A great small business always starts out as an idea, but you have to transform that idea into action. That’s where many individuals can start to feel overwhelmed. It’s understandable to freeze up at the deluge of things that are required to get a business started, but getting going is actually easier than you might think. Once you’ve decided that you have what it takes to start a business if your own, determined the kind of business you want, and evaluated your chances of success, you have to begin the process of actually setting it up.
I. Write a Business Plan
The key to a successful small business, especially in the startup phase, is to keep things simple and costs low. Costs don’t just mean your monetary costs, but also your time.
Many would-be small-business owners fall into the trap of trying to create the world's biggest and most robust business plan. You’re only going to need that if you’re seeking investment or financing, and even if you will be seeking either of those things down the road, I always recommend small-business owners start out with by testing their ideas first before investing lots of time and money.
II. Decide on a Budget
While I highly recommend you keep your costs as low as possible, you’ll still need to determine a budget to get started and how much you’ll be able to spend. If you’re self funding, be realistic about numbers and whatever you anticipate your budget to be. I’ve found that an additional 20 percent tacked on for incidentals is a realistic overage amount that helps you plan your burn rate.
Your burn rate is how much cash you’re spending month over month. It’s an important number for you to figure out to determine how long you can stay in business before you need to turn a profit.
III. Choosing a Form of Organization
Whether you’ve purchased an existing business or started one from scratch, you must decide which form of organization (sometimes referred to as “business entity”) is best for your company. The decision can be difficult to make. You can choose to set up a sole proprietorship, partnership, corporation, S corporation, or limited liability company, and each has its advantages and disadvantages. Make sure that you consult with your attorney or a professional agency before making a final decision.
Remember, the form you choose does not have to be permanent. If the circumstances of your business change, you can always change the form of your business.
IV. Naming Your Business
When selecting a name for your business, try to make it short and easy to remember. Be sure to rule out those that have negative attributes or that are very similar to names of existing businesses. The name of your business must not be misleading or in any way imply something that the business is not. Once you decide on the name, you may have to register and/or receive approval from the local or state government that your business is formed in.
V. Protect Your Ideas
Patents, trademarks, copyrights and trade secrets are collectively known as intellectual property and generally refer to the rights associated with intangible knowledge or concepts. Intellectual property may be a concern if your business is developing (or has developed) a product, process, or concept that you are going to market, or has developed any special information that you want to keep away from your competitors.
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