23 Mar 4 Things to Remember when Starting Your Own Business
When children need money, they often do one of two things: ask their parents or go and work for it. Some parents are more than willing to give their kid a 20 in order to get them to stop bothering them. Other parents want to help their children learn the value of a dollar.
Those children who want to work for their money but are too young to find gainful employment may turn to selling lemonade on the side of the road or start a lawn mowing service. These hard-working children embrace the entrepreneurial spirit. But what happens when these enterprising youth want to take small business beyond the borders of their neighborhood? What do they do when they have a better idea for a business after high school? After college?
This post details what aspiring businessmen and women need to do in order to start a company.
1. Make Sure Your Plan is Solid
The first thing you need to start a business is a solid plan. A business plan is a roadmap of what you want your business to accomplish and how you plan to accomplish it. This can be something as simple as an outline written on a napkin or a word document meticulously maintained on your computer.
Smaller businesses may not require an extensive business plan. If you want your lemonade stand to bring in more business on nights or weekends, a 20 to 50-page outline might be overkill; a paragraph or two might be enough.
But if you want to create a multinational lemonade conglomerate, you’re going to want to create a thorough plan of action. This should include:
- Company overview
- Products and services
- Target market
- Sales plan
- Financial plan
Either way, writing down where you want your company to be in one, three, or five years is a great place to start.
2. Establish Yourself (and Your Business)
Once you have your plan in place, decide on a business structure. The structure you choose will also change the way you comport your business in a legal and tax sense as well. There are six basic business models, each with their own purpose. They include:
- Sole proprietorship: one person is responsible for decisions, assets, and liabilities.
- Partnership: one of more persons or parties share ownership.
- Corporation: shareholders own the company.
- Trust: trustees run the organization for the betterment of the trustees involved.
- Cooperative: the people who use the services operate the business.
- Limited liability: a hybrid of a partnership and corporation.
It’s important to understand the type of business you are going to run and the risks and rewards of each model before making a decision. The next step in creating your own business is setting up a location and filling out the proper paperwork.
3. CYA (Cover Your Assets) with Permits
After you know where your business is heading, it’s important to make sure you have the right documents in place. Most businesses need some type of permit before they can open their doors to the public.
Federal regulations require permits in fields like agriculture, alcohol, broadcasting, commercial fisheries, transportation, and wildlife. Regardless of where you set up shop in the United States, the federal government requires these industry specific permits. State and local permits will vary depending on your location. Other countries will have different regulations based on their national laws.
Businesses that operate without the proper paperwork can be subject to fines, fees, lawsuits, and can even be forced to close. Preempt the negative impact of operating without proper permits by researching and completing federal, state, and local paperwork. Once you have all the proper licenses and permits, make sure you have the funding to begin work.
4. Find Investors
Finding investors can be tricky. As a kid, it was easy to get your parents to front the money needed to make your first pitcher of lemonade, but it becomes a little trickier with larger businesses. There are a few different ways you can get capital to get your business off the ground. If you’re unable to front the money for your new business personally, you may want to consider a loan.
Banks and private investment firms are always willing to extend a line of credit to entrepreneurs with great ideas. There are a wide variety of loans available to businesses depending on location, issuing institution, and business type.
Another way to find capital is to apply for grants. Grant money is not available to all types of businesses. Since this type of funding uses taxpayer money, only certain businesses meet the requirements to receive a grant. Non-profit organizations, educational institutions, and businesses that pursue the betterment of mankind are generally the type of ventures that benefit from this type of money.
These steps are obviously a Reader’s Digest version of how to start a business. If you want to go into business for yourself, research companies in your areas to find out what you need to do to get your idea off the ground.