Are you thinking about launching your own business? Doing so is an exciting prospect and comes with lots of considerations.
There are many key tasks that need to be completed before you launch, from assessing your market to developing a business plan. Understanding what needs to be done and having the right approach to each step will position your business for success.
Here are 8 key decisions to make when launching a business.
1. Start with an Idea
Every business starts with an idea, a vision for how to change a market, provide a needed product or service, or improve on an existing item. One of the first challenges is to take that idea and flesh it out.
Defining what it is you want to do and what sets it apart today is an important first step. From there, it’s important to determine the goals for your business and how you will meet them. Those goals may include launching a brick-and-mortar store or an online space or both. The goals may include what your customers are looking for and how your business can address those needs.
Having a well-defined idea helps to chart the course for the other planning that you will do to launch successfully.
2. Do Your Research and Know Your Competitors
Research gives you the insights into the market, your customers and your competitors. Being informed about the factors that are core to your proposed business helps you develop the right products, pricing and marketing necessary to make a difference.
This market analysis can help you determine if the area where you want to sell is saturated or there’s real opportunity. It can help you understand the key players and how your company can establish a niche.
There are two types of research necessary.
Primary research looks at data obtained from potential customers. Questionnaires, surveys, focus groups and interviews can help you understand if customers are interested in what you’re proposing. They key is to go to customers who are not family and friends and will give a candid assessment of your proposed business.
Secondary research uses other data, such as demographic information, industry information and other insights to supplement what is learned from primary research work.
Industry analyses and business data can help you identify your competitors, their market size, number of customers and sales. This information may not always be readily available but is invaluable if it can be gleaned.
This research can help determine the viability of your idea. If you cannot, for example, offer your products or services cheaper than your competitors, you may need to rethink starting a business in that space.
3. Determine Your Mission and Core Values
What is the answer for the question, “Why does your business exist?” A well-defined answer establishes the company’s purpose and motivation. Having a well-established mission and core values can provide clarity to employees, customers and investors alike. It’s the articulation of what the company does, why it does it and what it aims to achieve.
The mission can be a grounding element, especially when times are challenging. The core values give your business a clear sense of identity. Together, these value statements can ground your business, act as an elevator pitch and help communicate and market your company.
4. Create a Business Plan
The business plan is a detailed, strategic document that articulates many of the fine details and analysis that will reflect your company and its aspirations. Several of the previously discussed elements – the research, mission and values – are incorporated into the business plan.
The main elements to notice when creating your business plan will include:
- Executive Summary. A clear statement outlining the business, its purpose and its goals
- Company Description. This section includes a description of your business, the goals, products and services offered and the projected customer base. It frames the industry your business is in and how you plan to differentiate from competitors. It’s an opportunity to articulate what makes your company distinct from others in the space
- Market Analysis. This section shows how your company is positioned against the competition. It should highlight the market size, market share of top competitors, industry growth rates, the demographics and locations of your target customer bases, customer pain points, segmentation analysis and market needs
- Management and Organization. How will your business be organized? This section details the organizational breakdown and the names, qualifications and experiences of key leaders
- Products and Services. What are you selling? The products and services descriptions should also include how they are different from competitors, who will make them, sourcing needs and your pricing strategy
- Marketing Plan. Where will you sell your products and services and how will you raise awareness and build your customer base? What promotion strategies will you use and how will your goods and services be priced?
- Background Summary. This section includes the data, reports and analysis you did to complete the other sections. It’s a way to show transparently that you’ve done your homework
- Financial Plan. This section includes a proposed budget, projected financial statements, income statement, balance sheet, and statement of cash flows. If you are seeking funding, this is where you would detail your needs and requests
5. Build Your Business Structure
Each business needs a legal business structure to operate. The type of business structure you choose depends on the size and type of business you want to run. Each has its own advantages when it comes to taxes and liability risk.
The most common types are:
- Sole Proprietorship. This is the simplest business structure, used if one person owns and runs the business. There is no mandatory reporting and all expenses, income and losses are recorded on the owner’s individual tax return.
- Partnership. A partnership involves two or more people who run the business. In general partnerships, all partners have an equal role in owning and running business and are equally responsible for liabilities, financial obligations and other partners’ actions. In a limited partnership, there are general and limited partners, Limited partners have limited control and no liability.
- Limited Liability Company (LLC). One of the main benefits of setting up an LLC is having a separate legal entity whose owners (called “members”) can have different levels of involvement in the business. This means that it creates a separation and limited liability; the owners have no responsibility for the company’s debts or liabilities. There are also flexible options when it comes to how an LLC is managed and if taxes are to be structured as a sole proprietorship, corporation or partnership. This flexibility is one of the reasons the LLC is one of the most popular business structures.
- Corporations. A corporation is a separate legal entity and is independent of its owners and employees. There are more complex tax implications, regulations and record-keeping required in these structures.
6. Find Advisors
As a business owner, you’ll want to seek the counsel of wise advisors who can help you navigate the complexities of starting and running a business. Among the most common advisors are:
- Attorney. A lawyer can provide legal advice, draft and review legal documents and ensure you’re meeting regulatory requirements
- Accountant. Managing the books is essential. An accountant or bookkeeper can ensure your finances are in order and that financial reports are prepared and reviewed
- Financial Advisor. As your business grows, you want to be sure that you are allocating assets strategically, planning for your own financial future and making good, sound financial decisions for the business
7. Register Your Business and Get Licenses
Each state and municipality has its own guidelines for registrations, licenses and permits. In most cases, you will need to register your business in the state where it operates. In addition, there may be local or state regulations that need to be followed. Ensuring you have all the right licenses, registrations and permits can prevent trouble down the road.
8. Use the Best Business Tools
The right technologies can make all the difference in the success of a new business. Business systems that are integrated, automated and reduce the time and labor needed to conduct business are invaluable. From accounting and finance to customer relations management and marketing automation, business tools can transform how quickly work gets done and boost revenue.
When you have an idea for a business, planning is key. Understanding what steps to take can help you better define what your business is, what sets it apart and how it will compete. These foundational decisions can help to ensure that your business is organized in the right way and that fits your operating approach, ownership structure and risk tolerance.