How to Start a Business - How to Start a Small Business
Article Index
How to Start a Business
How to Start a Small Business
Why Small Businesses Fail
Part 1: The Executive Summary
Part 2: Market Analysis
Part 3: Company Description
Part 4: Organization And Management
Part 5: Marketing and Sales Strategies
Part 6: Service or Product Line
Part 7: Funding Request
Part 8: Financial
Part 9: The Appendix
Key Points to Consider
All Pages

How to Start a Small Business

Starting and managing a business takes motivation, desire and talent. It also takes research and planning.

Like a chess game, success in small business starts with decisive and correct opening moves. And, although initial mistakes are not fatal, it takes skill, discipline and hard work to regain the advantage.

To increase your chance for success, take the time up front to explore and evaluate your business and personal goals. Then use this information to build a comprehensive and well­ thought­ out business plan that will help you reach these goals.

The process of developing a business plan will help you think through some important issues that you may not have considered yet. Your plan will become a valuable tool as you set out to raise money for your business. It should also provide milestones to gauge your success.

Getting Started

Before starting out, list your reasons for wanting to go into business. Some of the most common reasons for starting a business are:

  • You want to be your own boss.
  • You want financial independence.
  • You want creative freedom.
  • You want to fully use your skills and knowledge.

Next you need to determine what business is "right for you." Ask yourself these questions:

  • What do I like to do with my time?
  • What technical skills have I learned or developed?
  • What do others say I am good at?
  • How much time do I have to run a successful business?
  • Do I have any hobbies or interests that are marketable?

Then you should identify the niche your business will fill. Conduct the necessary research to answer these questions:

  • Is my idea practical and will it fill a need?
  • What is my competition?
  • What is my business advantage over existing firms?
  • Can I deliver a better quality service?
  • Can I create a demand for your business?

The final step before developing your plan is the pre-business checklist. You should answer these questions:

  • What business am I interested in starting?
  • What services or products will I sell? Where will I be located?
  • What skills and experience do I bring to the business?
  • What will be my legal structure? (see overview below)
  • What will I name my business?
  • What equipment or supplies will I need?
  • What insurance coverage will be needed?
  • What financing will I need?
  • What are my resources?
  • How will I compensate myself?

Your answers will help you create focused, well researched business plan that should serve as a blueprint. It should detail how the business will be operated, managed and capitalized.

Is Your Business Idea Viable?

It’s easy to come up with an idea for a business, but it makes sense to ensure that your business idea is viable before you invest too much time and money in it. There’s obviously no way to guarantee that your idea is going to succeed, but thorough market research will go a long way to ensuring that you’ll be investing your time and effort in a business venture that should offer a reasonable return on investment.

If you can answer yes to the following questions, there is a good chance that your business idea is a viable proposition, which means your next step would be to draw up a business plan

Do you have a unique selling point?

Unless you’ve been lucky to find a gap in the market, your product or service is going to have to compete against other similar products for customers and market share. To compete, your business has to stand out from the competition – it has to have a unique selling point that you can use to encourage customers to buy from you.
This doesn't mean you have to invent a totally new product or service, your offering might be:

  • Cheaper or more economical to use.
  • Smell better or work better.
  • Come in a more fashionable design or appealing color range.
  • Weigh less, or be made of better material.
  • Anything else that compares favorably with similar products on the market.

If you have a unique selling point, it’s worth doing further research into the viability of your business. If you’re not sure if your product or service adds value that customers can’t find elsewhere, it might be better to brainstorm a few more business ideas before you forge ahead.