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How To Start a Small Business

An entrepreneur of any small business will attest to the fact that starting up a business is no easy enterprise. Chances are that a person who decides to start a small business will probably never work as hard as any other time in their life. It doesn’t just take drive, initiative and a self-disciplined work ethic -- though these are essential -- but requires rigorous dedication, commitment, preparation and financial planning.

Many would-be entrepreneurs don’t consider small business insurance, overhead costs, hidden laws and legal issues, potential profit loss, etc. When planning a small business, it’s wise to sit down and plan out a strategy, which includes:

• Market Research
• A Business and Financial Plan
• Expert Assistance
• Estimate insurance

Market Research

It would be pointless to create a service or develop a product that no one in the area needs. In order for success, the service or product needs to sell over and over so that it can be supplied over and over, and in order for it to sell, there needs to be demand to justify the supply. Market research is simply figuring out where your service or product will sell, which can broken down into three main factors:

• Demographics
• Location
• Demand

The size of a potential market can easily be overestimated. There are various group averages that need a particular service or product more than other group averages. An upscale cigar bar probably won’t do well in a location that is frequented by young females. Instead, an upscale cigar bar would do much better in a location where older males frequent with an average salary at or above $60,000 a year.

Business and Financial Plan

Don’t fall for the “paper napkin” fantasy, where all you need is a good idea and the profits will start flooding in the next day. No successful business, big or small, has succeeded overnight, or without a thorough and precise business plan, which includes:

• Financial Plan
• Business Plan
• Profit Estimation

Expectations are certainly necessary to start a small business, which is why getting it all on paper is important. All business plans should have some sales projection based on research and market estimation. If your business is selling organic sandwiches, don’t expect your sandwiches to sell any better than all the other local organic sandwich shops in the area.

Start-up cost is also an important aspect of a small business. If the person has good credit, they often have access to bank loans and small business grants. If credit is not so good, perhaps an extra part-time job might be required, a loan from friends or family, government loans or just personal savings.

Another good idea is to start as simple as possible. Don’t assume a storefront or office is immediately required. Home-base businesses are becoming more and more common, which saves huge expense. A pool man or cleaning service just needs a van and a cellular phone. With the advent of the Internet, websites are becoming sufficient enough as virtual storefronts for small businesses.

Seek Expert Assistance

Paying a lawyer on retainer to assist with laws and legal factors is better than scrambling to find one when it’s absolutely necessary. At the very least, any business, regardless of the size, even a one-person operation will need tax advice.

Estimate Insurance

If the business owns property, has hired employees, deals directly with customers or uses a vehicle for business purposes, getting small business insurance is also an important step to safeguard against potential liability or damage to property. Securing the investment of your time, effort and finances is just one of the necessary steps to start a small business smoothly and successfully.

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