Maybe you have always wanted to run your own business, but the task seemed too daunting. Or perhaps the idea of owning your own business is new to you and you’re eager to jump in. Either way, you should understand what it takes operationally to start a business.
How to Start a Business: Come Up With an Idea
First you need an idea for your business. You may want to open a franchise or have your own concept for an existing business. Perhaps you have an original idea for a product or service that can solve a problem you experienced. Coming up with that core idea that you are passionate about is the first step to starting a business.
How to Start a Business: Conduct Research
Once you have an idea, you have to test it to make sure it is sound. That is where the research comes in. See if versions of the idea are already available in the market or if the competition is fierce. Check with people you respect in the industry to see if they think the business idea is viable. Make sure you have a realistic picture of how you will make money.
How to Start a Business: Formulate Plans, Find Funding
To make sure you have a clear path to profitability, you will need to put together a business plan. This will help you with your initial planning as well as when you apply for funding in the future. Your business plan should include your goals, market research, financial forecasts and marketing plan.
Free resources are available online as well as through non-profits to help you create your business plan. That business plan can then be used when applying for small business loans or grants or when talking to potential investors. Funding sources can also be researched through your local banks, credit unions, non-profits and the U.S. Small Business Administration.
How to Start a Business: Decide on a Legal Structure and File Necessary Paperwork
A key step is deciding the legal structure of your business. Options include: sole proprietorship, partnership, limited liability company (LLC), corporation, S corporation, nonprofit or cooperative. Your business structure will directly impact your taxes and your liability requirements. An accountant can help you determine the best structure for your business.
You need to register your business name with government entities and obtain a tax identification number from the IRS. You also need to find out what licenses and permits you need from the various government agencies. Look into requirements for worker’s compensation, disability insurance and unemployment. Also make sure you have an accounting system in place for budgeting, setting rates and filing taxes. This could be done with accounting software, by hiring an accountant or a combination of both.
How to Start a Business: Find a Location
Make sure you have an office location with adequate room to get the business off the ground. Maybe you need a storefront or a warehouse? You may only need a desk, a corner and Wi-Fi. If you will operate out of an office, consider sharing space with another related small business to keep costs down. Make sure you find the location that best fits your business idea and then open your doors.
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