6 How To Start A Small Business Well

doylc.com - How To Start A Small Business - Starting a small business is undoubtedly a big undertaking, but luckily it's something that can be accomplished by anyone with a bright idea, a strong work ethic, and a good set of resources. Starting a business involves thinking about a business concept, writing a business plan, understanding the financial side, and finally marketing and incorporation.

• Lay out the basics

Choose an idea. It could be a product you've always wanted to make or a service you feel is needed. It might even be something people don't even know they need because it hasn't been invented yet!

It can be helpful to have smart and creative people for a casual brainstorming session. Start with a simple question like: "What should we do?" It's not about creating a business plan, it's just about generating potential ideas. Many of the ideas will be duds, and there will be quite a few common ones, but a few may emerge that have real potential.

When choosing a concept, consider your talents, experience and knowledge. If you have specific skills or talents, consider how those resources can be used to meet a specific market demand. Combining skills and knowledge with a market demand increases your chances of a successful business idea.

For example, you may have worked as an electronics clerk for many years. You may have identified a demand for a particular form of electrical work in your community and combining your experience with market demand can allow you to attract clients.

Define your goals. Would you like to be financially independent and eventually sell your business to the highest bidder? Do you want something small and sustainable that you enjoy doing and with which you would like to earn a regular income? Those are the things you should know very early on.

Create a working name. You could do this even before you have an idea for the business and if the name is good you may find that it helps you define your business idea. As your plan grows and things take shape, you might come up with the perfect name, but don't let that stop you in the early stages. Create a name to use during planning and don't hesitate to change it later.

Always check if the name is being used by someone else before choosing it. Try to come up with a name that is simple and memorable.

Define your team. Can you do it alone or bring a trusted friend or two to join you? This brings a lot of synergy to the table as people bounce ideas off of each other. Two people together can often create something greater than the sum of the two separate parts.

Think of some of the biggest success stories of recent times, like John Lennon and Paul McCartney; Bill Gates and Paul Allen; Steve Jobs and Steve Wozniak; and Larry Page and Sergey Brin. In each case, the partnership brought out the best on both sides of the equation.

Think of the areas where you are either weak or where you have little knowledge. Finding partners who are compatible with your personality and who can fill your knowledge or skill gaps is a great way to ensure your business has the resources you need to succeed.

Choose your partners wisely. Be careful when choosing the person or people you are going to build the business with. Even if someone is your best friend, it doesn't mean you will work well together in a business operation. Start it with a reliable person. Things to consider when choosing your co-leaders and support performers include:

Does the other person complement your weaknesses? Or do you both just bring a set of the same skills? If the latter, be careful as too many people can be doing the same thing while leaving other things unattended.

Do you see the big picture at eye level? Arguing about the details is natural and important to getting things right. But not seeing the big picture, the true purpose of your business, at eye level can provoke a reaction that can be irreparable. Make sure your team cares about them and is as committed to the cause as you are.

If you're interviewing people, read about how to spot real talent beyond the certifications, degrees, or lack thereof. The area in which a person is trained is not necessarily the area in which they are most talented. For example, an interviewee may have a background in accounting, but their experience and your judgment suggest they may be a better fit to help with marketing.

• How to write business plan

Create a business plan . A business plan helps define what you think you need to start your business, large or small. It encapsulates the purpose of your business in a single document. It also creates a map for investors, bankers, and other interested parties to use to identify how best to help you and to help them decide whether or not your business is viable. Your business plan should consist of the elements described in the following steps.

Write your company description. Describe your business in more detail and how it fits into the market in general. If you are a corporation, LLC, or sole proprietorship, state so and why you have chosen this path. Describe your product, its major features, and why people will want it. Answer the following questions:

Who are potential customers? Once you understand who they are and what they want, develop a marketing strategy.

What price are they willing to pay for your product or service? Why should they pay more for your product or service than your competitors?

Who are your competitors? Conduct a competitive analysis to identify key competitors. Find out who is doing something similar to what you are planning and how they succeeded. Equally important is finding the mistakes and figuring out what caused their business to fail.

Write an operational plan. It describes how you will produce or deliver your product or service and any costs.

How will you create your product? Is it a service you offer, or if it's more complex - software, a physical product like a toy or a toaster - how is it built? Define the process from sourcing the raw materials through assembly to finishing, packaging, storage and shipping. Do you need additional people? Will unions be involved? All of these things must be taken into account.

Who will lead and who will follow? Define your organization, from the receptionist to the CEO, and what role each plays in function and finance. Knowing your organizational structure will help you plan your operating expenses and fine-tune how much capital you need to function effectively.

receive feedback. Friends and family are great resources to ask questions and get feedback - don't hesitate to use them as a sounding board.

You need to enlarge your premises. This happens more often than expected. When inventory starts to pile up, it may end up in your living room, bedroom, and garden shed. If necessary, consider renting storage space.

Write the marketing plan. Your operations plan describes how you will manufacture your product and your marketing plan describes how you will sell your product. When creating your marketing plan, try to answer the question of how you will introduce your product to potential customers.

You should specify the type of marketing you will use. For example, will you use radio advertising, social media, promotions, billboards, attend networking events, or all of the above?

You will also want to define your marketing message. In other words, what will you say to convince customers to choose your product? This is where you want to focus on your Unique Selling Proposition (aka USP). That's the unique advantage your product has to solve your customer's problem. For example, you can be cheaper, faster, or higher quality than your peers.

Think of a pricing model. Start reviewing your competitors. Know how much they are selling a similar product for. Can you add something (added value) to make yours different and thereby make it a more enticing price?

Cover the finances. The financial statements translate your marketing and operational plans into numbers – profits and cash flow. You determine how much money you need and how much you could earn. Because this is the most dynamic part of your plan, and perhaps the most important to long-term stability, you should update it monthly for the first year, quarterly for the second year, and annually thereafter.

Cover your formation costs. How are you going to fund your business initially? The bank, venture capitalists, angel investors, Small Business Administration (SBA), your own savings: these are all viable options. Be realistic when starting a business. You're not likely to roll out of the gate and do 100 percent of what you set out to do, so you need to have enough reserves to fund things until you're really up and running. One of the surest paths to failure is undercapitalization.

At what price do you want to sell your product or service? How much does it cost you to make? Work out a rough estimate of the net profit - taking into account the fixed costs such as rent, energy, employees, etc.

Create a summary. The first part of a business plan is the executive summary. When you have developed the other parts, describe the overall business concept, how it is going to be monetized, how much funding you need, where it currently stands including its legal status, people involved and a brief history and everything else your business lets you like look like a successful offer.

Build your product or develop your service. Once you have planned and funded the business and have your basic staffing in place, get started. Whether it's sitting down with the engineers and having the software coded and tested, sourcing materials and shipping them to your fabrication room (aka "garage"), or buying in bulk and raising the price, the building process is the time when you prepare for the market. During this time you can discover things like:

The ideas have to be adapted. Maybe the product needs to be a different color, texture or size. Maybe your services need to be broader, narrower or more detailed. This is the time to take care of everything that comes up during your testing and development phase. They will inherently know when something needs tweaking to make it better or to make it less like a competitor's outdated offerings.

• How to managing your finances

Secure start-up costs. Most businesses need capital to get started. Money is usually needed to buy consumables and equipment and to keep the business going for the time before your business becomes profitable. The first point of contact for financing is yourself.

Do you have investments or savings? If so, consider using a portion to fund your business. You should never invest your entire life savings in one business because of the risk of default. Also, don't invest money set aside for emergencies (experts recommend setting aside three to six months' income) or money you'll need for various commitments over the next few years.

Consider a home equity loan. If you own your own home, it may be a good idea to get a home equity loan, as these loans are usually easily approved (since your home is used as collateral) and interest rates are typically lower.

If you have a 401(k) plan through your employer, you should consider borrowing against the plan. Plans typically allow you to borrow 50% of your account balance, up to a maximum of $50,000.

As another option, consider saving upfront. If you have a job, you'll save a portion of your monthly income over time to cover your startup costs.

Go to a bank to inquire about small business loans or lines of credit. Always visit many providers to make sure you get the best rate.

Manage your running costs. Keep a close eye on your running costs and keep them in line with your forecasts. Whenever you see something being lavishly spent — like electricity, phone bills, stationery, packaging — look around and estimate how much you really need, and minimize or eliminate the expense any way you can. Think frugally when you start out, including renting items instead of buying them and using prepaid plans for services your business needs instead of locking yourself into long-term contracts.

Have more than the minimum. You may find that it will cost $50,000 to start your business and that's fine. You get your $50,000, buy your desks and printers and raw materials, and then the second month comes and you're still in production and the rent is due and your employees want to be paid and all the bills come in at once . When this happens, your only likely option is to bag it. If you can, try to have the reserves for a year with no income.

Pinch those pennies. Plan to keep office equipment purchases and overheads to a minimum upon incorporation. You don't need a grand office space, the latest office chairs, and expensive artwork on the walls. A broom closet at a prime address can be enough if you artfully steer clients to the meeting at the local coffee shop every time (meet them in the foyer). Many a business founder has failed because of buying the expensive gimmicks instead of concentrating on the business itself.

Decide how to accept payment . You have to do something to receive payment from your clients or customers. You can get something like a Square, which is great for small businesses as there is minimal paperwork involved and fees are minimal. However, if you're uncomfortable with the technology, you can inquire about a more traditional merchant account.

A merchant account is a contract whereby an acquiring bank provides a line of credit to a merchant who wishes to accept payment card transactions from a specific card company brand. Previously, one could not accept payments with any of the major credit card brands without such a contract. The Square changed that, though, so don't feel locked into or limited to that option. Please investigate.

The Square is a card reader that connects to a smartphone or tablet, turning that device into a kind of cash register. You may have encountered this device in the shops you frequent, as they're becoming commonplace in cafes, restaurants, food stands, and other businesses (look for a postage-stamp-sized plastic square plugged into a tablet or phone).

Note that PayPal, Intuit, and Amazon offer similar solutions. Check out all the options before making a choice.

If you run an online business, services like PayPal offer a great way to receive payments and make transfers.

• Legal side coverage

Consider hiring an attorney or other legal counsel. There are many hurdles to overcome when going from a stiff working to an overworked and underpaid small business owner. Some of these hurdles consist of stacks of documents containing rules and regulations ranging from construction contracts to city ordinances, county permits, state requirements, taxes, dues, contracts, shares, partnerships and more. Having someone to call when you need it not only gives you peace of mind, but also gives you a much-needed resource that can help you plan for success.

Get an accountant. You will need someone who is adept at managing your finances, but even if you think you can keep your own books, you still need someone who understands the tax side of running a business. Taxes with companies can get complicated, so you need (at least) a tax advisor. Again, this should be someone who can be trusted, no matter how much of your finances they manage.

Form a business entity. You need to decide what type of business entity you want to be, for tax reasons and hopefully to ultimately attract investors. You will do this after deciding whether you need money from others, either in the form of equity or loans, and with the advice of your legal and accounting experts. It's one of the last steps before you actually spend money or ask someone for money. Most people are familiar with corporations, LLCs, etc., but for the vast majority of small business owners, you will need to form one of the following forms:

A sole proprietorship if you (without employees) run that business alone or with your spouse.

A general partnership when you conduct this business with a partner.

A limited partnership made up of some general partners who are liable for problems with the company and some limited partners who are only liable for the amount they invest in the company. All stock gains and losses.

A limited liability partnership (LLP) in which neither partner is liable for the negligence of another.

• How to marketing your business

Get a website . If you sell online, get your ecommerce pumping and either build a website or have one built for you. It's your storefront, so anything you can do to make people want to visit and stay , do it.

Alternatively, if your business is more focused on the "in person" experience, traditional marketing can be just as important. For example, if you are starting a landscaping business, focus on informing the neighbors before creating a website

When creating a website, remember that simplicity and clarity are key. A simple design that clearly states what you're doing, how you're doing it, and what you're asking for is most effective. When creating your website, remember to emphasize why your business is the best solution to a customer's problem.

Hire professional designers. When you decide on a website, make sure it looks professional. Designers can cost more initially, but a well-presented and trustworthy website is essential. It needs to look professional and work with ease. If you involve money transactions, invest in security encryption and verify that your money transfer companies are solid and reliable.

Discover your inner publicist. You may really believe in your product or service, but for it to be successful, everyone else needs to believe in it too. If you are new to advertising and marketing, or dislike making sales pitches, now is the time to put those feelings aside and embrace the role of a publicist. You need to come up with an excellent short pitch to convince people they need your product or service, one that reflects your company's value, purpose and potential. Write that pitch down in many ways until you find one that you think says it all and is something you can say without further ado. Then practice like crazy!

Take the time to develop a great social media presence. This can be done long before the deal is ready, which increases anticipation. Use Facebook, Google+ and Twitter and any other social media you participate in to create excitement and spread the word. You want to generate excitement so people will start following your progress. (Make sure you choose business accounts for your business and keep your personal accounts separate. The messages you send should be tailored differently depending on which account you're sending from.)

Implement your marketing and sales plans. Begin marketing when your product has been built or your services have been developed and you have a reasonable expectation of when both are ready for sale.

If you advertise in magazines, they need text or images at least two months before publication.

If you sell in stores, let pre-orders sell and allocate shelf space. If you sell online, prepare that ecommerce site to sell.

If you offer a service, advertise in relevant trade and specialist journals, newspapers and on the Internet.

• How to launching your business

Safe place. Whether it's an office or a warehouse, if you need more space than your garage or guest room, now is the time.

If you generally don't need an office outside of your home, but do need occasional meeting space, there are often places that can fill that need. A quick Google search for "Business Meeting Rentals [your city/state]" will yield plenty of rental options near you.

Be sure to check with your local municipality for zoning laws. Some types of small businesses cannot be run from home and it is important to ensure your business operates in the right zone.

Launch your product or service. When the product is fully built, packaged, coded, online and ready to sell, or when your services are fully fleshed out and ready to go, host a special event to launch your business. Send out a press release, announce it to the world. Tweet it, Facebook it, echo it in every corner of your market - you've got a new business!