What steps should a person take before opening the doors of a brand-new business? Is it all about having enough money, the right people, the best legal structure, or knowing how to advertise? Actually, you don’t need to be an expert in any one area to create your own for-profit entity. However you do have to follow a few essential steps to make certain that things run smoothly. Below are steps for starting a new business that should be followed!
Before we start it should be noted that there are quite a few variations in the following steps because so much depends on whether you operate as a sole proprietor, a limited liability corporation, or a full-blown corporation. The main variant has to do with size, whether you hire others to help you, and what the state laws are where you’ll be operating.
What’s the best way to explore the idea of creating a company that will eventually earn a profit? The following steps for starting a new business are a general guideline for anyone intending to build a company from nothing.
What are the Steps for Starting a New Business?
Review the Idea
There’s no substitute for reviewing your original business idea. Find at least one person whose opinion you trust and submit a written outline to them for a quick review. Discuss with the person why you think the idea is a good and why it has potential for profit.
This simple step can often save you a lot of heartache and expense down the road. For the same reason you have someone scan your résumé, you need someone who is outside the decision-making loop. They will be able to consider your idea and let you know if anything doesn’t sound quite right.
Evaluate Your Financial Position
Can you afford to do this? Remember, you won’t be generating any profit until the entity is up and running, providing it’s successful. Until then, all the expense money comes directly out of your pocket. That means it’s time for a thorough review of your personal finances.
After the review, you can take charge of your money situation by getting in order going forward. Step one is checking your credit ratings with the three major bureaus. Correct any mistakes on the reports, and consider hiring a professional attorney or debt counselor to help at this point. Next, go over your personal monthly budget and chop out any excessive spending. Pay special attention to areas where you’re paying high interest on credit card debt.
To improve cash flow, consider refinancing any education debt. For example, multiple student loans that are putting a strain on your monthly commitments. Refinancing student loans is a smart way to get a more favorable repayment period, and lower the interest rate and monthly payment.
Considering you will be footing the bill for any expensing in the early stages of your business, evaluate your financial position. This is one of the very important steps for starting a new business.
Write a Detailed Plan
Without a detailed business plan, you are flying blind, or at least without any instruments. If this type of detail is not your specialty, think about hiring a freelance writer. There are plenty of good ones out there, and typical half-hour consults are usually free or extremely affordable. Try to find someone who specializes in the type of company you’re creating.
Decide on the Structure That Works Best
You might want to consult a lawyer for advice on this topic. Most prospective business owners have an idea about what kind of entity they want to build. Options are many, but the most common ones are sole proprietorship, LLC, and corporation. If it’s just going to be you, a computer, and your home office, this is an easy step.
For LLCs and corporations, you’ll likely need help from an attorney or paralegal. They can get all the paperwork straight and filed with the appropriate state, local, and federal authorities.
Decide Whether to Hire or Outsource
Outsourcing your bookkeeping or other tasks is always an option to save you time and money. Even if you go solo, you might end up hiring others to help you with marketing, secretarial chores, website building, and more. For most stand-alone tasks, you can usually find freelancers who will work for a fee, like lawyers, website designers, and virtual assistants.
If you want to keep things as simple as possible, don’t hire employees unless you have to. Using freelancers on an as-needed basis will free you from having to file complex tax returns.
Once most of your key functions are up and running, you’ll want to advertise your services and/or products. Unless you have experience with designing marketing campaigns, opt for a software package that can do most of the work for you. Sometimes, an ideal hybrid solution is to outsource the chore of finding a suitable software product, and then paying someone for a few hours of hands-on assistance with getting it set up.
Approaching your advertising in this way can save you thousands of dollars. If you later opt to ramp up your efforts in this regard, it’s always possible to outsource the some or all of the marketing function to an agency or individual freelancer who specializes in your type of entity.
Steps for Starting a New Business – Summary
Starting a new business can often be intimiadting. It is also a process that generates a ton of questions such as should your hire internally or outsource, what type of company you should start, and many more.
If you are planning on starting a new business, be sure to follow these steps for starting a new business.