How to Start a Small Business

As the economic problems continue to hit every day Americans, many individuals are starting to branch off on their own and embark on starting a small business. Many people opt for such a route because of the ability to manage your own schedule and produce a product or service that was created through personal ingenuity and innovation. That being said, many ventures fail because the entrepreneur does not develop and initiate a sound small business plan. To properly start a small business, an individual must follow basic steps.

The first step associated with starting a small business is the development of an idea. To start a business you will need to create or choose a business idea. While this is obvious, the majority of people interested in starting a small business typically have the desire to do so, but lack an innovative idea that has the ability to become profitable.

For the typical entrepreneur, there are many options in creating a small business plan. A person can buy a franchise or an existing business, or develop a novel business idea themselves. Once the idea has been fortified, the development of a sound small business plan is essential.

Developing and writing a small business plan is the most important step in starting a small business. The creation of a small business plan is how potential investors will evaluate your business model. This is crucial because when seeking financing, the lenders or investors will need to read the plan and evaluate the likelihood of success. Within the business plan you will need to develop business strategies, financial projections, and marketing procedures to effectively advertise and promote your product or services.

When your small business plan is created you will need to figure out an avenue for financing. Typically, most small businesses have three channels for financing: friends or family, investors, or bank loans. Each of these arenas have different functions and specifications associated with them. The bank will require repayment in the form of principal and interest payments. Friends, family, and investors will commonly want some control over the function of the business, as well as ownership.

Once the capital has been raised and the business has been formalized through a mission statement, you will next need to take legal issues into considerations. Choosing a legal structure--Sole Proprietorship, Partnership, or a Corporation--is a necessary process that will have long term implications. Once this has been decided, other factors such as office space, expansion, the amount of employees needed, bookkeeping issues, and tax procedures will need to be realized before fully managing the business.

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