Starting A Business

If done properly, starting a business can be a very enjoyable and rewarding experience. We provide business ideas, reference materials and cover the necessary steps to determine the right business for you and position it for success.

Steps To Starting A Business

Step 1: Determine The Type Of Business To Start (Your Business Idea)
You will spend a lot of time and energy on your new business, therefore make sure it is something you enjoy doing. Otherwise you will have trouble expending the energy necessary to make your business successful. Ideally your business will involve something you already know. This will make things much easier and your chance of success much higher. Although with the proper support network (more on this later) you may find success in an area you do not already know it will be more difficult. Your business will face competition and you may find it harder to compete against other businesses that have more experience in your field.

When considering ideas for your new business, do not discount things as not being business material until you have done a business plan and truly know if money can be made or not. Also consider several things before settling on one. Ideally you will do business plans for at least 5 different businesses before settling on the one that is best for you and starting a business. I did close to 100 business plans before settling on my current business and my business ended up being related to one of my hobbies.

Finally, consider your support network. Starting a business is hard work you will need help. Just because you are starting a business does not mean you need to know and do everything. Do you have contacts that may be able to assist in certain areas? Franchises often provide a support network. Also look for other companies that may allow you to focus on your core business while simplifying the surrounding areas. For example SiteSell provides an excellent support network for Internet businesses and businesses looking to establish an online presence. This is very important, when starting a business, you need to be able to focus on the core business rather then the surrounding areas. The more support you can find for non core areas the better.

Step 2: Create A Business Plan
Your business plan is not something to be taken lightly or done quickly. Starting a business should never be done without a plan. This is the road map for starting your business and if done correctly will lead to your success. Do the appropriate research and be sure that you really know the industry. Ideally the business is something you already know, but if not, read relevant magazines, join relevant trade, industry or professional associations.

When creating you business plan be realistic and remain open minded. The objective of you the business plan is to determine the best way to position your business to make money, not prove that the way you have in mind is the best way. It is very likely that you will tweak or even completely change your business idea based on the plan. The objective is to start a business that will be successful, not prove that your first idea is the right one. If done realistically your business plan will not only tell you if your business really has a chance of making money but also how much you can expect to make from your business and when. Have others review your business plan to question things that may not be realistic. Although learning that your business plan will not work can be difficult to swallow it is better to find out before starting a business then after.

Make sure you understand your legal, tax and insurance responsibilities. You may need to hire lawyers or accountants so make sure these items are covered in your business plan. If your business is going to have employees, make sure you understand the expenses and necessary legal paperwork to do it right.

Step 3: Determine The Best Structure For Your Business
When starting a business many factors must be considered in choosing the best structure or form of business ownership. The choice you make can have an impact on multiple aspects of your business, including taxes, liability, ownership succession, and others. This is an important step in starting a business, do not take this decision lightly. Do the proper research and make sure your business is set up properly for your immediate and long term needs.

The popular options are:
Sole proprietorships -- These firms are owned by one person, usually the individual who has day-to-day responsibilities for running the business. Sole proprietors own all the assets of the business and the profits generated by it. They also assume complete responsibility for any of its liabilities or debts. In the eyes of the law and the public, you are one in the same with the business.

Partnerships-- In a Partnership, two or more people share ownership of a single business. Like proprietorships, the law does not distinguish between the business and its owners. The partners should have a legal agreement that sets forth how decisions will be made, profits will be shared, disputes will be resolved, how future partners will be admitted to the partnership, how partners can be bought out, and what steps will be taken to dissolve the partnership when needed.

Corporations-- A corporation chartered by the state in which it is headquartered is considered by law to be a unique entity, separate and apart from those who own it. A corporation can be taxed, it can be sued, and it can enter into contractual agreements. The owners of a corporation are its shareholders. The shareholders elect a board of directors to oversee the major policies and decisions. The corporation has a life of its own and does not dissolve when ownership changes.

Subchapter S Corporations-- A tax election only; this election enables the shareholder to treat the earnings and profits as distributions and have them pass through directly to their personal tax return. The catch here is that the shareholder, if working for the company, and if there is a profit, must pay him/herself wages, and must meet standards of "reasonable compensation". This can vary by geographical region as well as occupation, but the basic rule is to pay yourself what you would have to pay someone to do your job, as long as there is enough profit. If you do not do this, the IRS can reclassify all of the earnings and profit as wages, and you will be liable for all of the payroll taxes on the total amount.

Limited Liability Company (LLC)-- The LLC is a relatively new type of hybrid business structure that is now permissible in most states. It is designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. Formation is more complex and formal than that of a general partnership.The owners are members, and the duration of the LLC is usually determined when the organization papers are filed. The time limit can be continued, if desired, by a vote of the members at the time of expiration. LLCs must not have more than two of the four characteristics that define corporations: Limited liability to the extent of assets, continuity of life, centralization of management, and free transferability of ownership interests.

Step 4: Opening Up For Business
You are now ready to really begin working your business. There are a few things to consider. First is, starting a business takes money, what will be your source of income while starting the business? I would be surprised if your business plan did not show that in the first few months or year your business will not be making great sums of money. Therefore you need a plan in place to pay the bills while your business is getting started. Can you keep your existing job? Of course you are anxious to start your business and jump in full time. And no doubt your new business will take a considerable amount of your time but having a source of income while starting your business will allow for a few hiccups and mistakes along the way. Making the chances of your success much better.

There is no reason to wait until your business is fully up and running before getting started. Make some contacts and line up some customers before starting the business. Do not wait until you are ready to open the doors. And do not be fooled into thinking that once the business opens the customers will suddenly come. If you are unable to attract interest before starting the business what is going change after the business starts that will make the interest grow?

References For Starting a Business
Business ideas

Business Startup Materials

Additional Business Startup Materials

Start Up and Planning Information

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