Small businesses give the average citizen the chance to create a product or service, while maintaining their own work hours and business model. That being said, the majority of small businesses fail because the entrepreneur ignores basic steps required to establish a sound business model.
The first step required to start a small business is obviously the creation of a small business idea. There are two distinct paths an entrepreneur can take when creating his or her own business. The individual, or group of individuals, can either develop their own innovative idea or they can purchase an already existing small business and, in essence, renovate the business model to fit their own specifications. Regardless of the path chosen, starting a small business requires the development of a sound business plan.
Arguably, the most important aspect of small business planning is financing. The majority of individuals interested in starting a small business lack the capital themselves to start a company. Therefore, financing or borrowing is the most appropriate method taken when starting a small business.
When taking out a loan, it is crucial to work within a budget. At all points of small business planning one must develop cost/benefit analyses. Spending beyond one’s means or fruitful costs can cripple a small business idea before it even becomes tangible.
When your business is created and your financing needs are met, you must hone your product or service. Marketing, advertising, and cost effective planning are crucial when starting a small business.
Developing a mission statement is crucial to maintain organization throughout your business. Throughout this process you will constantly run into questions concerning the set-up of your business. Do you need office space? How many employees are required to carry out your function? What is the best avenue for marketing? These are all basic questions that are fundamental in starting a small business.
After formalizing a plan and developing a structure, you will need to worry about legality issues. The aforementioned questions are intertwined with the establishment of your business structure. A small business can be structured as a Sole Proprietorship, a Corporation, or a Partnership.
Granted, you will face many obstacles and critical decisions when starting a business. However, the most fundamental aspect of the creation is to always have a plan and streamline all functions in the most cost-effective way possible.
