What is a Small Business?
A small business, in the majority of nations throughout the world, refers to any type of business model that is privately owned and operated. This privately-owned status is the fundamental characteristic to define a small business; all small businesses are funded and operated through the work of one private individual or a group of individuals.
To be considered a small business, the venture must meet the size requirements instituted by the United States Federal Government. According to the Small Business Administration—the primary government agency who aids small businesses through education and the facilitation of financing—defines a small business as any company that employs fewer than 500 people.
This size qualification; however, will fluctuate based on industry—other forms of legislation define a small business as any commercial venture that employs fewer than 15 people. In addition to the size of the employee base, a small business may be classified based on its assets, the gross volume of sales or the amount of production.
Fundamental needs of a Small Business:
As a result of the dearth of employees and resources due to its private status, a small business must obtain a few fundamental resources. The first step when evaluating how to start a small business requires a private individual, subsequent to developing an idea, to obtain a source of financing.
To pay for expenditures, employee salaries, office space and all the costs required to produce a good or service, the individual must secure money from friends, family, through business grants, venture capitalists or by accessing loans from financial lenders. Regardless of the format, acquiring financing is the most crucial step when evaluating how to start a small business.
In addition to financing, all small businesses need to develop marketing strategies, sound products and an online presence to effectively reach their consumer base.
Step by Step Guide on How to Start a Small Business:
The United States government, to encourage entrepreneurship and innovation, enables any individual in the country to start and subsequently establish a small business. The first step in how to start a small business is calculating how much capital you have available; the more money you have, the greater your options for the type of small business you can establish. If you do not have enough capital you must look into various forms of financing—borrowing money from family or friends, obtaining a loan form a bank, applying for government grants or seek venture capitalists.
When you have secured your capital you must select the type of small business you want to open. This classification requires exhaustive research; after you have selected the type of small business you want to start, you must evaluate the field, including all competitors within the field, to develop a viable plan.
The next step on how to start a small business requires you to construct a tangible plan of action. This step regarding how to start a small business will require you to develop a detailed plan explaining how you will develop, market, advertise and subsequently deliver the product or service to the consumer base. By developing a plan of action you will be able to go down the list and accomplish each step before moving on.
The next step regarding how to start a small business requires the owner to decide what type of business structure you will use; the owner must choose between a sole proprietorship, a corporation, an LLC or a partnership. When you select the formation, a necessary step regarding how to start a small business requires the owner to file the appropriate forms with the chosen formation.
The next step on how to start a small business will require the owner to obtain a certified and formal business license. To legally establish and run certain types of businesses you must acquire a license; for all licensing needs visit the Small Business Administration website. Once you are licensed you may begin conducting and developing your business.