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Working for yourself can seem like an attractive alternative to being a wage slave. Operating your own business is hard work, and a risky endeavor. Over 70% of new business fail within 10 years. In order to be one of the success stories, you need to select the right idea, and plan thoroughly up front. This page outlines what you need to know about how to start a business.
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Working for yourself can seem like an attractive alternative to being a wage slave. Operating your own business is hard work, and a risky endeavor. Over 70% of new business fail within 10 years. In order to be one of the success stories, you need to select the right idea, and plan thoroughly up front. This page outlines what you need to know about how to start a business.
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Disclaimer
The content in this page is not a substitute for professional legal or financial advice. Please contact your attorney and financial adviser before using the information presented here.</note>
Introduction
- Starting a business requires first that you have a marketable product or service, and second, that you have a plan to successfully market that product or service. Laying the groundwork before you begin operations increases the odds that your business will be successful.
Step 1: Select a Product or Service
- What are you passionate about? Whether you're starting with an original idea, or purchasing a franchise, you need to believe in your business. After you've focused on what you'd like to market, you need to thoroughly research the idea to see if you have an effective business proposition.
- The SBA provides free business counseling services.
- Join your local chamber of commerce, and run your idea past members you meet.
- Your local bank may have a department that works with small businesses, providing counseling, advice, and referrals to accountants, lawyers, bookkeepers and other professionals.
- Research the market for your product by talking to customers and studying your competition.
- Estimate costs and revenues to see if your idea has the potential to generate a profit.
Step 2: Get Organized
- Before beginning operations, you need to have the fundamentals in place.
- Write a business plan. This will be revised frequently, but you should have a rough plan laid out as the first step in your preparation work. The research you did in selecting the product or service will serve as the foundation for your plan.
- Hire an accountant and an attorney, and settle on a form of ownership for your business.
- If you are marketing an original product or service, file for a patent or relevant intellectual property protection.
- Form a relationship with a bank.
Step 3: Line up Financing
- Your initial financing may be personal, generated from cash you have on hand, or raised from assets you sell or pledge as collateral for a loan.
- You may be eligible for an SBA loan, which will make you a more attractive candidate to banks.
- Friends and family may agree to become angel investors, giving you capital in return for a share of your business.
- Some special groups, such as women and minorities, may be eligible for government grants or guaranteed loans.
- If you have a new product or service in a growing industry, you may be able to attract interest from venture capitalists.
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