Steps to Take When Starting a Small Business

By Victoria Duff

  • Overview

    Before starting your own business, it's best to undergo some research, planning and preparation. History proves that 50 percent of all new businesses fail within the first year of operation and another 50 percent in their second year. Statistics also show that entrepreneurs who carefully plan their businesses stand an excellent chance of creating a company that survives the odds.
    • Step 1

      Research all aspects of your business idea--particularly the specific needs of your target market and the costs of producing your product, operating your business and marketing. This information will help you develop your business idea realistically.
    • Step 2

      Write your business plan. This includes a full description of your business model, marketing model, production of your product or service, build-out schedule, financial projections relating to the costs of creating and selling the product, administrative expenses and projected revenues.

    • Step 3

      Use your business plan when you apply for loans or approach friends and family for seed capital. Make sure you also develop your discussion of the highlights and values of your business idea for presentation to potential investors.
    • Step 4

      Begin marketing in order to bring in revenue. You should create your marketing materials while awaiting funding, because you may have to rely on your own revenue to fund the launch of your company if you can't get a loan or investment.
    • Step 5

      Don't be shy about announcing the launch of your company and asking people to help you by recommending your products and services to friends and business associates.
    • Skill: Moderately Challenging
    • Tip: Take advantage of the advice and resources at the Small Business Administration (SBA) office. If you are located near a major metropolitan area, you probably have an Economic Development Corporation (EDC) nearby. These offices provide excellent resources and advisory services for entrepreneurs. You also should consider hiring the services of a start-up consultant who will be able to guide you through the process of planning, funding and launching your business--and will likely save you from enough costly mistakes to pay for the consulting fees.
    • Warning:
    • Make sure you have complied with all federal, state and municipal laws that apply to your business. Licensing requirements, zoning laws and tax implications should all be considered. You should also take out any insurance you might need and decide whether to incorporate.
    • No matter how well you plan your business, it can be destroyed by an unlucky incident that results in a lawsuit, so you should consult an attorney and take care to protect yourself.

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