Individuals opt to enter the business world for various reasons. Lack of employment opportunities force many into exploring other means of acquiring a steady income. Hobbies become profitable when others take notice and request to purchase a finished product. A particular service or a skill is not readily available in a certain location. Whatever the motivation, starting a business requires a great deal of research and planning. The below provide an overview of key areas which should not be neglected when starting out.
Develop a Concept
All businesses start with an idea or concept. Potential business owners must research the opportunity, determining the need or desire for the specific product or service. The product or service must attract enough consumers and have a potential for growth with which to justify developing the business. Evaluate the future business location and office space alternatives. Will there be a great deal of local competition from an established company? Is the product or service something new and different?
Research the Industry
Owners must investigate growth in the particular industry by comparing published statistics and information. Determine the availability and price allocations of suppliers for manufacturing materials. Elicit opinions from potential customers, the competition and financial experts.
Establish the business structure
The business structure must be developed and considered, keeping in mind changes which the company may undergo. Some of the options include – sole proprietorship, a partnership, or a company. Decide upon a name, but perform research in order to avoid trademark infringements with established businesses. Evaluate what licenses and permits are necessary according to the business type.
Formulate a Business Plan
Develop a business plan for acquiring financing. This documentation generally consists of creating facts and establishing goals. The plan includes the business description and outline, necessary equipment, supplies and location providing detailed accounts of all expenditures and projected income. Financiers evaluate the company’s strengths and weaknesses, the qualifications of the owner and employees, sales growth potential and possible hindrances preventing investment return. Ensure the plan is accurate, complete and presentable.
Companies have one of two options available for financing, lenders or investors. As either represents a type of business partner, individuals must evaluate the advantages and disadvantages of each. Lenders require a guarantee on loans in the form of personal collateral. Banks and other institutions may or may not work cooperatively with businesses experiencing difficult times. While investors may demonstrate a greater amount of leniency toward invested returns, as shareholders, these persons often times expect a voice in the overall business operation. Keep in mind, each time a business owner applies or receives financing, the information is then forwarded to the person’s credit history.
This article had been developed by Servcorp, a global provider of serviced and virtual offices.