First steps to starting a successful small business
If you've got a great idea for a business that has the potential to drive profits and generate a customer following, there is still the matter of transforming your idea into reality. There is more to creating a small business than simply opening up shop.
It seems a long time since I started my business, but thanks to the notes I made at the time, I still have a record of the steps I went through before starting out. Here they are...
1. Draw up a business plan
Before you get started with choosing a suitable location for your business, first create a plan that lists the direction of your business and how you intend to generate revenue.
The U.S. Small Business Administration recommends you consider these important aspects of your venture:
- Come up with your business model
- Establish an organizational hierarchy
- Determine your potential target audience
- Perform market analysis
- Create and describe lines of products and services
- Produce estimated sales and cash flow forecasts
In addition, you should write up a mission statement for your business, which will frame your company's objectives to market and sell your products or services.
2. Select location and capital
Next, consider what capital or property you need to operate your business. This could depend on your industry as well as nature of your business. You may need a storefront, kitchen, office, warehouse space or other facilities.
As you look for locations for your venture, decide whether the rental costs will fit your budget and if the location is easily accessible for customers as well as business partners, according to the National Federation of Independent Business.
In addition, you will also have to determine what kind of capital you need, including financial, human, natural and physical capital. These can include equipment and materials needed to produce products or maintain services.
3. Secure small business financing
To pay for overhead costs, equipment or property, determine how you will fund your business. You have the option to apply for financing from friends and family, angel investors, lenders associated with the SBA, traditional banks and financial institutions or even alternative lenders.
Lenders will likely request to see business documents, such as your business plan, cash flow analysis and more. They could also ask for business and personal credit reports, collateral or bank statements before they grant approval for a small business loan.
4. Register your business
The next step is to register your business name with the appropriate authorities. When registering your business, you will present the name of your business. Not only will you mark this name on all of your business documents, but your business name is your way of communicating and branding your company to your target customers, potential employees and investment partners.
In addition to registering your business name, you may also have to register with state agencies, depending on your type of entity and the state you are established in.
5. Obtain licenses and permits
The SBA noted there are likely several state and federal licenses and permits you will have to acquire before you will be allowed to operate your business. These may include licenses and permits from specific government agencies such as the U.S. Department of Transportation and Federal Communications Commission.
The SBA offers a tool to find relevant business licenses and permits you might need depending on your state and zip code as well as your type of business.
Further, you might be required to obtain certain forms of business insurance, such as property insurance, general liability insurance, workers' compensation insurance or errors and omissions insurance.
6. Hire employees
Finally, decide whether you need to hire employees to help run your business, such as those specialized in sales, marketing and finance. Choose the qualification requirements for positions you have available and post job listings on the Internet, in newspapers and through other media. It’s also well worth considering hiring graduates.