Starting a small business is a great way to earn a living and contribute to the community. Many people with great business ideas never started, simply because they’re overwhelmed by the process of starting a small business and unsure of what specifically is involved. It’s understandable to freeze up at the deluge of things that are required how to start business, but getting going is actually easier than you might think.
With a to-do list of smaller tasks, you will be able to tackle enough of the actions necessary to get started. Here is the step by step guide to simplify the process and getting started with your own small business:
STEP 1: WRITE YOUR BUSINESS PLAN
To get started, write your own simple business plan that is a high-level overview of the small business you’re about to start. The plan should explain the vision and mission of starting the business. It will serve as your guide to decision making during business process. You will need to provide business plan to satisfy lenders and investors, before they approve a loan or make an equity investment in your company. Plans also serve as a means of communicating with potential partners, allies, vendors, employees and even customers.
STEP 2: CALCULATING BUDGET
Keep the initial cost as low as possible. Know how much you will be able to spend. If you’re self funding, be realistic about numbers and whatever you anticipate your budget to be. Keep aside an additional 20 per cent amount reserve so you can survive if things go leaner than expected. Keeping budget in mind, you should also determine how long you can stay in business before you need to turn a profit. One of the most frequent mistake people make is over-estimating revenue and under-estimating expenses.
STEP 3: LEGAL DOCUMENTATION
When starting a business, it’s wise to start as sole proprietorship, as it means less paperwork and up-front expenses. As a sole proprietor, you have full personal tax liability for all the business’s profits. The upside is that you can deduct the business’s losses on your personal tax return.
Filing paperwork to start a business costs money. You’ll need to account for city or municipality licensing, state incorporation or business entity fees and more. So, file for a business entity once you’ve proven in the first three to six months of business that you’ve got a viable, sustainable model.
STEP 4: SEPARATE BUSINESS AND PERSONAL EXPERIENCES
It’s easy for your personal finances to get tangled up with your business finances. Whatever business entity you decide on, keep the funds separate from your personal accounts. For one thing, doing so will make it much easier to figure out what you can deduct and what you can’t at tax time and it will also make it easier to grow how to start business or even sell it.
STEP 5: TEST MARKETING
Check the market potential of your product or services before throwing all your time and money into an unproven idea. If you have a service-based business, get involved with your local chamber of commerce or small-business chapter immediately and ask what resources are available for you to speak, present or share information about your business. If you have a product-based business, test the viability of your product at local swap meets, farmers markets or other community events to test what the public really thinks.