How to Start a Small Business
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There are different reasons as to why people start a small business. Despite these differences, there are, however, a number of good reasons to start a small business, which include; wanting to share resources, ideas, and products or being your own boss or even supplementing ones’ income. It is imperative to understand that this does not work without hard work and planning (Entrepreneur Press, 2010). Since many small businesses fail in their initiation stages, it is important for budding, as well as seasoned entrepreneurs to determine how they want to start that small business.
Identification of a business opportunity
Hess (2008) contends that when starting a small business, one needs to create or choose a working business idea. Although this is an obvious step, many people want to start businesses but they do not have an idea. What they have is just the desire to become entrepreneurs, oblivious of what it takes to run a small business. Having an idea of what business one needs to start is the first step towards starting a small business (Hess, 2008).
A business plan is the most important thing that one needs before starting a small business because it forms the foundation of a successful business venture. This can be attributed to the fact that it enables you to understand the competitive environment, capital requirements, industry structure and capital requirements (Scofield, 2011). This means that a business plan enables you to know who the competitors are. Competitors are other business entities that provide similar services and/or goods.
Finding start-up money
With a business plan in place, it is time to find some start-up money or capital for the business. There are three options for financing that an individual can rely on for capital. They include bank loans, investors, and family and friends (BusinessTown.com. nd). It is imperative to understand that each of these options has different considerations for a small business because family and friends and even investors may want ownership or take control of their contribution to the business. On the other hand, bank loans may burden a small business due to the additional burden of loan repayment, which can affect the business profits and revenue.
Once the business plan, the capital and the enthusiasm are in place, it is important for one to take the legal issues into consideration by defining the legal structure of the small business. This decision should not be taken lightly because the choice made will have either a positive or negative impact on the business (Mount, 2011). There are various legal structures that one can choose from including sole proprietorship, LLC, or corporation. It is imperative to understand that as the business evolves so too, may the form of business ownership.
Opening the doors
This is the time when one is ready to open the doors for business and make money. Nonetheless, making money means spending money (Scofield, 2011). These are some of the questions that one must have answers to prior to opening the doors for business. Will it operate in a home office or a commercial space? Will the owner hire employees to help in running the business? What are the book keeping needs of the business? What taxes will be collected and what taxes will be paid? With this in place, the business is in the start-up phase, and the owner can look forward to managing his or her small business.