The very beginning of every business is an idea – However, if ideas were profitable on their own, everyone would be a millionaire. The threshold that comes after you’ve had an idea is hard to endure (even impossible for some), seeing as how it consists of a several-stages-long process.
First, you have to validate your idea and make a business plan, then, you need to come up with the name (and other markings such as logo and colors). Finally, you need to gather the funds necessary for your business to launch and run. Here are some of the most important steps in starting a new business that you need to be aware of.
1. Validating your idea
Once you get a business idea, you might find it difficult to be objective about its validity. In the moment of inspiration, you’ll be too enthusiastic (even ecstatic) to be objective. Therefore, you need to have a systematic idea validation process, which will ensure that your idea is indeed as good as you want it to be. Fortunately, this can be done without you spending a dime. What you need to do is survey the market and determine how financially potent it is. Then, you need to take a look at the individual user and try to estimate how high your product/service is on their priority list.
2. Writing down a business plan
The next issue on the list is coming up with a business plan. Here, you need to have an executive summary, company description, and a detailed market analysis. Make no mistake, a well-devised business plan is a huge part of your success and it needs to be taken as seriously as possible. Of course, it’s impossible to predict all that can happen in the business world. However, this isn’t the purpose of a business plan, to begin with.
3. Coming up with the name
The next thing you have to do is register a business name, which is one of the creatively trickiest parts out there. Furthermore, it’s something you’ll need during company registration, which is why it needs to be tended to as soon as possible. All the good names are already taken and the last thing you want is a trademark infringement lawsuit on your first month as a business. Therefore, do your research properly. Next, you should keep in mind that the name you pick will appear on different backgrounds and different formats. This is crucial for your marketing efforts.
Once you have these three issues dealt with, it’s time to start gathering the money. The reason why this comes after idea validation, business plan and coming up with a name is due to the fact that potential investors, credit unions and strangers online might require all three. Questions they ask you might be the same ones you’ve asked yourself during the validation stage, while it’s incredibly hard to commit resources to a company that still doesn’t have a name. Therefore, this vital step is best postponed for a bit later on, even though you might feel anxious to get started.
5. Picking a company structure
Picking a company structure is more important than you think, seeing as how it affects both the tax scheme and liability of ownership. For instance, a sole proprietorship gives you full control over the company and allows you to handle your private taxes and your company taxes (more or less) together. On the downside, it means that if your business starts heading south, you’re in peril of losing your personal assets (vehicles, property and even family heirloom). This is the main reason why it’s far more secure for a new business to register as a partnership or an LLC (limited liability company).
6. Applying for licenses and permits
At the end of the day, depending on your niche and industry, you might need to apply for some special licenses and permits. Every niche, starting from food and construction industry, has some specific requirements that need to be fulfilled before you’re allowed to work. Sometimes, it could take months until you’re eligible for these permits, which is why it’s vital that you apply for them in time. Apart from being industry-related, these permits also depend on the state, making this entire ordeal even more situational.
Once all of this is out of the way, the real work only begins. Now, instead of coming up with the name, you have to think about integrating it into your strategy. Instead of gathering initial funds, you have to worry about the cash flow and instead of merely picking a structure, you need to think about the logistics of your business.