Starting your own business can be one of the most rewarding experiences of a lifetime. However, it is very demanding since you will spend countless hours consulting with accountants, lawyers, and other entrepreneurs. You can save yourself time by getting these eight things straight before starting a business.
1. Develop a business plan
Preparing a business plan is one of the most important steps you can take to increase the chances of business success. The plan is a roadmap or guide for your business – it guides you through the daily planning and decision-making process.
Additionally, having a written plan can help you receive funding from investors or secure loans from banks.
2. Pick a business name and own it
You need to choose a business name that is aligned with your mission statement, business plan, and unique selling proposition. It should also say something about your business and communicate aspects of your brand identity.
Once you’ve identified a company name, register it as a trademark. Failure to obtain a trademark can put your fledgling business at risk. Additionally, the time and money you’ve invested in establishing your company name could go to waste if another business owns the trademark.
3. Take care of the legal aspects
One of the important decisions you have to make before starting a business is deciding the legal structure of the company. The type of legal entity you choose will dictate the regulations, licenses, taxes, liability and other legal aspects of running the company.
The most common forms of business structures include sole proprietorship, partnership, corporation and limited liability company (LLC). With an LLC it is advisable to put in place a written document known as the LLC operating agreement. The form and contents of operating agreements vary widely, but most will contain six key sections: Organization, Management and Voting, Capital Contributions, Distributions, Membership Changes, and Dissolution.
Be sure to obtain all the proper licenses needed to run the new business.
4. Understand the market
Today, the marketplace is too competitive to establish a business without a deep understanding of your industry. Having comprehensive knowledge about the competition will broaden your knowledge about the industry and your target audience. This will help refine your business strategy and improve your business standing.
Therefore, before starting a business, evaluate the market in your area and know what your customers want. This will not only give you more insight into the industry but also save you lots of experimenting down the road.
5. Map your finances
Starting a business requires cash. Unfortunately, many people start businesses precisely because they do not have any money. As a result, most entrepreneurs end up being buried under a mound of debt. To avoid this situation, assess the amount of money you need to support your business. Once you’ve done this, look for funding from the right sources.
There are plenty of funding options available to entrepreneurs. The first and most common place is from friends and family. Another option is from venture capitalists and angel investors. Should these options not provide the needed amount, secure a business loan through financial institutions such as banks.
6. Don’t hire – outsource instead
When you want to establish a business, you don’t need to hire full-time employees. After all, employees increase a business’ financial burden and create a fixed monthly cost at a time when income is uncertain.
7. Surround yourself with advisors and mentors
One of the best ways to be a successful entrepreneur is to have an experienced business mentor to turn to for guidance. Starting a business is a journey that shouldn’t be taken alone. You will need someone who has been there, done it and knows what you are going through.
8. Don’t quit your job too soon
When you’re ready to launch your business, don’t rush to quit your job. Alternatively, you may want to consider taking a part-time job since you will need the money to pay rent, mortgage, health insurance and other personal expenses. Additionally, it could be useful in financing your new business.
These are some of the things you need to know about starting a business. If you can get them right, you have an excellent chance to survive and thrive in the marketplace.