owner’s personal liability is should the business go into debt or close down.
Step 5: Time to Create a Business Plan
Writing a good business plan is one of the most important steps in the process of small business start-up. A business plan is basically a written outline of all the aspects of the business including the proposed product or service, the target market, and the economic potential of the venture. Having this information on hand can help entrepreneurs to stay focused on their business goals, and it will make it easier to pinpoint any potential pitfalls in their plan. Finally, this document is often used when approaching banks, commercial lenders, and investors for financing.
Step 6: New Ventures Need Start up Financing
It is obvious that the best ideas will go nowhere without some initial capital investment. This start-up financing (also called seed capital) should cover the preliminary expenses including: market research and product or concept development, legal fees, and any necessary equipment and supplies- anything that is needed to get the business up and running. Aside from standard bank or commercial business loans, seed capital can come from SBA-backed micro loans, governmental grants and assistance programs, peer-to-peer lending, and in some cases, venture capital or angel investment.
Step 7: Make Sure that the Business is Registered and Legal
This step is quite broad and beyond the scope of this article. In short, entrepreneurs should make sure to get a tax ID number for their business and register the organization with their local chamber of commerce. They also need to be educated (or seek advice) about any appropriate zoning laws or licensing fees.