Starting your own business takes lots of research, time, money and resources, so knowing what's involved before you begin is key to successfully getting your idea off the ground.
Evaluate and Analyze
Review your skills and experience to help determine what type of business to open. Then, review the market to determine if enough prospects exist who have a problem and are willing to pay you money for a solution, suggests Forbes. Review how many competitors offer similar products or services to see if there's enough business for both of you. Evaluate your management and leadership skills if you plan to hire staff to help you run the business.
Write a Business Plan
A business plan helps you solidify your idea and figure out what to do to reach your goals, says Bplans, an online resource offering hundreds of free business plans. (see Ref #2) It's also a requirement if you seek a bank or Small Business Administration loan. A business plan requires details such as a company overview, description of your products or services, details about your target market, a marketing and sales plan, background information about your management team and your financial picture both now and for the next few years.
Create a Legal Structure
The legal structure you choose depends on how many people will own the business and how much you need to protect yourself from being personally liable for the business, says Nolo, an online legal resource. You can choose set up your company as a sole proprietor, a partnership, a limited liability company or a corporation. Each structure has specific requirements, liability issues and tax advantages, so work with an attorney to create the right one.
Obtain Licenses and Tax IDs
Check with your state about the requirements for obtaining a business license. Your state or local government may also require additional licenses, such as food handling or beverage licenses if you plan to manufacture and sell food items. Obtain a federal tax identification number. Inquire about state and local taxes by visiting the SBA's comprehensive list of agencies to find out what's required in your state.
Use personal savings, loans from acquaintances and even credit cards, if you have no other options, to finance your business. You can also seek a bank or SBA loan using personal collateral to secure the loan or take on a partner who has the finances to get the business started.