QuickOverview

It can be very fulfilling to start your own business because you have the freedom to be creative and innovative. Since you make all of your own decisions, you can make your dreams come true. On the other hand there is a lot of risk involved since many new businesses fail. You also need to do everything yourself and make all of your own decisions. With this in mind, you really do need to consider what a successful business requires and what can lead to failure.

Starting A Business From Scratch

The most important thing that you can do when starting a new business is to develop a thorough business plan. This will help you to see the strengths and weaknesses of your business. It is your blueprint for success because it lists your goals, helps you analyze its feasibility, define who your customers and competitors are, points out your strengths and weaknesses and details your future plans. You should develop the business plan yourself but you can consult professionals for advice. Once this developed, you will need to refer to it often and update it yearly. Some of the things that should be included are:

1. A summary of your business and its products.
2. Your business' name and location, and what the building needs.
3. Your market, competition and industry trends.
4. Your goals and how you plan to reach them.
5. Your financial needs .
6. A market analysis.
7. Your marketing strategy.
8. Your pricing policy.
9. How you plan to sell, distribute and service your products.
10. Financial information.

Some Experts To Help With Your Business

There are several professionals whom you should establish a relationship with. These include:

1. An accountant can set up a good bookkeeping system for your business that you can understand.
2. An attorney is essential for helping you to plan your business. They are also important whenever you need contracts or information about your rights and obligations.
3. A local banker will give you financial information about financing.
4. An insurance agent can tell you what type of insurance your business needs and how much.

Business Insurance

It is important that you learn what type of insurance your business needs and then obtain it. Some of the possible types of insurance that you may need include:

1. Fire.
2. Liability.
3. Vandalism and Malicious Mischief.
4. Theft.
5. Vehicle.
6. Product Liability.
7. Business Interruption.
8. Professional and/or Malpractice.
9. Workers' Compensation.

Choosing Your Business' Name And Logo

You need to choose a name carefully because you will have to live with it for a long time. The name should give people an idea of the nature of your business while projecting a good image. You will want to make sure that the name is not already in use. Once you have a name you will also need a carefully designed logo. Then you can trademark these things.

Finding The Right Location

Your business' location can make or break your business. This is why you need to think about it carefully and seriously. Decide whether you need a lot of heavy traffic or if people will simply come to you. If you have a retail store then your location is critical. However if you are a manufacturer, service or wholesaler then you do not need to worry about your location as much. Here are some other things to consider:

1. What special needs does your business have?
2. Are there any special zoning requirements?
3. How does the area look?
4. Is there a good customer base?
5. What are the traffic patterns and parking like?
6. How is your competition?
7. What is the lease like?

Regulations

There are a lot of government regulations that you need to know about. This can be intimidating, but it is very important. What you need varies depending upon your business type, city, county and state. Some common permits that you may need include:

1. Business license.
2. Miscellaneous local permits.
3. Police clearance.
4. Food permit and/or liquor license.
5. Seller's permit (This is needed in states with sales tax.)
6. Building permits.
7. Fire certificates.
8. Zoning permits.
9. State occupational licenses (These are needed for doctors, lawyers, general contractors and day care providers.)
10. Federal export licenses.

Keeping Records

Accurate, up-to-date records are crucial to a successful business. They are also handy at tax time. These records should be as simple as possible and can be kept either on paper or on your computer with a good back up system in place. It should start with a business checking account. Other types of necessary records include:

1. Inventory.
2. Client Contacts.
3. Petty Cash.
4. Suppliers.
5. Employee Data.
6. Mileage.
7. Telephone Calls.
8. Accounts Payable.
9. Payroll.

Accounting

This is a topic that makes a lot of people nervous. However, simplicity is the key here. There are 2 basic methods for doing this:

1. Single entry is a simple system that requires only 1 entry per transaction. This is adequate for most small businesses.
2. Double entry requires 2 entries per transaction so that there are cross checks which decreases errors.

There are also 2 methods to help you keep track of the money that comes in and goes out of your business:

1. Cash is the method that most small businesses use. Herein income is reported in the year it is received and expenses are deducted in the year they are paid.
2. Accrual is the method that is used whenever income is reported when it is earned and expenses deducted when they are incurred, regardless as to whether the money has changed hands yet or not.

The methods you use will depend upon your business. You need to make sure that you understand it so that you can make good decisions. You can purchase ready-made forms to help you with this.

Financing Your Business

There are 3 ways in which you can finance your business once you have a good, solid business plan in place:

1. You can start it with your own money.
2. You can find a lender to borrow money from. This can be a friend, relative, acquaintance or bank.
3. You can take on a partner.

Whatever you do, you should not depend upon the government for financing. Government grants are rare and only available for limited, specific businesses.

Managing Your Inventory

A lot of your investment will be tied up in inventory. Only the goods that you sell that year can be deducted on your taxes though. So, it is important to effectively manage your inventory. This requires good management and decision making skills. Herein is where precise record keeping becomes vital because you need to keep a balance between the costs (storage, insurance, taxes, etc.) and benefits (having adequate stock on hand, a wide assortment, low cost volume purchases, etc. ) of your inventory. Maintaining a correct balance here is difficult but essential.

Setting Prices

Your prices should cover your costs and yet provide you with a profit. While this sounds easy, it isn't because there is no hard, fast rule here. However, there are some things to consider:

1. Cost of doing business.
2. Profit goal.
3. Business' image.
4. Your competition.
5. What the market can bear.

Taxes

These laws are complicated and confusing because there are certain things that you can deduct if you meet specific rules. This is why it is so important to have a good accountant on your side. They can help you with state, federal and local taxes, as well as sales tax. If you have employees you also have disability and unemployment insurance taxes to pay.

Know Your Market

This is crucial to your success. Your target market needs to be clearly defined. You need to know their age, gender, economic status, lifestyle and geography so you can choose the most effective marketing strategy. This information can come from existing sources or you can gather it yourself but this will cost you time and money.

Marketing

You need to let your customers know that you have started your business so that they will come in and make purchases. This is very dependent upon marketing. As such you need to write up a plan that lists your goals, how to get there and how much money you have available to spend. You will then need to look at it regularly in order to stay on track. This will require work and careful analysis. Once you figure these things out you can use many traditional forms of advertising or try advertising online.

Good Managerial Practices

Management involves setting goals and making decisions that are based upon careful planning. As the business owner, you are responsible for all aspects of the business. Your management skills are what will guide your business to either success or failure. Therefore, you need to take care whenever you plan, organize, direct and control any part of your business.

Being An Employer

Employees make your business even more complex. For this reason, you need to think about this carefully before hiring anyone. If you do decide to hire employees, you should make sure that you hire the right people, train them well and keep them happy so that they will stay and help your business grow.

Hiring employees is expensive. This is why this decision must fit well with the goals in your business plan. If you go ahead with this, then you need to make sure that your employee's attitude works well with your business. This is what a 30 or 90 day trial period is for. After all, the wrong employee can greatly damage your business. During this trial period you need to train them well, even though it is expensive. Special training and a good company handbook are very important here.

Since you want your employees to be satisfied, motivated, and involved with your business you need to keep the lines of communication open. This means allowing your employees to participate in your business' goals and giving them constructive feedback.

You also need to talk to your accountant and lawyer to make sure that all of your paperwork and legal requirements are met. These things should be put into written records. Areas that should be included here are:

1. Working conditions.
2. Minimum wages.
3. Safety considerations.
4. Workers' compensation insurance.
5. Employee taxes.
6. OSHA requirements.

Of course, you also have ethical obligations to provide a safe workplace for your employees. Here are some programs that can help you with this:

1. Americans With Disabilities Act (ADA).
2. Affirmative Action.
3. Mental and physical wellness programs.

Taking Care Of Customers

Customer service is a very important part of your business' success and it is also one way in which you can compete with larger corporate businesses. Once your customers are satisfied, they will return and recommend your business to others. One thing that you should know is that it is harder and more expensive to find new customers than to retain the ones that you already have. With this in mind, you should view every interaction as an opportunity to serve your customer. This often means going beyond what is expected. It means getting to know your customers and their needs. It also means building relationships through listening carefully and responding promptly and appropriately.

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