Starting a business is never easy, in fact statistically most small businesses fail within the first two years. How do you ensure that you setup your business in the correct way and minimise the likelihood of your business failing?
Here is a five step process that will assist you in the start-up of your new business:
Step Number One – Take A Course
Are you familiar with running a business. Take a short course on how to start a business and things to look out for. This step will prepare you for the next stages in setting up your company.
A short course will take you through the typical day-to-day running of your business and how to deal with unexpected problems. These courses will help give you the theoretical knowledge as a base point for in case you run into trouble.
Step Number Two – Write A Business Plan
Writing a business plan is not just for your business economics class in high school. A business plan is any plan that works for a business to look ahead, allocate resources, focus on key points, and prepare for problems and opportunities.
There are seven sections that you need to have in your business plan:
- Executive Summary: Write this last. It’s just a page or two of highlights.
- Company Description: Legal establishment, history, start-up plans.
- Product or Service: Describe what you’re selling. Focus on customer benefits.
- Market Analysis: You need to know your market, customer needs, where they are and how to reach them.
- Strategy and Implementation: This needs to be specific. Include the management responsibilities with timelines and budgets.
- Management Team: Include the background of all employers/employees and company strategy.
- Financial Plan: Include profit and loss, cash flow, balance sheet, break-even analysis, assumptions, and business ratios.
Step Number Three – Choose A Location
Choosing the right location is tricky. You need to be within reach of your suppliers, customers and your home. First, the closer you are to suppliers, the less transportation costs you will incur and the less likely goods will break or spoil on the trip. Second, your business needs to be where your customers are, especially since your brand is new and not recognised. Third, the further you need to commute to and from work, the hard it is to make an impact in your new company. Ensure that you are within easy commuting distance to give you a greater chance of succeeding within your company.
Step Number Four – Finance
How do you plan to finance your company? Bear in mind that most companies run at a loss for the first three to six months and break even at around the twelve month mark. Ensure that you have bank loans, savings and business partners to help finance the business during the initial start-up phase.
Step Number Five – The Legal Side
When starting a business, ensure that you speak to a legal consultant. The company needs to be registered, loans need to be approved and signed off, register for tax number, a company trading license, employee licenses and permits to trade in the area.
In conclusion, the best chance for a new business to succeed is to ensure that the owner follows a set plan from the initial setup phase right throughout the company’s lifespan. Ensure that you follow these five steps and to consultant your legal advisor if you are unsure of anything.