Starting a business is not always quite as easy as most people think it is. When I was thinking of starting my first business, I said to myself “well here, I’ve got a great idea, I have experience since starting my first two business ventures, I have belief in myself and what I want to do. So let’s do this, and let the money start flowing”. It wasn’t quite long before reality started to set in and I started to realize I was only at the beginning of a very very long and difficult journey. From my experience and having had several discussions with many entrepreneurs, I have made a list of perhaps the most vital tips to keep in mind if you do want to embark on this journey. Don’t get me wrong, being an entrepreneur is wholly satisfying when your business has taken off, but the journey between now and that time could be very tumultuous. There might be times when you feel like giving up but like the saying goes: the difference between success and almost is that last step you failed to take. So saddle up, it took Thomas Edison only 1000 tries to get it right with the light bulb.
1.) Unique idea: Always make sure that your idea is unique, if not completely, then atleast have a unique twist to it. It is usually very difficult to enter into competition with other companies who are already very much established in that field. In this economy it is usually a tale of survival of the fittest , and trust me, these already established companies have had so much training and practice that they sure are ‘match-fit’ and on most occasions, more ‘match-fit’ than you Mr. Rookie.
2.) Choose a legal structure: Most businesses will really need some sort of legal structure and a lot of people have no clue about this when they are starting up their business. In most states, the main structures are:
• Sole proprietorship
• Partnerships
• Limited Liability companies 9LLC)
• Corporations
It is important to have an understanding of these structures so that you can know where your start-up falls into.
i.) Sole proprietorship: These are one-owner businesses. Any business with two or more owners cannot, by definition be a sole proprietorship. This is a business that is owned by one person and hasn’t filed papers to become a corporation or an LLC. They are the easiest to set-up and maintain.
ii.) Partnerships: This is a business that has more than one owner and that has not filed papers to become a corporation or LLC
iii.) Limited Liability Companies: Perhaps one of the most popular types of business structure. As the name suggests, liability is limited in this case and offers you the pass-through taxation of a sole proprietorship or partnership with the same protection against personal liability that corporations offer.
iv.) Corporations: The only thing with corporations is that it is a separate legal entity from its owners.
3.) Pick a winning Business name: Always try to pick a name that atleast is somewhat related to the service/product you offer. If your business is a website, then your domain name in that case. Certain times you might want to think about a possible trademark to secure your name.
4.) Choose a great location: For many types of businesses, location can mean the difference between feast and famine. Other enterprises will do more or less the same whether they are located in downtown Manhattan or in a deep crevasse on Mars. Not only does the importance of location vary greatly from business to business, but what a location desirable for one business might spell disaster for another. So try to pick a place that works for the business.
5.) Draft your business plan effectively: This is a very important part of starting a business whether you have to later submit it to someone or not. Always try to write a plan before or while starting your business. The purpose of the plan is simple; to bring together in one document the key elements of your business. This should include the products or services rendered, cost of production, revenue and how you intend to market it. Usually plans are written for two purposes i.e. to secure funds (you will have to include concise financial projection in this case) or if the plan is primarily for your own use.
6.) Federal, state and local start-up Requirements: If your company is a corporation, LLC or a limited partnership, you will need to register/file organizational documents with your state. The requirements for starting up businesses vary from place to place so be sure to find out the procedure in your state.
7.) Get a lawyer and an Accountant: Now you might not think this is important, but so did the many people who skipped this step for one reason or the other and ended up losing everything. The lawyer has the important task of managing risk (e.g. should you get sued or need to sue), he/she also handles with your accountant what sort of taxes need to be paid and filed. The accountant handles everything relating to bookkeeping, accounting and cash flow management. Should you also decide to go into contracts or agreements with people, you will also need a lawyer in this case to not only advice you, but keep the records
8.) What is your marketing plan? Always decide early on who your market is and how you intend to reach them. It might sound easy at the start but from experience, it could be the most difficult hurdle. If your business is a website, then it is important to understand affiliate marketing/advertising, search engine optimization and the power of social websites like digg, stumbleupon e.t.c. In the midst of all these technology however, never fail to remember that offline marketing (word of mouth) is still very much a powerful tool.
