People often ask for a list of steps they can use to establish their own business. From business type to business model to physical location, there are so many variables!
However, there are things that every business needs to do to get off the ground. So, here are the eight key steps you need to take to establish your own business. Just remember, be flexible. Every business is unique and you may need to refine this list as you go.
1. Conduct a personal evaluation
Begin by taking stock of yourself and your situation. Ask why do you want to establish a business? Is it money, freedom and flexibility, to solve a problem, or some other reason? Answering some basic questions on why and how you will start what business is on your mind will get you started thinking and planning, and help you as well narrow your focus. In order to start a successful business, passion alone isn’t enough.
You need to plan, set goals, and above all, know yourself. What are your strengths? What are your weaknesses? How will these affect day-to-day operations? You could conduct a SWOT analysis on yourself to figure this out. Use what you learn from the this to think through what you want your life to be like, not just what you want from your business.
2. Analyze your industry
Once you decide on a business you want to establish that fits your goals and lifestyle, evaluate your idea. Who will buy your product or service? Who will your competitors be? At this stage, you also need to figure out how much money you will need to get started.
Your “personal evaluation” was as much a reality check as a prompt to get you thinking. The same thing applies when it comes to researching your business and the industry you’d like to go into.
There are a number of ways you can do this, including performing general Google searches, speaking to people already working in your target industry, reading books by people from your industry, researching key people, reading relevant news sites and industry magazines and taking a class or two (if this is possible).
3. Evaluate your target audience
To determine how attractive your prospective market really is (your own desires aside for the moment), do a market analysis.
If you like, you can even take things a step further and consider the consumer needs currently not being met by businesses in the industry. This is a good time to take a look at potential competitors. And remember, the presence of competitors is oftentimes a good sign! It means that the market for your product or service already exists, so you know that you have potential customers who are willing to spend money on your product or service.
While you’ve got the time, learn as much as you can about your competitors, about what they provide to their customers, how they attract attention, and whether or not their customers are happy. If you can figure out what’s missing before you even get started, your job will be made that much easier when you do finally set up shop.
4. Set up your business
Realistically, registering your business is the first step toward making it real. However, as with the personal evaluation step, take your time to get to know the pros and cons of different business entities.
If at all possible, work with an attorney to iron out the details. This is not an area you want to get wrong. You will also need to get the proper business licenses and permits. Depending upon the business, there may be city, county, or state regulations as well. This is also the time to check into insurance and to find a good accountant. Aside from that you should also decide what kind of business structure you will put up (Sole Proprietorship, Partnership, Corporation, Limited Liability Company).
5. Start the planning process
Prepare a business plan. A business plan will help you figure out how much money you will need to get started, what it will take to make your business profitable, what needs to get done when, and where you are headed. A business plan is a road map —something you will use to help you chart your progress and that will outline the things you need to do in order to reach your goals.
Rather than thinking of a business plan as a hefty document that you’ll only use once (perhaps to obtain a loan from a bank), think of it as tool to manage how your business grows and achieves its goals.
6. Have a plan for funding
Depending on the size and goals of your venture, you may need to seek financing from an “angel” investor or from a venture capital firm. But, most small businesses begin with a loan, financing from credit cards, help from friends and family, and so on.
To stand a realistic chance of getting hold of the funds you need to get started, you’d be better off first focusing on your “pitch”. Your pitch tells your audience what your business does, who your customers are, and summarizes your key accomplishments. Not only will it be easier to fix because it contains less, but you’ll also get feedback on it—most investors don’t bother reading the full business plan, though they may still expect you to have it.
7. Set up your space
Finding a location. Negotiating leases. Buying inventory. Getting the phones installed. Having stationery printed. Hiring staff. Setting your prices. Throwing a grand opening party.
Think through each of these steps carefully. Your business location will dictate the type of customer you attract, what types of promotions you can run, and how long it will take you to grow. While a great location won’t necessarily guarantee your success, a bad location can contribute to failure.
8. Prepare for trial and error
Whether you’re establishing your first or your third business, expect to make mistakes. This is natural and so long as you learn from them, also beneficial.
If you do not make mistakes, you do not learn what to do less of and what to emphasize. Be open-minded and creative, adapt, look for opportunities, and above all, have fun! The great thing about owning and establishing your own business is that you get to decide what you want to do and where you’ll grow.