If you have landed on this page, you probably have decided to start your business—first, congrats and good for you. Not everyone is that bold to think of starting their own business. On the other hand, there are things to do and know before you start your business. Running a business isn’t all fun and games as it requires a lot of planning, perseverance, and flexibility. So today, we are going to look at some things to consider when starting your business.
- Sit and Think of Your Idea
- Write Your Business Plan
- Look at Your Finances
- Determine Your Business Structure
- Government Registration
- Get Insurance
- Choose Your Team
Sit and Think of Your Idea
There are a lot of things to consider when starting a business, and one is your why? Your “why” will help you clarify if you are doing this for a personal reason or, you have identified a problem in a problem and want to solve it. Answering your “why” should give you a good idea you are going into the business.
After your why, the next step is identifying your target customers. It is best if you were once a customer in that niche before deciding to sell to that target base. Being a customer in a niche you want to start a business in will mean you are aware of the problems in that niche and, it will be easier for you to get them to buy from you since you understand the need in the target market.
The next thing to sit and think about is your business name, while this may seem like a straightforward activity. Understand you are going for a business name that preferably has a “.com” web address. You can scribble down some on your own or can look for sites that help you auto-generate company names.
Write Your Business Plan
Alright, after brainstorming and thinking, it’s time to get writing. Business plans are like a summary of your entire company. You write them for investors, banks, and most times for yourself.
They are a great way to gain clarity. The simple format of a business plan is;
- An executive summary: In here, you have a brief about your company, your service or product, the target market, and how you intend to fund the company.
- Your Company and Business Model: In here, you will state what kind of company you choose. A sole partnership, partnership, corporation, or a Limited Liability company.
- Market research: In-depth analysis of your proposed market. It should contain subjects like; definition of target customers, primary and secondary data on target customers, and market analysis on competitors.
- Your Products and Services: An introduction to the product or service you are selling.
- Your Operations and Management Roles: This will detail the day-to-day operation of the business and the different roles that are available. It will also briefly describe other management staff on the team.
- Your Marketing and Sales Strategy: Your marketing and sales strategy are detailed here. How do you want to market the brand? How much do you see yourself spending on marketing activities?
- Your Financial Plan: Your financial plan will detail how you intend to get funded, the breakdown of projected revenue and costs.
Another thing to consider is creating an exit plan. In case the business doesn’t work out, how do you plan to exit from the market. Of course, you do not have to include this in your business plan, but you can have it in a separate entry.
Look at Your Finances
Now that you have a rough sketch of your business after your business plan. It’s time to get on your finances. As we said earlier, the business plan is to gain clarity. The whole point of a business plan at this stage is to keep updating it until you feel comfortable with what you have written down.
Under your finances, you will determine your start-up cost. Working out the correct start-up cost is necessary because, if undervalued, it leads to business owners running out of capital. You should also work out your breakeven point using breakeven analysis.
The breakeven analysis helps you figure out at what point (year) your company will stop making a loss and hit the point where you make a profit. Consider your expenses. As a new company, a crucial need is to cut costs.
Meaning you do not spend on things not needed to run your company. Examples are buying a printer for twenty employees when you are only three in the office or renting out a space for fifty when you are currently seven employees. We are not against expanding but don’t plan for future expansion at the stage of start-up. Expand when required and not from the onset.
Last on your finances is to choose your funding options. They include the following.
- Business loan: Banks give out loans to businesses, but most banks don’t enjoy giving loans to small businesses, and so it will be best if you can partner with a small-scale bank or ask for a government incentive loan.
- Business Grant: Grants are special loans you apply for but don’t payback. Grants are specific with their conditions, so it’s best to look for a grant that ticks your company’s boxes.
- Investors: Investors are people who put their money into the business. Your job will be to convince them that your business is worth investing in in the long term. You usually are looking for an angel investor at this stage.
- Crowdfunding: Crowdfunding is a way of funding your business through many little investors. People buy into your pitch and decide to invest a small amount of money. It’s become quite popular in recent years.
Determine Your Business Structure
Your business structure is determined by what kind of company you are looking into going into in the first place. A business run by an individual is a sole proprietorship. If you decide to go into business with a partner, then a partnership.
Most experts advise that it’s better to register as a corporation. There are three types, S, C, and B. The advantage here is that your company is a separate person compared to you. If a person sues you as a partnership or a sole proprietorship, then your assets are on the line.
For a corporation, if sued, the company stands as a separate person from you, and thus the company assets will be on the line. A company can start with an A Corporation is a good start as you can enjoy some tax benefits, and if you are going for an IPO, change it to a C Corporation. A limited liability company gives the security of a corporation but has the tax benefits of a partnership.
Most people prefer to do these very late, but you can save yourself some stress by registering with the government early. You can register your business as a corporation. If you do so, the government will present you with a document called articles of incorporation. This document contains the name of your business, what your business does, the corporate structure of your company, and your unique business identity number.
A Limited Liability company will need an additional document called an operating agreement. As for a partnership and sole proprietorship, you register your business as a DBA. You can register with your Legal name, a name you came up with, or even a fictitious name.
Getting insurance may look like a waste of funds, but on the contrary, It’s a good idea. Depending on the industry you belong to and the type of business you operate, your insurance will vary. Although, one insurance policy that covers the basics of any business is General liability insurance, which covers damage to the property, injuries to individuals in the organization, and injuries to 3rd parties.
Choose Your Team
Getting the right set of people to work with is not a simple task, and as such specific terms have to be defined. Do you want full-time staff, part-time or contract staff? What traits are you looking for, and how do you get in touch with them?
One way to get in touch is to use a user-friendly email finder to get contacts to potential candidates you want to interview or have a meeting with. After sorting out your criteria and bringing your team together, you would need a way to stay connected, even if you aren’t physically around each other. The way to do this is by getting the best CRM software available in the market today.
Other things to consider when launching your business are getting your income forms, employee identification number, and license permits (If necessary). There is also marketing your brand. Through a website, social media, placing of adverts, and word of mouth.
Growth comes naturally when the basics are done and repeated. Your company should learn to read the market change and be flexible enough to get in on trends. You can also corporate with other brands in your field to promote your brand awareness.