Starting a small business requires planning, making key decisions, and a series of legal documents need to be completed. In this article, we go on a voyage of the 10 important steps that are very crucial to starting a small business.
Using market research to find your customer
Market research mixed with customer behavior, trends in the economy help to confirm and improve your business ideas.
It is germane to understand your customer base from the start. Market research will help in no small ways to reduce risks even when the business is still in its teething stage. Gathering demographic information will help you to better understand the opportunities and limitations involved in gaining customers. The demographic information could include population data on age, wealth, family, interests, and other things that are relevant for your business setup.
It is apt to answer the following questions in order to get a good sense of your market.
- Demand: Is there any desire for your product or service?
- Market size: How many people would show interest in your offering?
- Economic indicators: What is the income range and employment rate like?
- Location: Where do your customers reside and where can the business reach?
- Pricing: What is the right price for potential customers to pay for your product?
In doing your research, you can either do it yourself in order to get the right results or outsource it. Bear in mind that the information you get when research is outsourced may not be specific. Here are the few methods you can deploy for direct research:
- Focus groups
- In-depth interviews
- Business plan:
A business plan is actually the foundation of your business. In order for your business to have direction, you can learn how to write a business plan using a template. It is very quick and efficient.
- A business plan helps you to run your business
A well written business plan is a guide that directs you through each stage of starting and managing your business. A business plan is a roadmap on how to structure, run, and grow your business effectively and efficiently.
- Pick a business plan format
There are no right or wrong ways to write a business plan. What is key is for the business plan to meet your needs. As such, there are two types of business plan: Traditional business plan and lean startup plan.
- Traditional business plan: This format is very detailed. It is a comprehensive plan that includes the request of financing from traditional sources. Traditional business has different sections like: Executive summary, company description, market analysis, organization and management, service or product, marketing and sales, funding request, financial projections, and appendix.
- Lean startup plan: This is a type of business plan for people who want to setup their business pretty quickly. It involves modifying the plan as you go on in the business. Lean startup plan also involves some components like: Key partnerships, key activities, key resources, value proposition, customer segments, customer relationship, cost of structure, and revenue stream.
- Fund your business
It is clear like broad-day light that it costs money to start a business. Funding is a key part of any startup business.
- Determine how much fund you would need and how to source for funding:
Each business has different needs; your financial situation and vision for your business is what will actually shape the financial future of the business. After knowing how much fund is needed to start your business, the next thing is to figure out how to get the fund. There are three funding sources:
- Investors loans
- Crowd funding
- Choose your location
The location where you situate your business will determine the kind of regulations your business will be subjected to. Make a strategic decision about the state, city, or neighbourhood you choose to situate your business.
- Choose a business name
It takes creativity to find the right name for your business. Immediately you pick a name, the next is to protect it by registering the name with the agencies in charge of business registration.
- Register your business name
Registering your business name makes it a legal entity. Registering your business actually depends on the business structure and location you have chosen. Business registration procedure is different from country to country. In some countries, you do not have any business with to do with the federal authorities; except for the filing of tax yearly after obtaining a tax ID. In some countries, it is the states that undertake business registration. There are countries where all you need is just to register a business name. Other forms of registration include LLC, corporation, partnership or nonprofit organization.
- Apply for licenses and permits
In most countries, a combination of licenses and permits are required from federal and state authorities. The requirements and fees are based on your business activities, location and government rules. For example, if you are into food and drugs, there is the need for additional licenses and permits after you have registered your business.
- Open a business bank account
Opening a business account when you want to start accepting and spending money as a business is very important. A business account helps your business to be legally compliant and protected. It provides some benefits to your customers and employees. Opening a bank account is usually done after obtaining a Tax Identification Number (TIN).
- Get a business insurance
If you are not protected under the right insurance policy, accidents and natural disasters could run you out of business. Going for business insurance will protect your business from the unexpected. It won’t be wise to start a business without being covered by any insurance company. Business insurance is a sure way to protect both your personal assets and business assets from unexpected catastrophe. Ensure that you insure things that you cannot easily pay for on your own. When you speak to an insurance agent, the agent will assist you to choose the right insurance for your business.
- Finally, open shop
Congratulations! You can open your business after completing all the requirements for stating you a business. You can now cut the tape. It is now time to start managing and growing your business.