Simple Guide to Starting a Small Business

In today’s world, having a normal 8-5 day job is no longer enough.  Not with the  cost of living at an all time high, the economy in recession and the rate of retrenchment on the rise. More and more people are looking into starting a small business.

starting a small business - image

We all have stellar small business ideas but the execution of the idea into a business can seem pretty daunting. However, its much easier than you imagine it to be.

Just like a journey of a 1000 miles starts with just a single step, your business will kick off in steps. You need to break down the process so as to simplify it. And then step by step, you will be on your way to entrepreneurship.

Here are six important things you need to consider when starting a small business

1) Write a Business Plan

During the start up stage of your business, it is important to keep things simple and the cost low. Before investing too much time and money into your business idea, it is important to test your idea first.

So as a first step, write a simple one page plan. This is what your business plan should include :

  1. Your company’s vision. This is where you outline what your business intends to do.
  2. Your company’s mission.  This is where you explain the purpose for which your company exists.
  3. Your company’s objectives. Here you cite your goals that will enable you achieve  both your mission and vision.
  4. Your company’s basic strategies. Here you expound on how you intend to go about achieving the objectives mentioned above.
  5. Jot down a simple action plan. Here you outline the smaller actions that are task oriented which are necessary to accomplish the objectives mentioned.

This might take a while but its more organized and takes way less time than a full business plan.

2) Come Up With a Budget

As much as it is important to keep your costs as low as possible,  I advice that you come up with a starting budget to determine how much you can spend.

It is vital to be realistic about the figures especially in case you are funding yourself. I advice you include a percentage for miscellaneous or incidentals. 20% is a realistic number.  This will aid you in planning your burn rate.

Burn rate is the amount you spend every month.  

This number is important in helping you determine how long you can run your business before you need to make a profit.

When you are starting your business you should do it with expectation of making profits between the first 30-90 days.

Having a budget reserve will ensure you stay afloat if things get tight along the way.

3) Pick a Legal Entity

Before starting any business, it is very important that you do a proper search ahead of time to establish the amount you need to pay as filling fees. There’s city or municipality licensing, state incorporation and business entity fees.

These fees vary from state to state and from city to city.

It would be smart, to start as a sole proprietor during the first phase of your business, which is also the test phase. Doing this means you get to do less paper work and you spend way less up front.  This is good as it can save you lots of money while you take time to determine how viable your small business is.

While sole proprietorship is good, it can put you at personal risk. It is therefore wise to take time, weigh the pros and cons and then consult with a tax professional or an lawyer to help you decide the smart way to go.

Applying for a business entity is easy and you can do it as soon as you’ve shown in the first three to six months of business that you’ve got a viable and sustainable model.

4) Set Up A Separate Account For The Money

Regardless of your chosen business entity, remember to separate the funds for the business from your personal funds. Not doing this will make for confusing financials and tax time.

You can seamlessly set up a free business checking account with your local bank or credit union. You only need your filing paperwork, your sole proprietor licensing info and a deposit.

Remember, you don’t need to pay for an account or get credit lines yet.  you just need to get a holding place for your money to keep it separate from your personal accounts.

This process will take you about an hour at any financial institution you pick.

5) Launch Your Website

Whether you choose to start a brick,  mortar or online business, you will require a website. Hence you’ll need to secure a URL. You can easily search for the website domain address you choose on domain sites eg Go daddy and HostGator,  and buy it for a small amount of about $10.

I have even better news for you! If you are starting an online business.you can attach your business to an online shopping cart for a small monthly fee.  Or build a basic website over you URL with do it yourself drag and drop site builders for a low fee.

6) Test Sales

Now that you’ve set up a proper foundation,  its time to test some sales.  Attempt spreading the word in creative ways that are not costly.

If your business is service based,  get involved with your local chamber of commerce  as soon as possible and find out the resources they have that you can use to present and share info about your business.

If your business is product based, you can test your product’s viability at farmers markets, local swap meets or at other community events. This will give you a chance to see the public’s view of your product first hand and you’ll find out if they are willing to buy from you.

Use Facebook ads with capped budgets to drive traffic to your website. You can also use Google AdWords accounts with a budget cap to see if you have traffic going to your website.

Final word on starting a small business

I hope that the above six tips on starting a small business will help you  test how viable your small business is before investing all your time, money and energy into it.