A Step-by-Step Checklist for Starting a Small Business
Many people dream of having their own business. Small businesses account for 99% of all businesses in the world. Businesses are the result of people’s aspirations for financial freedom, a career that grows with them and the path to achieving their dreams. Thousands of small businesses are started each year. However, only 1% of them are posited for success and less than 0.005% become major businesses.
Why is that? The major flaws of most businesses lie with its founders. The success of a business is dependent on external factors but most businesses suffer from improper planning and poor execution of an idea. A business needs to tick a few boxes before it can pull off and get ready to face those external factors. This step by step guide has been created as a reference checklist for a future businessperson like you. Good luck with your journey as an entrepreneur.
Before we go ahead with the checklist you need to tick-off while starting a business, let us concern ourselves with the preparations. Once you have an idea for your business, the initial step is to discuss it. Talk to your family, friends, mentors, and mentees. Take everyone’s opinion. The people who will like your idea will give you confidence. Ask for insight from the people who do not like it. They will give you crucial information regarding the flaws in your idea.
Once you’re past this, you can begin the process of starting your own business. Here is a step-by-step guide for the same:
Plan your Finances
Choose its structure
Pick Your Business Name
Buy licenses and pay for permits
Choose an accounting system
Set up your headquarters
Get your team ready
Promote your business
Step 1: Research Properly
A common flaw new entrepreneurs make is not researching enough. Their idea might be completely original and out of this world but if it lacks proper research its as good as dead. There are three questions you need a solid answer to in your research.
- Does anyone need it?
- Do they want it?
- What is the competition like?
Before researching the feasibility of your idea, you need to answer the two questions above. Once you have solid answers for both, the next step is making your idea possible. This is where you decide the investment and project the profits you can generate with your idea.
Step 2: Plan out
The most important activity for any budding entrepreneur. Planning involves creating the blueprint for your idea. This entails everything from how your product/service will be sold, and how you will guide your idea from its start-up phase to an investor-backed business.
Planning a blueprint is different for different businesses. There is no ‘preset’ business plan. Your industry will affect how this blueprint looks. Make sure to keep this in writing. Even a fairly vague plan can work out but no planning will doom your business even before it begins.
Step 3: Plan your Finances
Put together a spreadsheet. The costs involved include initial investment, production costs, resource and hiring costs, licensing and taxation costs, logistical costs and emergency funds. Out of all of these, the most amount of money required will be emergency funds.
No matter what business you are starting, always keep a year’s worth of money as an emergency fund. These emergency funds should be able to take care of resources, production, and logistics. The cost of resources and logistics are the most important to be maintained no matter how much loss your business suffers.
As for investments and later funding, plan it out too. It’ll take time for you to attract investors. This is where having a solid blueprint and business plan will play a crucial role.
Step 4: Choose its structure
A step that is often ignored by businesses. The structure of a business is the hierarchy and the interaction between various levels of hierarchy. This might not seem important but an established hierarchical structure is necessary for a business.
A ‘friendly boss’ is never a good thing, especially during the initial startup phase. Yes, you need to be kind to your employees but know where to draw the line and worship it.
Coming to the upper hierarchy of your business its overall business structure will decide its interaction with competitors and investors. Your business can be a sole proprietorship, a partnership, a limited liability company(LLC), etc. Consult a business attorney to find a suitable structure for your idea. The right structure can contribute to your brand reputation in the business world.
Step 5: Pick Your Business Name
This is the ‘fun’ part of starting a business. Pick an apt name for your business. Make sure it symbolizes your idea and research if no other business has the same name. This will ensure that there are no problems when registering your business. The name is down to your decision. No particular instruction there.
Step 6: Buy licenses and pay for permits
A very important part that almost no entrepreneur plans for. Remember that your business is subject to the rules and regulations of your country’s law. Each country has its own set of laws that you must follow.
Licensing and permits are different for different industries. Government websites should give you an idea regarding the paperwork required for your business.
Step 7: Choose an accounting system
Just securing finances is not enough. You need to be able to account for every penny earned and spend. A good accounting system will ensure that you are able to maintain the same.
A good accounting system is necessary for you to be able to conduct business, sell and buy, pay your employees and much more.
Step 8: Set up your headquarters
A business needs a headquarter. Your headquarters are a significant investment. Make sure that this investment is well-planned and has all the basic resources that your company needs. Do not cut on costs while choosing a headquarters since it might backfire in the long run.
Step 9: Get your team ready
Start hiring the people you’ll grow your business with. Never place inexperienced people in important positions. Make sure your first hirings understand and respect your business plan.
Begin by outlining the most crucial positions in your business. These are the positions you need to fill first.
Step 10: Promote your business
Selling your product/service and securing investors is crucial for a small business. That happens only when you promote your business properly. Promoting begins by outlining the USP of your business.