Starting a small business is a big endeavor that no one should enter into lightly, but if done well, it can be one of the most rewarding and financially beneficial decision of your entire life. If you’re itching to start a small business, chances are you’ve got at least a bit of entrepreneur in you, so here’s some things to keep in mind as you prepare to start your own business.
Choosing The Right Type Of Business
If your next small business is currently a blank slate, you’ll first want to establish what type of small business you’ll be starting. A few options for starting your own business would be a franchise, a sole proprietorship and a business start up.
A franchise doesn’t necessarily mean a million dollar fast-food restaurant; many franchises make great home businesses and could be anything from an internet home business to a service business like roof repair.
Sole proprietorships are businesses that are owned and operated by just you (or you and your spouse); sole proprietorships can be any type of business and will afford you many tax benefits that aren’t available to you if you are working as a contract employee.
A business start up is the traditional business type that builds upon a strong business plan and can expand dynamically and transform as it grows. This is typically the hardest type of business to start, particularly on your first attempt, but also has the biggest potential in the long term.
Crafting The Perfect Business Plan
A business plan is a must-have if you intend on getting a loan or a group of investors. A strong business plan will detail all of your business ideas for your new startup including the projected financials, monetization strategy and overall trajectory for the company. A franchise will typically provide the business plan for you, if you are starting a business from scratch, consider talking to an experienced entrepreneur or hiring a consultant to help you craft this immensely important document.
Whether you plan on starting a home business or a multi-national conglomerate, you will most likely need to raise some money to get going. The two most popular approaches are a bank loan or getting a group of investors together.
The bank will be more difficult initially because they will be hesitant to take a risk on a first time business owner, but in the long run you will probably end up on top if your business does well, since the bank will not own a piece of your business.
With a group of investors, you will often be able to get up and running quickly, but you need to carefully consider your terms or you will end up giving away too much of the company, or conversely raising too little startup capital and running out of money too early.
Above all, make sure that you do not simply invest your life savings into your idea. This is a huge risk and if you are planning on doing it because no one else will give you money for your business, you need to take a closer look at your plan and see why no one is willing to take a chance on it. The initial round of fundraising for a company is often referred to as the “friends, family and fools” round, so if you end up being the only investor, make sure you’re not the fool.