Posts Tagged ‘starting a small business’

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A legitimate business has essentially satisfied all the criteria set by relevant authorities

Before your business idea becomes a legally recognized startup an assortment of federal regulations, registrations, licenses, and permits must be complied with. Granted that different forms of business exist, all with varying requirements, having a clear overall picture of what’s required will save you much time and effort. Get ready to share details about the following:

1. Your business structure

 

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A partnership is one of the business structures you can opt for.

Government needs to know the form your new small business will take as this will inform its legal accountability and type of taxation. Some of the different business structures you may wish to consider include sole proprietorship, partnership, limited liability company (LLC), and corporation.

2. Your business name

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Display it loud and bold if it is legal

A registered business name implies that your startup is legally operational, in addition to being a prerequisite for receiving financial assistance from the government.

3. Is it a regulated business?

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To run this sort of business you’ll need a permit from the FDA.

If your new small business intends to deal with product/s or activity that is under the supervision of a federal agency you will need to obtain the required federal license or permit. This will be the case if you aspire to deal in:

4. Is the new small business tax compliant?

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Tax compliance is vigorously pursued by government…

It’s certainly prudent to be fully aware of your new startup’s federal tax obligations. Lots of information is available to this effect; this checklist and these guidelines should be a nice place to start.

Note that there are two types of federal tax registrations.

Employer Identification Number (EIN) – This is a requirement for corporations, LLCs, partnerships, and sole proprietorships that intend to hire employees. Get the requisite Form SS-4 from the IRS.

S Corporation Tax Form – This is applicable for corporations that wish to attain S corporation status for special tax treatment purposes. Form 2553 is required and is also obtained from the IRS website.

5. How well does the new small business handle employee affairs?

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How the boss and the team relate is of concern to government.

Hiring and dealing with employee affairs can be quite tricky; you basically need a good grasp of federal labor and employment laws. The SBA provides a wealth of hiring and employee information. Also, registering with E-Verify will allow you to establish your employees’ employment eligibility.

6. Does the business have proper insurance coverage?

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Government needs to know that businesses are adequately insured seeing as workplaces can be quite hazardous…

One of the preconditions for starting a new small business is obtaining adequate insurance coverage. Not just any cover will do though; your type of business determines what form this insurance coverage will take. Additionally, the business ought to have health insurance coverage in place, including the Small Business Health Options Program.

7. Is the new startup compliant with location and equipment regulations?

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How many different regulations had to be complied with before this operation got going?

An assortment of regulations determines how small businesses should go about matters to do with location, zoning, leasing business equipment, and leasing commercial space, etc. These resources from the SBA will shed more light on these issues.

8. Is your new startup conversant with business laws?

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Advertising, like other facets of business, is governed by laws and regulations…

There are roughly a dozen business laws and regulations that you need to be aware of as a new small business owner; with some basic knowledge you’ll at least be able to handle various business obligations from an informed point of view. These laws cover aspects of advertising and marketing, employment and labor, finance, intellectual property, online business, privacy, financial contracts, and so on. The SBA offers more information about these laws.

9. How environmentally-conscious is your business?

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The EPA is most likely going to be pleased with this setup…

Depending on the nature of your new small business you may need to secure some form of licensing from the Environmental Protection Agency (EPA). Find out more about what is required at http://www.epa.gov/smallbusiness.

10. In case it’s home-based…

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Government also has rules for work-at-home guys.

This SBA guide offers information about what is required of home-based new small business owners.

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Aspiring entrepreneurs can at least take heart in the fact that not all of the available stats about business failure are credible. One of the foremost of these invalid stats is attributed to a study done by Bloomberg and which declares that 8 out of 10 businesses fail within the first 18 months. The stat has been widely referenced including here. It’s sort of reassuring that this particular study is non-existent.

According to the SBA approximately 50% of new businesses survive for 5+ years while about one-third survive for 10+ years. There is however sufficient reason to question this statistic as well and this has to do with how the reason for failure is defined. Indeed, businesses close down for a variety of reasons, apart from failure. The SBA’s stat is therefore inaccurate.

This position is supported by a University of Tennessee 2013 study which showed that only 25% of businesses failed in Year 1 while just 36% failed in Year 2. An alternative independent study estimates the number of closures at 3% to 25%.

I digress though. This post isn’t about business failure stats but rather the reasons why new businesses fail.

Hopefully you are now more upbeat about launching your business venture. Don’t let your optimism cloud prudence though. Here are some reasons why your startup could make the annual damned 25% list:

1. Your motivations for entrepreneurship are misguided

To succeed in an entrepreneurial career you have to be pragmatic right from the get-go. In addition to having a passion for what you intend to do, your reasons for starting a business should be based on a practical foundation. Your startup must be focused on providing a practical solution for an identified need in the market.

Business failure is a harsh reality...

Business failure is a harsh reality…

If your reasons for starting a business are to make more money, escape the 9-to-5 lifestyle and be answerable to yourself only, etc, you clearly need to rethink things. These are the perks of a successful entrepreneurial lifestyle and they don’t come easy. In entrepreneurship things typically get worse before they get better.

2. Lack of a unique value proposition and innovativeness

Deciding to offer a product/service that virtually everyone else is providing and doing this in the exact same way is really business suicide. Naturally you will have to contend with poor revenues month after month. The probability of making real progress is virtually zero – how can this happen when you are barely able to make enough?

Many businesses offer the same products/services but the most successful among them are the ones that do this in a unique way. Think about your business – what can you do to set it apart from the rest? Once you find the answer make sure that this uniqueness is well communicated to the target market.

3. Ignoring customers feedback

One adage that you must never forget as a business owner is that the customer is always right. The reason is simple – without customers your business is useless. Engaging with your customers therefore will give you a firsthand opportunity to learn about those things they feel will make their buying experience better. Customers feedback, whether offline or online, will give you hints about what to improve on with regards to your product/service, business practices, pricing, etc. Ignore feedback at your peril – when customers decide to ignore you back the failure list could be where you are headed.

Ignoring customers feedback is the one-way street to business oblivion...

Ignoring customers feedback is the one-way street to business oblivion…

4. Incompetent management

Being the owner of a new small business often means that you are in charge of just about every aspect of running the enterprise. You are therefore supposed to handle or oversee the critical roles of production, sales, purchasing, finance, marketing, customer relations, hiring and managing staff, etc. Don’t forget that you are the custodian of the company’s mission and vision – in charge of providing direction and strategically steering the company forward.

Business success depends on how well an entrepreneur handles the managerial role...

Business success depends on how well an entrepreneur handles the managerial role…

The characteristic volatility of the workplace and marketplace ensures that no two days are the same. To be successful as a manager therefore you must learn how to be proactive and to stay on top of things. Indecision, neglect, lethargy and other qualities of this ilk are the hallmarks of a poor and dysfunctional leader.

5. Insufficient capital and poor cash flow

One very significant reason why many startups fail is the lack of sufficient funding. Before launching a business you must ensure that you have enough funds to cater for startup costs and to support operations until the venture becomes self-supporting. Clearly one needs to be realistic. Businesses do take some time to get going. Having enough funds to cater for operational expenses for a year or two is advisable in order to give the business ample opportunity to establish itself in the market.

6. Financial mismanagement

Failing to properly account for business money is a sure path to early failure. From a financial perspective, effectively running a business means that you’ve got a grip on cash flow, expenses, taxes, employee salaries and benefits, etc. Many business owners opt to delegate this aspect of running a business to accountants or bookkeepers out of sheer reluctance to learn the basics of money management. Opt to not be ignorant. At the very least you should be able to understand simple financial documentation including a balance sheet, P&L statement account and a cash flow statement.

7. Poor location

Even the best funded and managed startup will find it difficult to survive and thrive if the location is wanting.

Consider the spot where you intend to open shop. Is it easily accessible for your target customers and suppliers? Is it secure? Are all the necessary amenities provided? Is the local community receptive or hostile to new businesses? Is the cost running the business from there manageable? Would it be wiser to relocate to a cheaper neighborhood?

An unsuitable location does your business a major disservice

Are you sure that your business’ location can’t be better?

8. Failure to adapt to market changes

The marketplace is typically dynamic – never static. Your initial business model may be working wonderfully for now but moving forward you’ll need to adapt to the changes in the marketplace in order to remain relevant. Many a business owner has opted to adamantly maintain status quo in the face of changing times only to make a belated realization that in the business world it is “adapt or die”.

9. Ineffective marketing

It’s no good to have a superb product or service if no one knows about it. If they don’t know about it they won’t buy it and if they don’t buy it you’ll be out of business. Marketing is therefore imperative for business success.

Marketing doesn’t have to be all complicated and expensive. Depending on what you are offering you definitely have several cost-effective options to consider starting with word-of-mouth which is absolutely free. How about using social media to spread the word even further?

10. Overambitious expansion

Upon achieving early business success many entrepreneurs erroneously embark on an expansion spree without adequately thinking about whether the move could be premature. The reasons for success vary and could indeed be temporal. For this reason, steady business growth is most advisable. Expansion efforts should be based on well observed and deliberated business realities as well as marketplace trends and opportunities. Steady growth will allow you ample time to secure the required systems and people that will give the new addition to your business a fair shot at success.

11. Hiring the wrong team

Successful entrepreneurs will tell you that nothing quite beats having a good team. Your staff should be individuals who are equally motivated to succeed and see the business grow and go places. It is therefore important for you to hire people who can talk and walk the part. Getting such people won’t be easy but once you find them make sure that they have a good reason to stay.

Hiring a dysfunctional team is catastrophic for business sucess

Hiring a dysfunctional team is catastrophic for business success

12. Lack of a website or any online presence

The number of people with Internet access globally is at an all-time high and continues to rise by the day. As such, conventional methods of conducting business searches are being tossed aside in favor of online convenience. The lack of an online presence is therefore counter-effective for a modern-day business. Even though your business doesn’t sell goods/services online it is of utmost importance that people know about its existence. The site must of course be presentable enough so as not to put off potential customers.

It's of the essence to ensure that your small business has an online presence

It’s of the essence to ensure that your small business has an online presence

The least you should do in case you don’t have a website is become part of the social media conversation. Starting a company Twitter or Facebook account is a more than sufficient way to guarantee your business’ visibility and relevance.

13. Underestimating the competition

For a new business, gaining customer loyalty is quite akin to wooing a beautiful lady – the loyalty has to be earned, and the suitors are plentiful. As such, you cannot afford to take your customers for granted assuming that they’ll always come back for more. Remember that the competition is eyeing the same target market; up the game best and the customers will come in droves, remain mediocre and stare failure in the face.

14. The belief that you can do it all

However high your motivation and energy levels are it will be foolhardy for you to believe that you can alone deliver success for your business. It’s prudent therefore to seek advice from persons with longer and better experience about how best various aspects of business operations can be handled. Delegating tasks to capable staff is equally vital.

Why risk burnout and the failure of your business when all you have to do is ask for a little help?

Why risk burnout and the failure of your business when all you have to do is ask for a little help?

15. Unwillingness to take responsibility

As the business owner you must be willing to admit and own your mistakes without exception. Apportioning blame to others or to circumstances will only briefly soothe the ego but the realities of the situation will still need to be addressed. Running a small business successfully is about the ability to remain objective and goals-oriented.

Hope springs eternal though. Things may be really grim for your business venture right now but hopefully it isn’t too late for you to turn things around. It’s not going to be easy but if you are committed to the cause your entrepreneurial dream need not be added to the “crashed and burnt” list. Here are some tips for how you can turn around the fortunes of your business for the better.

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The United States Small Business Administration’s (SBA) Office of Advocacy asserts that small businesses make up 99.7% of all U.S. firms. It’s therefore safe to say that small businesses are the economy’s driving force.

Starting a small business is basically about setting up shop, finding clients and earning money. This is true for whatever form of business you plan to start.

Several more traits are also used to define small businesses as follows:

1. Low startup costs

Depending on the specific type of small business, startup costs are typically quite low. A retailing business doesn’t have to start big; simply buying the initial inventory and renting a suitable space will do. A consultancy service doesn’t have to start in a plush office with a flashy address; starting out in your home office where the overhead costs are minimal is certainly prudent.

2. Just a few employees

It’s typical of a small business to have a single worker – the owner. For this reason these businesses are commonly referred to as “one-man-shows”.

Nevertheless, as operations grow you may need to hire a number of employees. To keep your operating costs low you may, like many other small business owners, find it feasible to hire independent contractors or freelancers.

3. Small market share and intense competition

A small business serves just a small portion of the market. This is as compared to the significantly larger shares of the same market that corporations and larger businesses can control thanks to their bigger capacities.

Also, since there are a huge number of small businesses that need to compete for business opportunities in the same market, competition is rife. This typically results in product/service innovation and differentiation.

4. Limited budgets and funding

As compared to larger firms, small businesses typically operate with limited budgets. With their limited finances these enterprises have little or no choice but to keep their costs of doing business low. Cost-efficiency is the name of the game for small business owners.

5. A single location

Most small businesses operate from a single location; not many of these businesses have branches or outlets in multiple cities or states. Also, the rising prominence of home-based businesses means that a significant number of enterprises are now operating without formal business facilities. To their credit, many small businesses now have a global reach thanks to running internet-based operations.

With some inspiration you can come up with an amazing business idea

With some inspiration you can come up with an amazing business idea

In their quest to find out how organizations come up with new ideas and convert these ideas into successful new products, services, businesses and solutions, researchers from New York’s Rensselaer Polytechnic Institute arrived at an interesting conclusion. They discovered that most of the novel ideas behind successful projects were the result of “happy accidents” rather than formal idea-generation processes.

Looking at some of the most revolutionary, creative and enduringly successful business ideas there are around, you can’t help but concur that there is something fluky about them. Perhaps this is why such ideas are not too common. Nevertheless, because the entrepreneur in you is determined to succeed, nothing can or should stop you from creating your own luck.

Coming up with a winning concept is the first step. To get there though, you need to start looking in the right places. Examples of these idea sources are discussed below:

1. Answering the question “What’s next?”

While thinking about current trends and technologies, and then employing entrepreneurial foresight, you can try to anticipate future needs and requirements.

Someday your idea can become reality...

Someday your idea can become reality…

In doing so you may come up with a concept(s) for products and/or services that will cater to these needs. There are indeed plenty of successful businesses that have flourished because the entrepreneurs concerned foresaw future opportunities.

2. Earning money from your hobby

Many people have found entrepreneurial success by transforming their hobbies into businesses. For instance, many food catering businesses are owned by persons who decided to monetize their love for cooking. Similarly, many people have found success in photography, fashion design, jewelry making, etc.

Who knows? Your photos may soon start earning you good money...

Who knows? Your photos may soon start earning you good money…

3. Getting rid of a particularly bothersome problem

All of us have to contend with various niggling bothers in our daily lives. Some can be ignored but some are clearly very difficult to overlook.

Business opportunity, anyone?

Business opportunity, anyone?

Think about one bother that makes you go bonkers. Most probably there are lots of other people in the same situation who are itching for a solution. Can you think of a solution that can double up as a business idea?

4. Identifying an untapped/new market niche

For a given industry, think about the various products and/or services that currently exist. What are the various requirements that are hitherto being catered to unsatisfactorily? Spotting and monetizing such opportunities typically requires some imagination.

For example, many of us couldn’t think beyond bottled mineral water. Some imaginative entrepreneurs did. Now we have carbonated mineral water and flavored mineral water.

Candles need not be plain - there's more money in decorative ones...

Candles need not be plain – there’s more money in decorative ones…

5. Visiting exhibitions

Attending trade fairs and exhibitions, and especially those featuring participants from other countries, can really help to broaden your scope of thinking. At these events you will be able to interact with foreign entrepreneurs from whom you might learn several ideas that are yet to be exploited as business opportunities in your country.

Trade fairs and exhibitions will expose you to new ideas and concepts

Trade fairs and exhibitions will expose you to new ideas and concepts

Apart from inventors and entrepreneurs you might also want to engage with product distributors, sales reps, franchisers and wholesalers. They are obviously interested in expanding their business to your country – who knows, you may end up running the sole local dealership for one of these companies.

6. Transferring your skills to an entirely new area

Imagine using your skills to create a new product that is a clear departure from what you are used to doing. The result could be a business idea whose success may exceed your own expectations.

Apart from water tumblers a glass-worker can also make various attractive collectibles...

Apart from water tumblers a glass-worker can also make various attractive collectibles…

In the movie “The Illusionist” the lead actor, a carpenter’s apprentice, uses his woodworking skills to create a lovely imaginative locket for the girl he loved. Such custom-made keepsakes tend to sell well.

7. Exploiting a market niche where innovations are scarce

There are markets where successive innovations are far in between. A creative entrepreneur can make the most of the situation by providing a product that users are likely to hail as being revolutionary.

For instance, scissors and manual clippers were for a long time barbers’ instruments of choice. The introduction of the electric shaver changed all that and ideally helped to revolutionize the concept of male grooming.

The chainsaw rendered handsaws and axes virtually obsolete...

The chainsaw rendered handsaws and axes virtually obsolete…

8. Launching a cheaper version of an existing product/service

This approach is really effective for startups hoping to compete in industries dominated by big household-name players. Provided that your proposed product/service has proven that it can deliver, customers will definitely want to give it a try. It is for this reason that many industries are characterized by product price differentiation.

Is this the real thing?

Is this the real thing?

For example, a man who cannot afford to buy a diamond necklace for his lady can always purchase one made with cubic zirconia gems.

9. Engaging with a product or service’s users

As a matter of fact, it is the users of a product or service who can provide the best feedback about it and also suggest whatever improvements they would like to become available in the market.

Seek customers advice about how you can improve a product and then launch one that meets these requirements

Seek customers advice about how you can improve a product and then launch one that meets these requirements

You can therefore decide to interact with people who buy a certain product that you are capable of improving upon and from these discussions find out what your new version of the product should feature and/or offer.

Sportswear giant Nike started out by making improvements to running shoes.

10. Scouring mass media for opportunities

The mass media is a treasure trove of information and ideas from which business opportunities can be created. Wherever you look, be it on the Internet, television, newspapers, magazines, and so on, there is always information about the latest trends in this or that facet of our daily lives. Ads of virtually every description are always aplenty.

Mass media is a rich source of potential business ideas and opportunities

Mass media is a rich source of potential business ideas and opportunities

You can directly respond to potential business opportunities. You can also go a step further and visualize a new concept that you can package as a viable business solution.

always aplenty.

You can directly respond to potential business opportunities. You can also go a step further and visualize a new concept that you can package as a viable business solution.

Online transactions and online banking are the mainstays of modern business

Online transactions and online banking are the mainstays of modern business

In the last couple of years a steadily growing preference for online banking has been witnessed. An ever-growing segment of small business owners and indeed the general population now seldom has to visit local brick-and-mortar branches to do its banking.

Thanks to advances in technology, banking has become increasingly accessible. Tools like apps, direct deposit, online account management and ATMs have been instrumental in helping to make the banking experience more convenient, flexible, cheaper and less complicated.

Nevertheless, not all banks with online presences are worth doing business with. Again, there’s a lot more to think about than no-fee services and how high the annual percentage (APY) yield offered is.

What therefore should you consider when selecting an online bank?

1. Credibility

Make no assumptions; be sure your bank of choice is legitimate. Genuine banks have secure websites and are insured by the FDIC.

2. Banking limits

You need to find out what the caps for withdrawals and deposits are and whether or not these will work for the types of amounts you routinely transact.

What, for example, is the mobile deposit cap at the bank you are considering? Will this figure suffice for the check amounts you regularly need to deposit? If not, you’ll probably be better off finding another bank.

3. Cutting-edge security

While losing money is quite impossible thanks to the backing that organizations like the FDIC provide for online banks, the real concern has to do with data compromises. You must therefore opt for a bank that has put effective measures in place to forestall the threat of personal information exposure and sharing.

Find out how well your personal and banking information is protected...

Find out how well your personal and banking information is protected…

Such an online bank’s website will typically be protected by multiple safeguards and firewalls, coupled with fraud alerts and intrusion-detection monitoring. You also want to find out the Secure Socket Protocol (SSL) you’ll be using to access your account. Industry standard 256-bit SSL encryption guarantees highly secure transmissions with regards to personal data and online transactions.

4. Account set-up

You probably assume that opening an online account is easy everywhere.

It isn’t.

Many customers have in their reviews about online banks expressed how difficult it was to get going at their respective banks. Absurd requirements and copious documentation are the typical tell-tale signs of such banks.

In such a case simply find another bank where all that’s required is your personal information, and checking and routing numbers of an existent bank account.

5. ATM network

There should be enough ATM facilities in your vicinity

There should be enough ATM facilities in your vicinity

If you regularly need to withdraw cash make a point of choosing a bank that has a lot of ATMs in your vicinity, not too far off. It is also a good idea to scour the market for banks that refund all ATM fees monthly.

6. Fees and payments

Conventional banking is characterized by an assortment of payments including ATM, service, overdraft and monthly fees, and the amounts can be quite considerable. Online banks, on the other hand, generally tend to keep fees at a minimum for chargeable services.

A look at the fine print will let you know what you can expect to pay for monthly maintenance, low balance penalty, check writing, transfers to outside banks, customer service calls, etc.

7. Customer support

It is important to know to what lengths your online bank will go to make your banking experience convenient. Some of the pointers to check out for here include 24/7 telephone customer service, live chats, online bill payments, online calculators, real-time customizable account alerts, and a checking account product.

Effective customer care makes online banking so much more convenient...

Effective customer care makes online banking so much more convenient…

Find out what to expect at your bank from comments people have made on social media and from websites such as Consumerist. The FDIC website’s Bank Find feature will provide you with specific information about the bank you have in mind.

8. BauerFinancial ratings

You ideally want an online bank that has a rating of three and above on the Bauer scale. BauerFinancial has for 32 years independently analyzed US banks and credit unions performance. From these ratings you can make a comparison of how well or poorly a certain bank is performing in relation to the others.

There's a lot to think about before starting a business. Success will require entrepreneurial prudence.

There’s a lot to think about before starting a business. Success will require entrepreneurial prudence.

In the planning and starting-up of a business enterprise a novice entrepreneur will certainly have to contend with multiple tasks and problems.

With respect to these realities it is worth appreciating the usefulness of having a checklist in helping the individual to cover most, if not all, of the variables that are involved in starting a business. With such a checklist you will be able to address two main concerns i.e.

  • Evaluating your preparedness in terms of starting the planned venture and
  • Ensuring that you get off to a great start once you launch the business

The following are some of the most crucial questions that you must find answers to as a prospective entrepreneur:

1. How is your reaction to business opportunities like?

Successful entrepreneurs are known to react quickly to seize business opportunities whenever they arise. These reactions require a good measure of instinct since pursuing such opportunities does entail some form of risk-taking.

Like successful hunters, successful entrepreneurs make the most of opportunity...

Like successful hunters, successful entrepreneurs make the most of opportunity…

Poor business people, on the other hand, are known for their procrastination which results in missed opportunities and general poor business performance.

In this regard, would you describe yourself as proactive or reactive?

2. How good is your management of energy and time?

The old adage “Time is money” holds true for any entrepreneurship activity. Ideally, you should be one who is willing to commit energy and time to activities that will profit your business venture.

Building your business successfully will require lots of time and effort - it's going to be hard work...

Building your business successfully will require lots of time and effort – it’s going to be hard work…

The start-up stage is extremely crucial. Creating a successful business from the ground up will require 101% of your involvement, no compromise.

Are you ready for self-sacrifice?

3. How prepared are you in terms of saving money, making business contacts, and learning / training about your prospective business engagement?

Most of the successful entrepreneurs we know are people who had taken time to get prepared financially, mentally, and emotionally, for the task ahead. Prior to starting a business you must fully understand what the decision implies – it is a process that will require you to be wholly committed to the cause.

Start from the bottom and build upwards with the work-ethic of termites...

Entrepreneurs start from the bottom and build upwards with the work-ethic of termites…

Think about how termites build their nests. Individual grains of earth are gradually pieced together and the result is an imposing structure so rigid and strong. Likewise, you will need to prepare a solid foundation upon which to grow.

4. How well or how badly do you take discouragement or failure?

Successful entrepreneurs are those who have thoroughly understood that both discouragement and failures are realities in the business world. They are however pragmatic and work hard to make their business ventures successful. While being persistent in their efforts they also don’t over commit themselves and their resources to an extent that initial failures will ground them for good.

You might be tempted to quit - but this shouldn't be an option for you...

You might be tempted to quit – but this shouldn’t be an option for you…

Are you ready to be persistent or will you quit as soon as things start going wrong? What will you do if customers don’t show up as anticipated?

5. Do you have a competent adviser or team of advisers?

Prudent entrepreneurs seek the advice of seasoned business people in different lines of enterprise. They do so in order to have their ideas vetted before they embark on them. Doing so has spared many novice entrepreneurs undue financial and psychological hurt.

Having a good advice and support team is definitely vital in the early stages...

Having a good advice and support team is definitely vital in the early stages…

There’s no substitute for experience, and a problem shared is a problem solved.

Do you have a group of persons that you can consult with moving forward?

6. Have you established that the demand for your products and services actually exists?

This holds more so for innovative ideas. Talking to people about the idea may give some form of encouragement but the crucial consideration is ideally whether the intended product or service will actually be bought and become profitable.

Eureka! But is there market demand for your product?

Eureka! But is there market demand for your product?

Have you studied the marketplace and confirmed that there’s indeed a demand for what you plan to start selling? What similar solutions already exist? How does your solution stand out from the rest?

7. Have you established the financial implications required in starting up?

It is important to have a clear picture of what your business’ start-up costs are. Additionally, you’ll need to factor in money estimates that will help the business run well for at least six months after its inception.

Starting, running and sustaining your business will need money...

Starting, running and sustaining your business will need money…

8. Do you have enough to go on for at least a year?

Apart from the start-up and operating costs highlighted in point 7 above you must have a sufficient income or savings to maintain your upkeep for at least a year. This is so whether or not you have a family to support. These monies should be sufficient until a point where the business venture starts earning you a good income.

9. Do you have any external sources of funding in mind?

Sometimes it so happens that individual savings are exhausted before a business takes off. It is therefore prudent that you have reliable sources of potential financing backup in case such a scenario arises. How well prepared are you for such an eventuality?

10. What form of business organization do you have in mind?

There are quite a number of business forms that you can create including a sole proprietorship or a partnership.

Will yours be a sole-proprietorship where everything depends on you?

Will yours be a sole-proprietorship where everything depends on you?

All these forms have different implications and you are well advised to clearly understand these before you settle for any. A lawyer’s advice may come in handy here.

11. How do you plan to maintain your records?

Successful entrepreneurs have an efficient system of knowing what their incomes and expenses are, and how much their businesses owe or are owed. Such a system need not be complicated in design – it just has to serve the purpose.

Proper record-keeping will ensure that information about your business is always readily accessible...

Proper record-keeping will ensure that information about your business is always readily accessible…

Record keeping is an integral part of any successful business. Effective accounting will only become possible if there are accurate records to start with.

Is the record-keeping system you have in mind going to be appropriate for your type of business?

12. Will the venture need personnel?

Entrepreneurs whose businesses have to hire personnel understand the importance of having a skilled team. Prior to establishing your business you must first ascertain that the kind of people you need exist and that you can afford to pay them.

What type and number of employees will your business require?

What type and number of employees will your business require?

Where will you find the sort of personnel you require? Will you need full-time employees or will freelancers be appropriate?

13. How will your pricing be organized?

It needs to be clear from the onset that a correct pricing of your products and services is of the essence. Basically, successful entrepreneurs set prices that will help them cover all their production expenses as well as earn them a viable profit.

Product price has to reflect the production costs incurred and the expected profit margin

Product price has to reflect the production costs incurred and the expected profit margin

What considerations have you weighed in arriving at your proposed price? Will the revenues you’ll earn as a result of selling at this price be adequate to sustain the business?

14. How soon can the initial investment be recouped?

One aspect of successful businesses is such that they are able to recover their costs of investment in a reasonable time-frame. Such costs include items like machines and equipment, any construction and design work, etc., and they are recovered from the profits the business earns.

From your own estimations, how soon do you think this will take?

15. Does your business satisfy the legal requirements?

Successful entrepreneurs make a thorough background research into all legal aspects that are required for their ventures to operate within the law. You should therefore identify all the permits and licenses that you should secure before starting off.

Eventually, running an unlawful or illegal business is not worth the entrepreneurial effort...

Eventually, running an unlawful or illegal business is not worth the entrepreneurial effort…

Will you be operating within the law when you open your doors for business?

This checklist is neither conclusive nor does it suffice for every type of business. It however offers a general idea of what prospective entrepreneurs must bear in mind if they intend to be successful at the nascent stage of their business ventures.