In the United States, there are over 28 million small to medium businesses. This accounts for a staggering 99.7% of U.S. companies. What are some reasons why people start a business? The reasons include wanting more flexibility or having a unique idea. But despite how genuine the reasons are for starting a company, more than 65% of them will fail within the first two years and only 50% of those that remain will survive the next five years.
So if you’re interested in starting a company, know that you will be facing a real challenge. Nevertheless, the stage for success is set at the beginning. With the following ten steps, you can start a successful business.
1. Conduct Your Research
According to Growthink, the first key to starting a successful new company is to evaluate your business idea. Does it fulfill a need or solve a problem? In other words, does your company offer a product or service that the market needs? There are several ways to identify the need for your business offering, like focus groups, or market research. As you conduct your research, determine answers for the following questions:
- Who needs your products/services?
- What is the competition offering?
- Are there companies offering similar services or products at the moment?
2. Create a Business Plan
To transform your company idea into something tangible, you will need to create an effective business plan. This is basically a blueprint to guide you through various phases, i.e. start-up, establishment, growth, etc. Having a business plan is a must for all companies, but especially for a start-up!
There are several types of plans, depending on the type of company you are operating. If you plan on seeking financial support from a bank or investor, then a traditional business plan is more suitable. It is a fairly detailed and thorough plan with several sections related to your company. It will help validate your business idea to financial investors.
Make sure your plan includes plenty of information about your sector or industry. For example,a nonprofit plan should explain the current size and trends in the not-for-profit space. Understanding your industry and key trends will help you develop strategies for success in them.
If you’re not planning on obtaining financial support, then a simpler business plan will suffice. It would outline what you want to achieve and how you plan to do so. Whether you opt for a traditional or simple business plan, it will always be something that you will continue to work on.
3. Financial Planning
You don’t need a lot of money to start a small business, but keep in mind that it will require an initial investment and ongoing coverage of expenses before you make a profit. Compile a spreadsheet with estimates such as:
- Legal fees
- Equipment costs
- Licenses and permits
- Market research, etc.
Don’t forget to anticipate items like utilities, rent, production, travel expenses, salaries, and even your own salary. When you tally up these estimates, this will give you an estimate on the initial investment you will require. It is after you come up with this figure, that you can figure out how to fund your company.
4. Select a Business Structure
Do you want your organization to be a limited liability, corporation, partnership or sole proprietorship? You might consider hiring an accountant or attorney to help you with this matter.
While it doesn’t seem overly important in the short-term, the type of structure you choose may make a big difference later on. Not only are there tax consequences for different business structures, but if you seek equity financing or later to sell your business, your choice of structure will be scrutinized.
5. Create and Register the Business Name
Choose the appropriate name for your organization. Keep in mind the implications it will have. Next, check to see if it’s being used by another company. If not, you can register it. You will also have to pick a domain name for your website. Unfortunately, the domain names for nearly all common words are taken. So, oftentimes you need to be very creative when choosing a domain name. For local stores adding your town or city to the domain name often works. That being said, you want to keep your domain name as short as possible so customers and potential customers can more easily type it in to their browsers to access your website.
6. Obtain Necessary Permits and Licenses
The type of permit and license will depend on the type of organization you have and where it will be located. You must do some research into this process.
7. Set Up An Accounting System
In any start-up, you must be able to create and maintain your budget, prices, costs, and even file taxes. You can seek assistance from an accountant for this or do it yourself. Accounting software can also prove helpful.
8. Set Up Your Location
After you’ve completed the groundwork, you must set up your business operation. Do you plan to operate from an office space, retail location or home office? Offices.net advises that you utilize a brokerage to assist with your research. They can provide a comprehensive guide on availability, price comparisons and service reviews and you don’t pay them a fee! Don’t forget to consider the necessary equipment that you might need. You might also have to decide between leasing or purchasing commercial space.
9. Prep Your Team
If you need staff, you will need to hire employees at this step. First, create positions and outline their duties. Have this written down before advertising/hiring, and ensure you clearly state the responsibilities of the position, including the salary or rate of pay. You may also consider outsourcing or hiring independent contractors. Also, you will perhaps need to have occasional training for your staff in various fields of working on computer. The knowledge of working in Word, Excel, PowerPoint and similar are mandatory.
10. Market Your Company
Once your company is ready to operate, it’s time to attract customers. For this step, you’ll require a marketing plan including your business’ unique selling proposition. Explore several marketing ideas.
Starting a business is an exciting and sometimes overwhelming process. But having a business plan in hand will help you set up your organization correctly and stay on the path of success. Follow the other tips suggested above and success can be yours.