The Basics of Starting a Small Business
For those of our members who may be just starting out in business, we’ll be posting this “Starting A Small Business Crash Course” in 6 parts, beginning today and one each week for the next 5 weeks.
This course will help you learn the ins and outs of starting your own small business.
In this first lesson we’ll talk a little bit about what a small business is, and some of the steps you’ll need to take to start your own.
Small business is a phrase that’s used every day by millions of people across the globe. This is because during the past decade the rise of small business has become more substantial than in any other decade prior. This is largely due to the growing number of services that are offered to small business owners, to make it possible for them to keep their business running.
There really isn’t any guidelines for when the term small business is used. However, it’s simply defined as a business which has a small number of employees. How few employees is debatable, and the definition of when a business changes from a small business to a bigger business differs both by country as well as industry. This number is generally less than 100 employees.
Small businesses due to their nature, are usually sole proprietorships, partnerships, or privately owned. Common in many countries, smaller businesses, tend to be related to: accountants, restaurants, guest houses, photographers, small shops, hairdressers, tradesmen, solicitors, lawyers, small- scale manufacturing etc.
Small businesses are often located in private homes, for two main reasons. The first is because it’s cost-effective and in most cases convenient. The second reason is that there are several benefits with taxes, etc by having your business in your home.
Running a small business is an exciting opportunity, a great way to introduce yourself into the business world, and to gain business sense.
But, before you spend a lot of money on your small business it’s important that you know the facts, so take some time, go to the library or get on the internet and research the basics. If possible talk to a few experts or other small business owners so that you can be sure that entrepreneurship is right for you.
Here is a quick list of some things that you can do to get started;
Conduct a feasibility study of your business idea
Describe your typical customer, your product and your competitors. Who will your suppliers be? What will you charge for your product or service? How will you market your product or service? These are just a few of the questions you need to answer.
Write a complete business plan
Do this using the information you gathered from your feasibility study. This is vitally important and often an overlooked step that needs to include a description of your company, its goals, competitors, market, financial information, and of course, how you intend to meet your goals.
Get your financing in place
There are many ways to finance your business, from your own savings to personal credit cards to bank loans. If you need credit, know your business plan from front to back – and maybe even sideways 😉
Decide what kind of structure your company will have
From a legal standpoint, there are three basic choices; sole proprietorship, partnership and incorporation, each with advantages and disadvantages.
Choose a name for your company and check on name availability
Naming your company is highly individual, but it’s the first thing associated with your business, so choose your name carefully. You’ll need to do a NUANS (Newly Upgraded Automated Name Search) report, which checks your name choices for uniqueness against a database of other business names. A reserved name is valid for 90 days.
Determine whether there are special permits or licenses that your business will need
Check with county court house or your local tax collectors office for the proper forms.
Set up your business bank account and record-keeping system
Your banker will need to see your business documents, and you may want to set up more than one account so you can keep track of your finances better. Record-keeping is required, and can be done manually or with a computer program.
There are many different types of insurance, but most probably your company will need at least one. For example, if you’re going to have employees, you need to have workers compensation insurance.
Decide where your business will be located
Lease your business’ space. Alternatively, you could choose to start your business from home if it’s feasible. There are advantages and disadvantages to starting your business from home. You have tax write-offs for example, but sometimes your image suffers.
Purchase supplies and office equipment
You’ll need too many things to list here, and of course, each business has different needs. You might need a fax machine and printer. You’ll probably need a computer. You’ll definitely need paper, pens, pencils and a calculator.
Being armed with the facts and information you need from the beginning is a giant step towards ensuring the success of your small business. So take your time and do your research.
Look for Part 2 next week!
We’ll be talking about some of the different options available for financing your small business.