4 Elements Needed to Start a Small Business

by Kevin 5 months ago in how to

What You Should Know

4 Elements Needed to Start a Small Business

Start your own business! Easy, right? Yes and no. Pretty much, if you can point and click, you can start a business. Even so, that will not amount to much if you do not take the time to properly set it up. Once you realize what it takes to set up a business, it can seem as daunting as learning to juggle. It involves tasks with which many of us are not familiar, and learning about things that seem boring, such as conducting studies, business classifications, funding sources, and writing up proposals. There are services that can help you along the way, as long as you remember four basic–but important–elements.

Market Research

Just because you have a good business idea does not mean there is a market for it. No one should undertake a business venture without first studying the market. If you are planning on starting a business at a physical location, a market research study will tell you whether the product or service you plan to sell is desired in your intended area. If it is not, widen the area for your proposed location. If you find your product or service is not in demand within the desired area, begin researching requirements for running the business online. You should establish a website prior to opening a physical location This could provide you with sales in the meantime. After your market research, it is time to make it official.

Entity Classification

You need to decide what type of entity your business will be. Starting out, many people opt to establish a Legal Liability Company (LLC), which is a classification that is geared toward companies that will be smaller in size and helps separate personal from business income.

More Research

Research what needs to be filed with whom to make your business a legal entity in your city and state, not to mention federally. Normally, if you check with your respective secretary of state, they should have everything you need to file in one location. There are services that can, for a fee, take care of all the filing (initial, annual, biannual, etc.). If you are going to have employees, you need to figure out how to set up the tax filing requirements for them. Are you going to provide them with benefits? There are legal requirements regarding the collection and storage of employee’s personal data, as well.

Capital

Business expenses will obviously vary. There needs to be a source of money that will help fund such early-stage necessities as market research, and a website. However, there will come a time when you need more money, either for operating costs, or un-budgeted expenses. If you plan on approaching individuals or larger entities for startup capital, such a proposal will be addressed in your business plan

Develop a Business Plan

There are services that can assist in the writing of your business plan. You need to present potential partners with a well written and polished business plan. The sections that should be present in your plan are as follows:

  • Cover page–A business plan includes a cover page, which contains the business name and contact information.
  • Executive summary–The executive summary will contain your business’s purpose, and in which market it will function.
  • Business overview–The business overview identifies your business’s location, and founding information.
  • Industry analysis–The industry analysis will contain findings from your market research.
  • Customer analysis–The customer analysis describes what your target audience is.
  • Competitive analysis–Also from the market analysis, the competitive analysis will state who your competitors are
  • Marketing plan–This section includes your strategies to sell your product.
  • Operations plan–This section describes how you plan on your company functioning. This part should be as detailed as possible. For example, when you pay your employees, you will have to track their earnings. There is special software (paystub generator, check printing) that can help you accomplish that, and some home banking software can help here as well.
  • Management team–State who will be in charge of running your business. This includes Chief Operating Officers, Chief Financial Officers, etc., or the respective titles of the heads of your main departments, or at least who possess similar responsibilities.
  • Financial plan–Describe how you plan to fund the business from startup to day-to-day operations (this includes start up capital from investors, small business loans, etc).
  • Appendix–This is where you will display any documents, charts, graphs, etc. that will supplement the information presented in the business plan.

Because there are services that can guide you along the way, setting up a small business can be made relatively easy. Properly conducting the market research, legally classifying your company, nailing down where you will get your capital, and writing a knockout business plan will help you juggle all the rest of the many issues that arise while starting a small business. It entails a little more than pointing and clicking, but if you cover the aforementioned four elements, it should be as easy as 1-2-3... 4!

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