Starting a business presents many challenges which must be methodically handled.
Many people dream of becoming entrepreneurs but do not know how to start a business. Prospective entrepreneurs need to make sure that owning a business will fit their individual personalities and lifestyles. In order for a business to succeed, the owner must be motivated, decisive, organized and able to work with all personality types. Running a business can be both physically and emotionally exhausting, and entrepreneurs should be prepared to work long hours with few days off. The U.S. Small Business Administration's Small Business Readiness Assessment Tool helps potential business owners assess whether or not they are equipped to start a business through questions on personal characteristics, skills, experience and training.
The first step in starting a successful business is writing a business plan. According to the U.S. Small Business Administration (SBA), inadequate planning is the cause of the majority of failed businesses. A business plan is an ever-evolving document that helps guide the future of the company, and it cannot be written without extensive industry research. The SBA cites a successful business plan as having the following components:
The executive summary of the business plan includes the company's mission statement as well as the proposed number of employees, a description of the facility, information about the products and services that will be rendered and a summary of future plans. A market analysis contains details about the targeted consumers and the outlook of the industry. In a separate section, the business should outline its marketing and sales strategies, as well as provide a company description. In this description, the business owner should articulate how the company will function and what elements will make it successful.
Another portion of the business plan should outline the organizational structure of the company and include information about the company's ownership, management positions and board of directors. The business plan must include funding and financial sections that detail how much funding is needed to launch the business, how that funding will be allocated, estimated funding requirements for the business's first five years and long-term financial strategies.
Once the business plan is complete, it can be submitted with a loan proposal to local lenders. If a financial lender is unable to approve the loan, government programs are available to help business owners secure financing. Lenders can help entrepreneurs prepare the applications for the appropriate federal loan program, according to Business.gov. These programs which include SBA loans, farm and agricultural loans, and rural business loans provide a guaranty to the bank, which assures that the government will pay a portion of the loan if the business owner defaults. The Search for Loans, Grants & Financing page on the Business.gov Web site is a quick way for business owners to search for federal financing options.
Small business owners may want to research available grants when writing their financial plans. Many state government agencies and local nonprofits offer loans and grants to minority and women business owners. Specialized grants are also available for companies that provide scientific and technology development and research. Business owners can research and apply for federal grants at Grants.gov.
All businesses must obtain a business license, which is handled at a state level. The SBA has compiled a list of links to the state agencies responsible for issuing business licenses. A state business license is typically required for the company to conduct day-to-day business operations and to file taxes. Before issuing a state business license, the governing agency will likely inspect the business to ensure that it is compliant with state regulations. A particular product or service that a business offers may require special licensing. Commonly licensed professions include barbers and cosmetologists, accountants, private investigators, auctioneers and real estate agents. Commonly licensed products include alcohol, firearms and gasoline. Many states have local agencies available to assist small businesses in obtaining the appropriate licenses.
For any new business, outside guidance, training and counseling is highly recommended. Business owners can find local agencies that provide assistance to small businesses at the SBAs Web site. These agencies offer low-cost or free assistance during all phases of a small business's development. SCORE is one such agency that offers free online and face-to-face consulting to small business owners who are still in the planning stages of their companies, as well as to established business owners. By utilizing these local programs, a small business owner gains access to an experienced mentor who can assist with drafting the business plan, make financial suggestions and help the company comply with state and federal regulations.