For every intending entrepreneur, how to start a business seems to be a major concern. Starting a business goes beyond having a business idea or capital, it entails all the mental work done behind close door to ensure that the business stands the test of time.
Basically, it is advisable to conduct extensive research in line with the business idea you have.
Irrespective of the business idea, there are some general rules and guide you should adhere to. Fortunately, this article compiles a complete guide on how to start a business.
It is not always as exciting as when the thought of doing business comes to mind as when the thought of how to start a business comes to mind. How to start a business comes with its wave of confusion, pressure and threats. There is no far fetched reason to this as how to start a business is directly related to it’s growth, continuity and longevity. So if a business do not start well, the business will not end well.
Regardless of the business in view, a proper guide on how to start a business will not only scale the business but also make more visible or clear the potentials of the business thus building up the confidence of the entrepreneur.
Following these detailed basic steps on how to start a business, a good guide is assured.
1. COME UP WITH A BUSINESS PLAN
A plan mostly is a guide away from failure. A business plan guides you through the journey of knowing and identifying relevant, irrelevant and excesses. Growing a business is a process, it is never an immediate achievement. A good plan from the start gives you clear visions, confidence and Focus.
There are two methods of writing your business plan, the traditional business plan method and lean business plan.
The traditional business plan: This is mostly used or needed by a detailed business owner or investor, this is mostly the best option as it is detailed. The Traditional business plan contains:
√ Business name
√ Your Mission statement
√ Your Product and services
√ Your Companies leadership team
√ Your Employees
√ Where your company is located.
√ Your Target market
√ Your Market Analysis
√ Your SWOT (Strengths Weaknesses Oppositions Threats) Analysis
√ Your Organisation and management structure with a chart if possible
√ Marketing and sales strategy
√ Funding requirements and duration
√ Business yielding Potentials
√ Credit Histories
√ Permits that would be required
√ Licences that would be required
The Lean Business Plan method: This is basically a direct to the point type of business plan, it contains:
√ Mission Statement
√ Major Partnerships
√Resources that would be used to create product and services
√ SWOT (Strength Weaknesses Oppositions Threats) Analysis
√Sales and Marketing Strategy
√ Target Market
√ Revenue Streams
2. CONDUCT A MARKET RESEARCH
It is important you understand the system of your market, you will definitely be needing it. Understanding your market gives you a great insight on what the value you are providing is worth, it’s target and the competitions.
The strength and weaknesses of other industries, what you are going to do different or what you are going to improve on to provide a better service. What you need to make the difference or improvements. What it will cost you to startup. During your market analysis, you take SWOT analysis of your business.
3. IMPROVE YOUR BUSINESS PLAN
With the knowledge from your market analysis, you improve your business plan, let go of the excesses and add to the plan the necessities to be the shift in the market. This stage in starting your business can be regarded as the final plan stage.
At this point, a clearer picture of your industry and a modification of your mission statement is done. So as you go about putting things in other, you have a clear perception of what you are doing.
4. RAISE CAPITAL FOR YOUR BUSINESS
As there are several means of raising Capital, alot of negative informations are out there about taking loan. Taking a loan basically depends on the business plan and structure, if you are confident enough about the potentials of your business, a loan is no bad idea.
°LOAN: Loan is certain amount of money lent to you by the bank over a period of years and interest rate and monthly payments are fixed in terms.
Other ways to raise capital include:
√ Personal Savings: The money you have put aside for the purpose of starting a business. This is not gotten from anyone else but you.
√ Selling stock of your company: This refers to liquidating your asset for money. Your investor buys the share and gives you cash, most times it is advisable you keep over 50% of your stock as the investor has exclusive right to re-sell his share and that might affect your ownership of the business. The highest shareholder is the owner of the business.
√ Partnership: You partner with someone or organisation of like minds. Where the other party, contributes to the capital a given percentage. In partnership, the share in the profit as well as the loss which would mostly be aligned to their contribution to the Capital and overall growth of the company.
√ Sponsorship: You can write a business proposal to individuals, organisations or companies. If validated and approved, these individuals, organisation and Companies will raise the Capital. In this case, they may not be interested in any percentage of the profit but might be requiring a steady report on growth process. In the other hand, the may require a given percentage (most times a little percentage. Example, Non-governmental organisation) but will not take part in the loss of the company.
√ Friends and Family: This is contributions from close relatives and friends. it could be a place to start, it could be facilities but mostly cash. They business owes no obligations to these persons.
5. CHOOSE A BUSINESS STRUCTURE
In starting a business, having done the fore analysis, the next consideration is the structure of business if it will be sole proprietorship, partnership or a limited liability company. While choosing a business structure, you must Consider:
• The tax and legal standing: Tax is a mandatory contributions, levied on business owners by the government. It could be at a national level or state level. It can also be on both levels.
• Cost of start up: From your market analysis, having explored the possible ways of raising an income and the potential of your business, you would know the right business structure to erect.
• Profit sharing : It is just in sole proprietorship that you do not share the profit and loss of the business. In every other business structure, profit and loss is shared based on agreement of both parties.
• Continuity and transferability: Majorly a decision from the potential of your business and your interest. If it’s not a long term interest or short term interest.
6. CHOOSE A BUSINESS NAME
Your business name is like your gateway to investors and Consumers. So in picking a name you should know and consider that:
• It is almost like the full essence of your company in one word or two, so keep it simple and intentional.
• It is your business identity, it should therefore be in alignment with your services provided or the satisfaction intended.
• Business name should not take alot of energy to pronounce or needs special attention to memorize. It should ring a bell such that even a layman can relate with and relate to the name.
• Trade mark issues should be put into consideration while choosing a business name
• In as much as it should be Simple, make your business name Unique. If possible, a name not found in the dictionary.
7. REGISTER YOUR BUSINESS
Registered business gives you a legal standing. Your registration is your proof of authenticity. A registered business is recognised as a separate entity on it’s own, separate from the owner. It has its own rights, values and identity recognised.
Reasons to register your business:
√ Protection from Legal Authorities: When your business is registered, your business name is protected and cannot be used by any other business. The authorities protect and preserve your business name and slogan.
√ Business account : Having a business account is very important for every business. A business that is not registered cannot get a corporate account and this is not good for possible investments and business transactions. Using a personal account in running a business, limits the Potentials of the business.
√ Business Trips and Conferences outside your country: A registered business makes it possible for you to travel outside the shores of your country for business deals and business transactions. Only Registered Businesses can gain international recognition thus you can only leave the country for business purposes when your business is registered.
√ Hiring Employees: There are rules and regulations guiding every company. When a company is registered, it makes the rules more valid, this applies also to the hiring, paying and, maintaining of employees. It is easier for a registered business to hire employees as the individuals know that they will be properly protected and are operating under a controlled management. This breeds the best from both the employees and the employer.
√ Continuity: A registered business name assures you of a lasting legacy. Even after the Business owner is no more, the business can still run on its own. it does not die with the owner. Therefore, registering your business is as good a solid foundation as Posterity.
√ Getting Loans: Banks and other corporate bodies give loan to Registered businesses. When your business is not registered and loan is applied for there is alarm for investigation for fraud. This makes the process longer than necessary as you would have to proof beyond doubt that you are genuine and most times not get the loan until you are registered.
√ Reputation: A registered business is trusted by the consumers of your services. Your registered business entails permanence and shows effective management. This builds confidence in your investors and Consumers alike.
√ Incorporation: When your business is registered it will now be recognised by the Corporate bodies in your country. The body responsible for registration of businesses. This recognition gives your business a legal stand in your industry and is an advantage against other industries in your Market who are not registered.
√ Legal protection from risks: Your Registered business is an entity of its own. So if your business runs into debt or liability of any sort with the bank, so far you did not guarantee such debt on a personal basis, nothing related to you would be affected. it is outrightly that of the business to deal with.
√ Financing : Most investors will not put their money in a business that is not registered. A non-registered business has so many disadvantages in this regard as it can not be regarded as a separate entity. Therefore many investors will not accept it as having a legal and working structure that can be accountable for their money. So, a registered business keeps you open to opportunities of investment and growth.
8. FIND A GOOD LOCATION
Location is paramount. Every service has its consumers but you can have the right service but the wrong consumers and this is mostly an effect of bad location and all efforts on the plan and structure will be a waste
In choosing location, your target market is majorly considered as well as the availability of raw materials. You do not run a cyber cafe in a typical village but in a school environment or at least where it can be assessed. The Economic policy of the environment too should be considered. If capitalism or socialism before settling your business in the environment.
9. OPEN A BUSINESS ACCOUNT
We do not mix pleasure with business as much as we do not mix personal affairs with business. A business account is vital, different from your personal account.
Most business accounts require multiple signatures thus relieving the business owner of the stress of every aspect of management, business accounts also generate income as interest.
Having business account makes it easy for you to prepare tax and also makes it easy to keep a proper book record of your expenses and your income.
A business account presents the management as organised and effective to investors. This can offer you credibility.
10. OBTAIN NECESSARY LICENSES AND PERMITS
Registering your business is not the only guarantee you need to kick off, every business have their license or permit of some sort and this is dependent on your industry and location.
Business permits, regulate the structure and safety of the business community.
Some possible License and permit that can generally be required for start-ups includes:
• General business license: Every business needs a general business license in other to operate in the country or in the city they are located. This is the first and most basic document every business must have. In most cases it is issued by a federal agency.
• Building or Construction permit: This is needed especially when changes are to be made in the already existing structure or the land. It could be an extension of the already existing structure or a complete rebuild on the same space. A permit would be needed from the local or state authorities.
• Health Permit: Mostly for businesses that deal with food. They are issued health permit before the can run to safe guard the consumers and build confidence in the product as this also aids in quality control.
• Special Federal Licensing or permit: If the activities of your business are being regulated by the federal government, a permit would be needed from the federal agency. Example, Import and export of wildlife.
•Environmental permit: This can range from Pollution permit to Water usage or land permit. Pollution permit for businesses that involves environmental contaminants. The state or local government will demand the business gets a permit. Water or Land usage permit is also likened to business that would be using the the land or water for their businesses. Mostly local authorities require this.
• Sign Permit: Local authorities mostly require that businesses gain permit before the can put up a Sign board or poster about your business.
• Tax identification number: A state or federal employer identification number is required for most businesses. This is also known as the tax identification number.
• Sales Tax Permit: Also known as Sellers permit or sales tax permit, this is for businesses that involve selling of goods. This is applicable to offline and Online businesses.
• Home occupation permit: This permit is for businesses that operate from home. Mostly issued by local authorities and is majorly based on the location of your business.
• Zoning permit: This permit regulates where businesses can or cannot operate. For your business to operate in a particular area in a city, the zoning permit will be required as some business are not healthy for some environments.
•Professional/Occupational license: Professionals such as Lawyers, Doctors, Engineers also Teachers might require a licence before the can practice in a city or county.
11. APPLY FOR BUSINESS INSURANCE
For unforeseen loss and risk management, you will be needing a business insurance.
Business insurance protects from theft, fire, medical expenses, compensation towards workers et al. Find a good licensed insurance agency and they would help you articulate the best insurance policy for your business.
Some insurance policies include:
√ General Liability insurance: This insurance policy provides Coverage against any liability cost rising from loss or damage. Regardless of the structure of your business and it’s growth potentials a general liability insurance is a must have.
√ Employee Insurance Policy: Covers expenses in regards to the employees, from medical bill to any lawsuit from the Employee.
√ Cover for loss of income: When business cannot operate after a disaster, This insurance covers up for the fixed cost.
√ Product Liability Insurance: Businesses into manufacturering would be needing this insurance for damages caused by their products.
√ Property Insurance: Helps business owner pay for any damage or loss of business property. If the property of the business is not insured, any loss or damage will be paid by the business owner.
12. GET ALL THE NEEDED EQUIPMENTS, TOOLS AND FACILITIES READY
Starting a business with borrowed facilities can work perfectly fine till you get yours, depending on your business. Getting all the facilities at once might not work and should not stop you from starting if you can borrow.
13. EMPLOY STAFF
A general saying “If you want to go fast, go alone but if you want to go far, go with someone” a very important aspect of a business is employing staff. A properly trained one on the field will do greater good. Also, a good training to a newbie will promise loyalty to the company.
You can not raise your business structure and do all the work and produce a high efficiency, even if you do, it will take a longer time. Time that would have accomplished one or two more tasks. So, no department or aspect of your business suffers, a staff is a must. If a small scale business, basically two or three for a start is enough.
14. PROMOTE AND MARKET YOUR BUSINESS
We are a most fortunate generation with the internet, where almost everything is possible including Promoting and marketing you business. Key effective ways are:
Make videos: The selling means of advertising products is video making. The video first should be short but detailed. If you cannot deal with the creative, you hire the services of a content creator an accurate one at that.
Make Reviews: You can give your product or render your service to some persons for free or a little token, get honest reviews from them. They would spread the word for you.
E-mail: Another promising way of marketing your products is through emails, Send emails to people, to promote your business, give updates and genuinely reach out to them on a personal level. Attend to their honest review or replies and give a feedback.
Social Media Ads: Run a Facebook, Instagram or Twitter Ads. For this, you would be needing a good copywriter. This would bring your business to the lime light, people from all works of life would see it and a good percentage of these people will click on it.
Have a website: Especially for an Online service provider, a website, properly developed with a very good user interface and an articulated blog post, where potential customers can come and know everything about your product is necessary, so when you run this Ads, it takes your potential customers to your website and expose them really to your product.
Create business social media handles: Create business social media handles separate from your personal handle, post your products on a daily basis, have a social media manager who has great skill in copy writing or content creation. You ask for honest reviews from consumers and re-post on your social media handles. This will encourage and boost the Confidence of other potential consumers.
• Use relevant #hashtags: Use relevant hashtags to promote your business, create hashtags with your business name if necessary. Your business reputation matters, do not use hashtags that would tarnish or drag the name of the business to the mud.
• Collaborations: When bigger industries are hosting events and call for sponsorship or partnership, this is a good strategy to sell your product as you will be featured either as a partner or as a sponsor, as much as this might bring about financial responsibilities, it can also be as free and simple as volunteering, it can also be donating assets that can be gotten back after the event. This strategy is subjective to business type.