As the
economic problems continue to hit every day Americans, many individuals are
starting to branch off on their own and embark on starting a small business.
Many people opt for such a route because of the ability to manage your own
schedule and produce a product or service that was created through personal
ingenuity and innovation. That being said, many ventures fail because the
entrepreneur does not develop and initiate a sound small business plan. To
properly start a small business, an individual must follow basic steps.
The first step associated with starting a small
business is the development of an idea. To start a business you will need to
create or choose a business idea. While this is obvious, the majority of people
interested in starting a small business typically have the desire to do so, but
lack an innovative idea that has the ability to become profitable.
For
the typical entrepreneur, there are many options in creating a small business
plan. A person can buy a franchise or an existing business, or develop a novel
business idea themselves. Once the idea has been fortified, the development of
a sound small business plan is essential.
Developing and writing a small business plan is
the most important step in starting a small business. The creation of a small
business plan is how potential investors will evaluate your business model.
This is crucial because when seeking financing, the lenders or investors will
need to read the plan and evaluate the likelihood of success. Within the
business plan you will need to develop business strategies, financial
projections, and marketing procedures to effectively advertise and promote your
product or services.
When your small business plan is created you will
need to figure out an avenue for financing. Typically, most small businesses
have three channels for financing: friends or family, investors, or bank loans.
Each of these arenas have different functions and specifications associated
with them. The bank will require repayment in the form of principal and
interest payments. Friends, family, and investors will commonly want some
control over the function of the business, as well as ownership.
Once the capital has been raised and the business
has been formalized through a mission statement, you will next need to take
legal issues into considerations. Choosing a legal structure–Sole
Proprietorship, Partnership, or a Corporation–is a necessary process that will
have long term implications. Once this has been decided, other factors such as
office space, expansion, the amount of employees needed, bookkeeping issues,
and tax procedures will need to be realized before fully managing the business.
