In this tutorial, I am going to teach you the basics of how to start a small business, which are the backbone of the economy. They help many people become employed while creating a good income for the entrepreneurs themselves. However it is a noteworthy fact that in most cases, 50% to 95% of small businesses fail within the first 5 years of opening, according to the U.S. Small Business Administration. The main reason for these failures is the lack of proper planning.
Today, we will take a look at the nine major steps for how to start a small business successfully and retaining it beyond the first five years.
1. Create a List of Ideas
Before you start, create a list of ideas describing the business you would like to start. Find inspiration in various sources including your own experience, hobbies or from news reports and your environment in general. Brainstorming will provide you with a valuable source of business ideas. As you learn how to start a small business, your first step should always be to compile a list of all of your ideas, including a small description of each as this will help you to choose your bests idea later on.
2. Analyze the Ideas:
After compiling your list, the second step is to analyze each idea. The best way is looking at each's Strengths, Weaknesses, Opportunities, and Threats; this is known as a SWOT-analysis. Some basic points that you will have to analyze in each of your business ideas are:
i) Which of the customers’ needs will be satisfied through the products/ services that you are offering?
ii) What is the customers’ demand for quality for your product/service?iii) Identify your competitors!
iv) Will this business suit my personal lifestyle?
These business startup guidelines will help you to identify the possible risks and potential advantages of each idea; they will guide you in choosing the best ideas to work further on.
3. Define the Business Idea
This important step for discovering how to start a small business is planning, having a clearly defined idea as well as its limitations and its details. You will need to define the following:
i) Which products/services will my business offer to its customers?
ii) Who are my customers?.
iii) How do I sell/offer my services/products to these customers?
Answering these questions will help you to understand the nature and limitations of your business as you develop your idea.
4. Develop Your Business Idea
After you have selected a business idea and clearly defined it so that you are clear as to the business you want to start, the next step is to professionally develop that idea. You need to conduct market research as well as investigate the legal and financial framework for the business you have chosen. For new entrepreneurs, it is highly recommended that the development of your business idea be discussed and evaluated by experienced business professionals. This allows you to get insights into technical issues that you may encounter further down that you have not yet thought about.
5. Prepare a Business Plan
It is said that proper planning prevents bad performance. Now that you know which business to start and you have developed your idea, the next step is to prepare a business plan. This is an important challenge for any starting business, and so it should be carried out with diligence.
Usually, the business plan will include, a detailed analysis for each of these pieces:
i) Executive Summary
ii) Concept of the Business
iii) Business management
iv) Industry and the competition
Having realistically worked through a business plan you should be further assured that your business idea is actually viable. Part of the process of learning how to start a small business includes failure! If you face problems and find your concept is not viable, then it is better to return to alternative ideas and reconsider these, starting the process over again. It may take you a few ideas to find a winner, so persistance wins the day.
6. Choose a Business Form
Now that your business plan is ready, select a business legal form. Usually one of the following options:
Discuss your choice with a business professional as each of these business forms have their own pros and cons.
7. Register the Business
Once you have chosen the business legal form, register your business with your local city or county government to avoid legal problems in future. Having a business license also helps you gain your customers’ trust.
8. Create a Timeline for Execution of Plan
As you are almost ready to execute your business plan, define a time line for the execution of each of these steps. This is where you determine priorities as well as giving you more insight into the time and resources you should expect to invest to execute each step.
9. Execute the Plan & Start the Business
The last step to start a small business is the actual execution of your business plan. Never take this part lightly! Dedicate yourself to the new startup by taking interest in each and every activity related to your business and follow common sense business ethics and etiquettes. Closely monitor activities and performance of the business on a regular basis, changing or adapting as required. This will help your business grow even further.
As you learn how to start a small business, take these 9 steps seriously as it will give you a leg up on your competition. Surround yoiurself with competant advice that goes beyond the basics of this small business guide you are reading now. What do you think? Tell me below as I sure would like to know.