Opening a new business can be overwhelming when you are unsure of where to start. Below we are providing 5 tips for starting a small business! Continue reading to find out more! For support and other questions contact us here at Mitchell Firm to help you through the process of starting your business! Call 540.443.9272 to learn how Mitchell Firm can help you navigate the process.
1. Balance: Passion, Skill and Market Research
Make a distinction between what you are passionate about, what your skills are, and what would make a good business. Analyze the results and find the cross-section. All three factors are equally important, and you’ll need to find the right balance. Passion is important because it will make you endure any pressure. But, without skill, passion is not very useful, especially at the beginning. It is easy to get lost in something you lack the skill to do. Also, if you are skillful and passionate about something but it does not have commercial potential you should keep it as a hobby. Now, assessing whether your business idea has a commercial potential can be tricky. First, try to find competitors in your field. If there are none, that usually means that your idea is not worth pursuing. If there is competition, learn from them. You can also ask experts, or conduct market research for your specific field. The more information you have the better.
2. Investigate Legal Obligations
It is crucial that you learn and fulfill all legal obligations when opening a business. If you don’t take this task seriously it will result in penalties and even closure of your company. First focus on registering your company. Choose a business structure and learn how it will affect your taxes. Minimizing your taxes is key to company growth. We will explore some of the most prominent options for business structure. Sole proprietorship. It is a default business model. If you are planning a really small operation and you are the only employee this model is best. But beware, although taxes are low for this business model, you should know that your personal liabilities and assets are not distinguishable from the ones belonging to your business. Maybe the best structure for emerging small businesses is LLC. Those three letters stand for: Limited Liability Corporation. Unlike sole proprietorship LLC allows you to protect your personal assets. The profits of the company and your personal income are taxed. Although this step is important, most people become discouraged by the complexity of the legal system. If you are not a legal expert, it would be wise to hire someone to help you out. Every country and state differs in its legal demands, so try to find specific local companies, for example, if you are opening a South Carolina LLC make sure you hire a local company.
3. Start Simple
Form your business idea to be simple. You will have many challenges along the way, the best course of action is to start on a solid foundation. If you start with a simple plan you can more easily focus on all aspects. When you build a strong starting point you can safely add to your company and grow. It is all about focusing on the key aspects and minimizing your potential loss. Always think from the perspective of small businesses, don’t trouble yourself with comparing your business with giant corporations. Try to keep it simple, functional, and take only thought out risks.
Many business gurus advise on risking big and winning big, but it is not like that in the real world. Sure you can risk it all and maybe win, but just try and research how many new businesses fail in the first few years. In the United States of America over half of all new businesses fail in the first five years. You should risk, but try risking smart.
4. Research Competition
You start with an idea, and it is always a challenge to imagine that idea in the real world. That is important for planning the execution of your idea. The most valuable information for this process is gained through researching your competition. You can learn what and how they sell, and to whom. You can be inspired by the successful aspects of their business and incorporate them into your own business. On the other hand, you can spot any deficiencies in their business and use it to your advantage. For example, if the competitor has bad customer support you can make sure you have the best one. That way you will immediately stand out and be more prepared.
5. Write a Good Business Plan
There are a lot of instructions out there for writing a business plan. This means there are a lot of ways to write it, but there is also some universal advice that will benefit you. However, you decide to write your business plan keep in mind that the best way to start is from the general, broad ideas, and gradually move towards specific solutions. First, describe your business in the broadest sense, then ask yourself follow-up questions. That way you will stay on track and keep the “big picture” in mind while at the same time evolving your idea into specific topics and challenges. A good idea is to use the five w’s when formulating the follow-up questions.