Seven Steps to Starting Your own Business

by Palo Alto Software

Question 

I’d like a basic outline for the fundamentals of how to start my own business. Please include some insight on financial management, legalities, literature that may come in handy, etc. Thanks!

Answer

What is interesting about this question is that, while many businesses are indeed created after much thought and planning, probably just as many are started on the fly; the guy who has had the itch to go solo but gets fired from his day job before actually doing so is apt to just wing it and hope for the best.

By the same token, there are many companies that start out planning to be one thing and end up doing something quite different. This is not to say that forethought and planning are a waste of time when starting a business; that’s certainly not true. Rather, it points out one of the fundamental laws of successful entrepreneurship –be flexible. For example, a 15 years ago Microsoft had no Internet strategy at all. Seeing the folly of that, they shifted much of their focus almost overnight. That’s a good lesson for all of us.

That said, here are the seven steps to starting your own business:

Step 1: Personal evaluation.

Begin by taking stock of yourself and your situation. Why do you want to start a business? Is it money, freedom, creativity, or some other reason? What skills do you have? What industries do you know about? Would you want to provide a service or a product? What do you like to do? How much capital do you have to risk? Will it be a full-time or a part-time venture? Your answers to these types of questions will help you narrow your focus and pick a business.

Maybe you don’t know what kind of business fits your goals. If that’s the case, there are many places to get business ideas. Do some online research. Look through the Yellow Pages. Go to trade shows. Buy industry magazines. Check in with the Small Business Association. Read the business section of the newspaper.

Step 2: Analyze the industry.

Once you decide on a business that fits your goals and lifestyle, you need to evaluate your idea. Who will buy your product or service? Who would be your competitors? You also need to figure out at this stage how much money you will need to get started.

Step 3: Make it legal.

There are several ways to form your business ––  it could be a sole proprietorship, a partnership, or a corporation. As I have discussed several times previously, although incorporating can be expensive, it is well worth the money. A corporation becomes a separate entity that is legally responsible for the business. If something goes wrong, you cannot be held personally liable.

You also need to get the proper business licenses and permits. Depending upon the business, there may be city, county, or state regulations as well as permits and licenses to deal with. This is also the time to check into any insurance you may need for the business and to find a good accountant.

Step 4: Draft a business plan.

If you will be seeking outside financing, a business plan is a necessity. But even if you are going to finance the venture yourself, a business plan will help you figure out how much money you will need to get started, what needs to get done when, and where you are headed.

Step 5: Get financed.

Depending on the size of your venture, you may need to seek financing from an “angel” or from a venture capital firm. Most small businesses begin with private financing from credit cards, personal loans, help from the family, etc. As a rule of thumb, besides your start-up costs, you should also have at least three months’ worth of your family’s budget in the bank.

Step 6: Set up shop.

Find a location. Negotiate leases. Buy inventory. Get the phones installed. Have stationery printed. Hire staff. Set your prices. Throw a “Grand Opening” party.

Step 7: Trial and error.

It will take awhile to figure out what works and what does not. Follow your business plan, but be open and creative. Advertise! Don’t be afraid to make a mistake. And above all, have a ball! Running your own business is one of the great joys in life!

SOURCE: http://help.bplans.com/seven-steps-to-starting-your-own-business/554/