What Does it Take to Start a Business?
Establishing a business can be an exciting experience, yet requires plenty of preparation before its launch. From registering key documents to estimating startup costs, there are various tasks you need to do before your venture can launch successfully.
Not everyone has all of the answers when it comes to starting a business, which is why seeking advice from experienced professionals is highly recommended.
1. Entrepreneurship
Entrepreneurship involves starting up a business to take advantage of an available market opportunity. Anyone can pursue this venture if they believe their product or service will bring profit, and are willing to risk investing capital necessary to bring it to market.
Successful entrepreneurs typically possess a unique viewpoint of the marketplace. They tend to take risks that others would shy away from while remaining self-motivated and dedicated in pursuit of their goals.
Starting a business requires careful planning and smart financial decisions. Entrepreneurs should also be mindful of any legal, financial or marketing considerations when embarking on this new journey. Registrating key documents such as articles of incorporation/operating agreement/DBA/EIN forms as well as income tax forms should also be completed to set up their new venture successfully.
2. Planning
Many people start businesses for personal reasons: to become their own boss, attain certain lifestyle goals or increase job security. All these reasons are great motivations to start up a business; however, it’s essential that one be realistic about what it will take for their endeavor to be successful.
Beginning a business can be costly. There are costs associated with registration, opening a bank account for it, paying insurance premiums and licensing requirements and hiring employees among many others that must be covered to start-up a successful venture.
Remember that it can take years for a business to turn a profit, which is why it is critical to carefully budget and save prior to launch. Furthermore, plan for ongoing costs like website hosting services, point-of-sale software and utilities that could arise during operation of the enterprise.
3. Finance
Once you have developed and formalized your business idea, and constructed an official business plan, the next step should be financing it. This may involve calculating startup costs such as upfront expenses; how much sales revenue must be achieved before reaching breakeven; or the volume needed to generate profits through production units sold. It also includes reviewing any legal or tax obligations of your enterprise.
As part of setting up your company, it will likely be necessary to register for state and local taxes as well as determine its legal structure – this could include sole proprietorship, limited liability company or corporation status.
Establishing a separate bank account for your business helps maintain separate finances from personal. Doing this also reduces credit card debt risk in case your venture fails. In addition, investigate funding options including grants targeted toward specific purposes like supporting young entrepreneurs or revitalizing high streets.
4. Management
Businesses incur initial expenses such as physical supplies, professional services and equipment purchases. If you plan to hire employees, additional considerations will need to be taken such as employment laws and costs for workers’ compensation insurance coverage. It’s also wise to have separate bank accounts set up specifically for your small business to keep personal finances separate from business funds.
Based on your industry, depending on how it functions you may require the registration of key documents like an articles of incorporation or operating agreement as well as an employer identification number (EIN) or tax forms. Furthermore, purchasing commercial general liability insurance before starting up will help protect you against unexpected incidents, such as property damage, theft or customer lawsuits. Lastly, research must also be conducted regarding utility costs such as water and electricity for your space.
5. Marketing
Launching your own business can be an exciting journey, whether you want to do it solo as a freelancer or switch fields entirely. But there are key financial and legal activities you must complete before officially opening your doors.
Conduct market research to assess whether there is demand for your products or services. Doing this can provide insight into what customers expect from industry standards, and help your brand stand out against rival brands.
Establish a company website and social media accounts to market your startup when launching. A small business bank account will also come in handy for handling taxes and financial matters, and don’t forget the EIN to identify it as separate from you!