Starting Your Own Business: Step by Step Guide

Are you an Entrepreneur?

Courtesy of jolinapetersheim.com

If you are reading this article is because after reading our previous article “Are you an Entrepreneur” then you believe that you are an Entrepreneur, and are ready to start the process to launch your new business venture. This and the future articles on this series will help you identify what are the steps that you should follow in order to increase your odds to be successful, and to avoid some of the most common errors that new business owners make. It is true that many people have started business without a formal plan, and have succeeded, but it is also true that over 90% of small business fail within the first 3 years.

Why do New Business Fail?

Regardless of the industry, new or small business usually fail for the same reasons:

  • Lack of Experience
  • Insufficient Capital
  • Poor Location
  • Poor Inventory Management
  • Over Investment Fixed Assets
  • Poor Credit
  • Personal Use of Business Funds
  • Unexpected Growth
  • Competition
  • Low Sales
 While nobody can guarantee to you that you will succeed in your business (and you should run away from anybody that does so), still there are many reasons for you to launch your own business. From personal satisfaction and recognition, to financial success, entrepreneurs launch business and succeed all the time, by avoiding some of these most common errors.

Step by Step Guide to Launch your Own Business

1- Write your Business Plan

Simple Business Plan. Courtesy of (http://lazyowlboutique.files.wordpress.com/)

A business plan it is just an outline of what you want to accomplish with your business and the basic steps that you will follow to get there. Many people have succeeded in business without having a business plan, but many more have failed just because of it. A business plan can be as complicated as you can make it, or as simply as you need it. At the beginning it can have 1,000 pages, or it may only have only two pages depending on your business and your need for external financing. It is basically the document that you can refer to when you are not sure what to do next, and it can help you avoid some of the issues that can cause your business failure by helping you remember why are you on business, and what business are you in.

2- What kind of business structure you need?

Some types of business require very little business legal structure, while others require extensive infrastructures and regulations. Business can range from a corner lemonade stand, or independent lawn care, to a hospital or factory; and each one of them may require a different business structure in order to succeed. Choosing the right structure can help you reduce your tax liability, reduce your personal liability, increase your business status, and even receive the right kind of finance. Some of the most common legal structures that you can select in the U.S. are:
  • Sole proprietorship
  • Partnership
  • Cooperative
  • Limited Liability Company
  • S Corporation
  • C Corporation

3- Location, Location, Location

As in Real Estate, one of the primary reasons for business success or failure is the location of your business. Depending on your business you may need to be in an area with high customer traffic, or it may actually need to be in an isolated area. Can you imagine what could happen if someone decides to put a Hair Saloon or Gas Station in the middle of nowhere, or if someone else decides to put a munitions factory in your downtown or backyard?. From traffic patterns, and zoning codes, to simply the actual cost/rent prices, having the right location can be the decisive factor in your business success or failure.

4- Finance your Business

Even if you are already independently wealthy and are interested in your new business venture as a way to help your community, you will need to determine how to finance your business since at the end you will need those financial resources to keep it going in the future. From your own personal money, to venture capital financing, or bank loans, every type of business needs to determine what is the best financial structure that can help it sustain their operations. While the sources of capital are almost infinite, not every one is the appropriate one for your business, or not every one can give you the right terms for your business.

5- Legal and Regulatory

Many business fail simply because they forget that they are part of their communities, and fail to meet their legal and regulatory obligations. From business name registrations and trademark, to licensing, permits, and taxes, business need to take into consideration the laws and regulations of the community where they plan to conduct their business. As an example most of the communities do not allow dangerous chemical plants, or adult entertainment sites near schools, while at the same time almost anyone can put a restaurant or hair saloon almost anywhere. Failing to follow the proper regulations or failing to file the proper legal paperwork can not only cause you to receive a fine, but can also cause you to lose your business if you forgot to trademark your business. Sometimes a few hundred dollars spend up front can help you save 100s of thousands later in legal fees.
While these are by no means all of the issues that you should take into consideration, they can surely help you avoid some of the most common mistakes that new business make.

About Inloso

Inloso offers strategic business consulting in Latin America and the U.S., in the areas of multinational strategic business development, multinational operations, and entrepreneurship. We have over 20 years of experience and can help you expand your business, improve your profits and customer satisfaction, and/or reduce your costs of operations. Please visit our contact page if you are interested in our assistance in any of these areas.

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