To start a small business segment now commands a massive chunk of market share.
After the devastating economic bloodbath in 2008, we have seen a significant jump in entrepreneurship.
Part of it is due to the sheer necessity to generate income.
Reducing job opportunities also led to a rise in small business.
In United States alone, there are over 28 million small businesses.
According to the Small Business Administration, they comprise nearly 99.7% of total US businesses.
That is why more and more people are keen to start a small business.
But simple as it sounds, the basics of how to start a small business is rather complicated.
After all, no business develops overnight.
It is inevitably a slow and steady process.
But the key point is that a systematic plan of action is important.
If you plan to start a small business, you have to bring together the various facets in perfect harmony.
You have to carefully nurture the business like a little sapling.
The slightest of miscalculation can severely affect the sustainability of the concept.
So the most important aspect is to guide your business towards success.
That will ensure that you can create a long-term proposition.
When you take the plunge and take up the challenge to start a business, eye for details is most important.
From concept to how you market the product, limited resource is often the bane of small business.
But with a little bit of planning and foresight, you can make this an asset.
Statistics indicate that only two-thirds of total small business survive beyond first two years.
Most times, the starting is what matters most.
So we decided to create this ready guide of how to start a small business.
It gives you a systematic ready-made road to success.
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How to Start a Small Business
So here is the steps to start a small business:
- Research Is Important
- Create A Business Plan
- Organizing The Finances
- Look Out For Business Grants & Government Help
- Creating The Right Business Structure
- Decide & Register The Name Of Business
- Look For Licenses
- Create Your Team
Step 1- Research Is Important
This is the first step in any successful plan on how to start a small business.
I am guessing you have already identified the business idea.
But research will help you get a reality check.
The research will help you understand the kind of reach your small business can generate.
If you have not thought about the concept yet, research can help you finalize that too.
It can help you identify some key profit-generating ideas and how you can implement them.
Moreover, does your idea have the strength to succeed?
Well, one of the most significant benefits of research is you can explore the possibilities in depth.
Is your idea solving a problem?
Can the small business you plan to start help address a problem?
Research helps you to explore this fact in several ways.
You have a realistic view of the competition that you may face.
That is a critical aspect of any business.
The extent of competition goes on to determine how successful can you be.
Moreover, it can help you decide whether or not to go ahead with the idea.
For example, if research indicates that there are already 10 operators in what you are planning to launch, you can take a call.
You can either look out another opportunity or plan to change the area of operation.
The location in which you operate a business is also crucial.
The detailed research will help you identify the most profitable areas.
You can then easily look to cash in on the opportunity to promote it further.
Whenever there is natural demand, it is always easier to promote a business.
You get an advantage, and as a result, resource mobilization too can be moderated.
That surely gives you a head start in your small business.
Step 2: Create A Business Plan
A good business plan is almost a necessity when you are exploring how to start a small business.
Once your research is complete, creating a business plan is the next logical business.
In fact, when you plan to start a small business, this is a very important step.
A good business plan generally lays the foundation of a great business.
The business plan is what helps implement your thoughts in reality.
So you often refer to it as the blueprint for your business.
This is what will help to start a small business in reality.
The progress of your business is charted out in the business plan.
When formulated correctly, entrepreneurs simply have to execute this plan effectively.
The rest, as they say, is history.
Different types of business plans are useful for different businesses.
Therefore, just creating a plan is not sufficient.
You have to identify the most effective business plan that suits your business model.
The business plan is necessary for not just charting the growth strategy but many other elements too.
For example, if you need financial help or looking for investors, this is a necessity.
The business plan, therefore, becomes the crucial lifeline for a sustainable small business.
But don’t underestimate the whole effort in creating the business plan.
It is never wise to simply download a template and fill it up.
For example, when you are approaching investors, a one-page plan will not work.
It needs appropriate clarity and reference to the context for effective solutions.
Moreover, the type of business you are in may also dictate the business plan.
But, all in all, if you want to lay the foundation of an effective small business, you have to make a proper plan.
That will alone help you to get an edge.
Step 3: Organizing The Finances
This is the next important step when you are exploring how to start a business.
You may have a killer concept or a rocking business plan, but without money, it is of no use.
So organizing the finances is very important for an effective start to your business.
Whether you have your own investments or you are planning to get an investor, you need clarity in your concept.
Let us understand that there are many ways of organizing the finances for your business.
You can apply for a bank loan or approach your family or friends.
You may also look at mortgaging assets like a house or jewelry to raise funds.
The other option is of course roping in investors for the same.
But whatever you decide on, you need to follow a precise and well-formulated plan.
For that, you have to analyze the cost involved.
Businesses have capital expenses, need working capital and many other requirements.
So you have to create a comprehensive spreadsheet with these.
That will help you garner meaningful advantage and also improve the overall sustainability.
That will have to be detailed, so all the required expenses are covered in this list.
It also needs to account for expenses for licenses, marketing and brand promotion.
All in all, even if it is a small business, it needs a lot of money.
If you don’t plan well and allocate better, the sustainability of the business becomes a concern.
Whenever you are exploring how to start a small business, this is an important consideration.
For any kind of results, you have to run the business smoothly for at least a year.
So that is the amount of money that you need to arrange for before you start a small business.
Step4: Look Out For Business Grants & Government Help
Most state and Central governments, the world over, have business development initiatives.
Different types of grants may be available for different sectors.
Moreover, in every sector, there is some fund allocation to encourage business initiatives.
Now when you are looking for funds, it is a good idea to look out for these grants.
As they are Government sponsored, they may attract a lower interest expense.
You can also latch on to the advantages of Government sponsored funds.
Apart from that, Government grants also can give a business a lot more visibility.
It also helps build a degree of credibility to your business.
It can help you attract a larger customer base and create a convincing growth strategy.
Most importantly with a few grants in place, the need to look for fresh investors also reduces.
That means the shareholding structure of your business does not get diluted too much.
When you rope in investors, you are also answerable to them.
You may have to incorporate their views, and your original concept may become redundant.
However, a business grant easily addresses all these concerns in one straight go.
Apart from Government aids, many private organizations may also offer grants.
The idea is to keep a meaningful watch for all these opportunities and make the most of it.
These opportunities may need some research.
You may have to scour through pages of various departments to zero down on the best options.
That means you need to allocate time and invest energy towards this end too.
Apart from it, the business grants also need an expansive and striking business plan.
So you can see proper research, financing and an effective business plan are all related.
You need to keep a close tab on all of these.
Step 5: Creating The Right Business Structure
In the plan about how to start a small business, this is the next most important step.
The right business structure will provide an appropriate fillip to your small business.
Now this will again depend solely on the type of business you are launching.
The nature of funding too has a bearing on the overall business structure.
The sole proprietorship business is one of the most popular structures for small business.
In this, you shoulder all responsibilities and pocket all profit from the business.
The partnership is a popular option when two or three friends or family members pool in their resources.
A LLC or a Limited Liability Company is another popular business structure.
This is more commonly seen in case of large corporates and has a relatively complex shareholding structure.
Your liabilities and how you plan to file the taxes are important.
That too plays a crucial role in helping you decide the structure for your small business.
However, the structure that you choose initially can also be changed eventually.
You can re-evaluate your business at a later date and take a call to restructure it as well.
It all depends on how you want to distribute liabilities and profit.
Certain business structures have a distinct tax advantage over others.
So, all these elements will play a role in helping you decide on a structure.
The degree of complexity in your business will dictate the final structure.
You can always take help from your legal advisors and CPA for the best results.
They are best placed to explain the liabilities and advantages of each structure.
You can take into consideration all these factors before deciding on the final structure.
You need to look at preserving profit and minimizing liabilities.
Your business interest is primary.
Step 6: Decide & Register The Name Of Business
This is perhaps one of the fun elements of starting a small business.
But that does not undermine the importance of this step.
Naming a business is a crucial move.
After all, the business will be known by this name.
Sometimes the right type of name will help in the initial deluge of customer response.
Though you may say that the quality is what matters finally.
But the naming of a small business is equally important.
It is that important factor that gives a sense of identity and branding to the overall business.
When you start a small business, be sure of the name you want for it too.
You must make sure that you think through all the potential implications.
Therefore a comprehensive analysis of all probabilities is crucial.
But selecting a name is not just enough.
It is also important to follow proper procedures in registering it.
In the absence of proper registration, the credibility of your small business may suffer.
Look out for all possible options and choose the ones that have the best impact.
Registering for an online domain is also important.
In today’s era, a small business can benefit a lot from the internet exposure.
Be it for promotion or branding; the online exposure can limit these expenses significantly.
So don’t just go for an offline registration.
Make sure that you also create a website and register your business online.
That will help improve the visibility and also address marketing and promotion interests better.
Step 7: Look For Licenses
Proper legal compliance is a necessity for any business to succeed.
Before you start a small business, it is important to get all the paperwork done.
That will help you start with a smooth and hassle-free note.
This will also ensure that there is no unnecessary interruption in your business.
Paperwork is a part of the process when you start your own business.
Normally a small business can attract a variety of permit and licenses.
Depending on the type of business that you have, you need to identify the right ones.
The start-up process in any small business is very crucial.
It does not just set the tone and tenor of business but also the future prospects.
Proper permits and licenses are also crucial in building a level of credibility to your business.
Therefore, this too is a crucial step in how to start a business.
Step 8: Create Your Team
The next step is getting the manpower in.
That is decidedly one of the most important elements for perfect execution.
Without the right team in place, you cannot start your small business properly.
You can directly recruit people through your network of associates.
You may also want to advertise and organize interviews before short-listing the final team.
A lot of it will be dependent on how your funding comes through.
After all, advertisements and interviews will involve expenses.
Moreover, when you start a small business, you may want to go with individuals with a proven track record.
You can also look at outsourcing the work to third-party contractors.
But that will depend on the nature and type of small business you are launching.
All in all, you have to look at creating a meaningful base of dependable employees.
Therefore when you plan to start a small business, it is a labyrinth of many processes.
The plan does not just end by starting the business.
It continues even after that.
You have continuous exercises and expenses like running an ad campaign, product marketing and brand promotion.
So you have to build a comprehensive plan of how to start a small business.
That alone will help you create a profitable and successful small business.
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