Written By Terry Ouimet, with curated information from Hubspot.com
link to Hubspot.com article https://blog.hubspot.com/sales/how-to-start-a-business
SIMPLE TAKEAWAY- A business plan is crucial to the long-term success of any new business. This article will help you establish a clear vision and goals for your business. And it will give you a step-by-step path to follow which will ensure that you create and set up your new business effectively and efficiently
SIMPLE ACTION STEP- This is one of the most comprehensive startup guides for new entrepreneurs that I have seen. Follow the steps below and begin writing your business plan now. It will put you in a position to be highly successful with your new business.
RELEVANT BOOK- The Art of The Start 2.0: The Time-Tested, Battle-Hardened Guide For Anyone Starting Anything by Guy Kawasaki. Click this link below to go directly to Amazon and check it out. Full disclosure: I am affiliated with Amazon and receive a small referral reimbursement if you buy the book through this website. Your price is not any higher, but you help SimplifierBlog to stay up and running.
WHY Do I Need This Information For My New Business?
The simple answer is that this information on how to start a new business will help you establish a clear vision and goals. And it will give you a step-by-step path to follow, which will ensure that you create and set up your new business effectively and efficiently. Every big victory or successful endeavor begins with a smart plan. This article will show you how to develop a smart plan for your business. Most people fail to actually complete a business plan. This article shows you step by step what you need to do from coming up with your idea to being “Open for Business.”
Leaving the confines and poor management of your 9-5 job can be extremely liberating and exciting. However, many people who want to start their own dream business find themselves asking “Where do I start?” and “How do I start?” We all want to put ourselves in a position to be successful right out of the gates. The question is how? The Answer is a smart well-thought- out PLAN.
I have been through this process a couple times and researched this topic extensively. I believe that if you want to start your business right the first time, it requires a fair amount of research, thought, and effort. However, there are some proven steps that can help you streamline this process. Also, I have personally researched and qualified the best relevant article that I could find on this topic to help support some of my points. It will help us get the best information possible and make your reading time pay off.
WHAT Are The Key Takeaways Of This Article?
Benefits of Creating a Business Plan Prior to Launching Your Business
Set up your business and legal structure properly.
Help lenders and investors understand your vision and why you are worth investing in.
Help you develop your company vision, goals, and strategies.
Refine your financial projections including costs and profit expectations.
Allow you to differentiate yourself from the competition and develop a sales and marketing strategy.
Enable you to secure financial investments and startup capital.
Fundamental Steps In A Written Business Plan Document
Be sure to make your business plan thorough, but clear, and concise. The very nature of the document makes it a little long, and a little boring in parts. But the purpose is to act as a dashboard or snapshot of what your business is all about and how you are going to make money. Furthermore, your business plan can be changed and adapted over time as your business changes.
An Executive Summary Statement– An overview or dashboard of your whole business plan. This appears first in the document, but is usually written last.
Company Description– Your mission statement, what your company does, and how it does it.
Market Analysis– Competitor research, customer research, product research.
Product or Service Description– Explain how your product or service solves a problem in the market. Describe your “winning position.”
Operations and Management Structure– List the roles and responsibilities in your company.
Marketing and Sales Strategy- How you plan to market and sell against your competition. Your detailed strategies.
Financial Plan– Outline your business costs and profits as well as funding information.
Appendix– Put any backup paperwork here such as resumes, permits, financial documents etc.
Now the main article !
1. First Step To Your Dream Business: New Idea Generation
Idea generation. First, Solve a Problem. If you are starting from scratch, your first objective is to simply fill a need or solve a problem in a niche that you want to serve and are passionate about. You will want to do this in a unique way and steal market share from existing market leaders. That sounds simple, but is difficult to actually implement and execute which is why research shows that more new business fail than succeed. If you need help coming up with a business idea you may want to read my two articles titled 9 Steps to How I Came Up With My Business Idea. I formulated some steps that work tremendously with the idea-generation phase. Here is the link below:
2. Legal Structure and Business Setup
Legal Structure. Decide on the legal structure of your business, will it be an LLC, Sole Proprietorship, Partnership, or a Corporation? There are pros and cons to each regarding ease of set up, risk, taxes, and liability. Do some basic research and select appropriately. You may need to consult a business or tax lawyer at this point which would really suck, but could save you from making bad decisions.
Below is a summary of The 4 Most Common Business Structures taken from the article that I have researched, qualified, and selected as the best on this topic of legal structure. The article comes from Hubspot.com and they give a great summary of the common business structures for you to choose from.
Article Source: www.hubspot.com Meg Prater
How To Start A Business: A Complete Guide For Startup Entrepreneurs
link to original article https://blog.hubspot.com/sales/how-to-start-a-business
The 4 Most Common Business Structures
1. Sole Proprietorship
Example: Freelance graphic design.
What it is: A sole proprietorship is a business that’s owned and run by one person, where the government makes no legal distinction between the person who owns the business and the business itself. It’s the simplest way to operate the business. You don’t have to name your business anything other than your own, personal name, but if you want to, you can give it its own distinctive name by registering what’s called a Doing Business Name (DBA). (We’ll get back to that in the “Choosing & Registering Your Business Name” section.)
Pros: It’s easy and inexpensive to create a sole proprietorship because there’s only one owner, and that owner has complete control over all business decisions. Tax preparation is also pretty simple since a sole proprietorship is not taxed separately from its owner.
Cons: It can be dramatically more difficult to raise money and get investors or loans because there’s no legal structure that promises repayment if the business fails. Also, since the owner and the business are legally the same, the owner is personally liable for all the debts and obligations of the business.
How taxes work: The individual proprietor owns and manages the business and is responsible for all transactions, including debts and liabilities. Income and losses are taxed on the individual’s personal income tax return at ordinary rates. In addition, you are also subject to payroll taxes, or self-employment taxes, on the money you earn. (More on self-employment taxes later.) Find IRS tax forms here.
Example: Multiple doctors maintaining separate practices in the same building.
What it is: A partnership is a single business where two or more people share ownership, and each owner contributes to all aspects of the business as well as shares in the profits and losses of the business.
Pros: It’s generally pretty easy to form a business partnership, and it doesn’t tend to be super expensive, either. Having two or more people equally invested in the business’ success allows you to pool resources. It also means you have access to more than one person’s skill set and expertise.
Cons: Just like a sole proprietor, partners have full, shared liability if the business goes south. That also means that partners aren’t just liable for their own actions, but also the actions of their partner(s). There is a variant on partnerships called a limited liability partnership, or LLP, that protects against that — which is how most law firms are organized, for example. Finally, when more than one person is involved in decisions, there’s room for disagreement — which means it’s important to have an explicit agreement over how the obligations and earnings will be split, especially if/when things go wrong.
How taxes work: To form a partnership, you have to register your business with your state, a process generally done through your Secretary of State’s office. Find IRS tax forms here.
3. Limited liability company (LLC)
Example: A small design firm.
What it is: LLCs are a type of business structure that’s more complex than sole proprietorships and partnerships, but less complex than corporations. They are called “pass-through entities” because they’re not subject to a separate level of tax. Most states don’t restrict ownership on LLCs, and so members can include individuals, corporations, and even other LLCs and foreign entities. Most states also permit “single-member” LLCs, those having only one owner.
Pros: As the name suggests, owners of an LLC have limited liability, meaning that they personally are not responsible for any financial or legal faults of the business. This reduction in risk is what makes an LLC a very popular business structure.
Cons: LLCs are often more complex than sole proprietorships or partnerships, which means higher initial costs, and certain venture capital funds are hesitant to invest in LLCs because of tax considerations and the aforementioned complexity. That being said, they’re simpler to operate than a corporation because they aren’t subject to as many formalities.
How taxes work: LLCs have the benefit of a “flow-through” tax treatment, meaning that the owners – not the LLC – are the ones who are taxed. Having only one level of tax imposed makes taxes easier. Find IRS tax forms here.
Example: Microsoft, Coca-Cola, Toyota Motor, and almost all well known businesses.
What it is: A legal entity that is separate and distinct from its owners, and has most of the rights and responsibilities that an individual possesses (to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes.) It’s more complex than the other business structures, and it’s generally suggested for larger, established companies with multiple employees.
Pros: They make seeking venture financing easy. They also provide the best protection for personal assets, as the founders, directors, and stockholders are (usually) not liable for the company’s debts and obligations – only the money and resources they’ve personally invested.
Cons: Because they’re much more complex than other business structures, they can have costly administrative fees, and more complicated tax and legal requirements.
How taxes work: Corporations are required to pay federal, state, and in some cases, local taxes. There are two different types of corporations: “C corporations” and “S corporations.” C corporations are subject to double taxation – so any profit a C corporation makes is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends.
The corporation does not get a tax deduction when it distributes dividends to shareholders. Shareholders cannot deduct any loss of the corporation, but they are also not responsible directly for taxes on their earnings – just on the dividends they give to shareholders.
S corporations, on the other hand have only one level of taxation. Learn more about the difference between “C corporations” and “S corporations” here, and find IRS tax forms here.
Click on link above to the original article for more information on the rest of the steps.
(Thank you to Hubspot.com for this relevant information on business structures)
Choose and register your business name. Take the proper time to choose a perfect name for your business and make sure it is not taken. To make sure the name is not taken, go to the website of your state’s Secretary of State and then under the ‘Business’ section, you can chose the ‘Name Availability Search’ link and then enter the chosen name of your business. Depending on the type of business you are starting, you may or may not need a federal license or permit. This link has a great table to help you quickly decide what you need at the federal level: https://easuccess.com/bfgw Following are a few links to help you with your selling permit, sales tax exempt certifications, licenses and tax codes:
Also, Here is a website that may help:
3. Register Your Patents and Trademarks
Patents and Trademarks. This is something that you must do very early on as you research competitors. I mentioned it in the Idea Generation Phase but it’s also worth mentioning here while you are getting all your paperwork done. Somebody else may already have an existing patent on a product that you are designing and creating and you don’t want to infringe.
You don’t always need to file a patent or get a trademark when you start a new business, but if you do, new patent regulations make it such that you want to be the first to stake your claim and get your patent party started. It’s now called the First to File and First To Invent. First to file (FTF) and first to invent (FTI) are legal concepts that define who has the right to receive a patent for their invention. The United States patent system is based on a unique “First-to-Invent” doctrine, which means that the inventor who first conceived of the invention and then diligently reduced it to practice by filing a patent application (or actual reduction to practice) is considered the first inventor and is entitled to the patent. Here are a couple links to help:
US PATENT SEARCH: http://patft.uspto.gov/
GOOGLE PATENT SEARCH: Just type your keywords into google and start searching.
US TRADEMARK SEARCH: https://www.uspto.gov/trademark
4. Goal Setting For Your Business
Strategic Business Goals and Objectives. Set 3-5 Goals for your business that are “SMART Goals.” These combine longer term, idea based more generic goals (“I want to build a highly successful business in the toy industry”) with short term, tangible, measurable objectives (“I will sell 5,000 units in 6 months, capture 15% market share,”, etc).
SMART goals should be Specific (Who, What, Why, Where), Measurable (How will I know I reached them?, How much? How many units, dollars or market share?) Achievable (Should stretch you but remain possible and attainable so that you remain motivated), Relevant (Should directly correlate to your overall business strategy in the market, your brand strategy, and your vision for success), and Time-Bound (Set goals in smaller incremental stages that are appropriate for your industry such as monthly, quarterly, six months and one year goals.
More important than setting the goals, is keeping them visible and top of mind as you motivate yourself and hold yourself accountable toward achieving them.
Strategic Tactics. Your “winning position”is your primary business strategy or what you are relying on to win and achieve your business goals stated above. Your tactics are the daily and weekly activities that you engage in to support your winning position or strategy. Tactics are the tools that help you build the “thing”, or the gas that helps your car get to its destination. Examples are: working to secure a licensing agreement, making 10 cold calls per day, or accessing a key decision maker.
Selling is all about the right attitude and the right actions. If you perform the right tactics and actions on a weekly basis, you will execute on your strategy, build brand awareness, create a competitive advantage, make sales, increase market share and make money.
Make a list of tactics for each of your SMART Goals.You will know that you are working productively and efficiently toward them if you look back at your week and you implemented your tactics.
5. Website and Online Presence
Sales and Marketing. This is a good place to formulate your sales and marketing strategy. If you are new to sales, I highly suggest downloading my free e-book Money Making Sales Tips For New Entrepreneurs. Every new small business owner needs to learn how to influence and sell if they want to stay in business.
You already have your “Winning Position” from the Idea Generation Phase so now you need to make some concrete plans on how you will market it and sell it. Solidify your branding which is how customers identify and experience your unique business. It’s what they think of when they think of your product or service. You want your marketing and sales to all align and it begins with creating that memorable impression that customers identify as “you”, otherwise known as branding.
Marketing Channels. Next you need to decide on your marketing channels and strategies. This is how you will get the word out to your customers about who you are and what you have to offer them. You will most certainly need to come up with a social media marketing strategy. I recommend just starting out with one or two social media platforms such as Instagram or Facebook. That way you can learn these tools and utilize them effectively in a way that allows you to get to know the needs, problems, and concerns of your customers. And you will be able to interact with them directly which is what you need to be doing to build a successful business.
This all takes time so if you have not hired anybody yet and you are wearing all the hats, just focus on one social media platform at a time.
You Are In The Business of Sales
Selling. If you are in the people business, you are in sales. As a new entrepreneur, learn some basic sales and influencing skills right away. This investment will pay you back many times over and keep you in business for years to come. You will quickly realize that you need sales skills everyday, in every facet of your business. Additionally, calculate your cost of doing business, your selling price, and your profit margin. Have a targeted and effective sales strategy in place. Know where you will go for the business and how you will get it. Do not rely on the ingeniousness of your product or service alone. Always be selling! (ABS)
Common Marketing and Distribution Channels
Marketing Options. You can choose to sell Business to Business (B2B) or Business to Consumer (B2C) or both. Under these models there are common marketing channels or ways to sell and distribute your product. There are others but this will help you to get started.
Direct Selling– means selling your product directly to your customer, for example through your website/eCommerce site, in a brick and mortar store, or both. This can also be called retail selling. Perhaps you are a consultant or speaker collecting money directly from the people who purchase your products and services.
Wholesale or Distributor– means selling to customers who are the middle people. You sell to distributors who then sell to the end user such as WalMart. The wholesaler or distributor warehouse and ship the product directly to the end point of sale or end user.
Franchising is a business in which the original owners or “Franchisors” sell the rights to their business logo, name, and model to a third party retail outlet. These are owned by independent, third party operators, called “franchisees.”
Retail Sales- This represents purchases of finished goods and services by consumers and businesses. Retail sales occur with products that have made it to the end of the supply chain such as Target and Home Depot. You could market and manufacture a product yourself for example and sell directly to the retail stores.
To solidify your marketing strategy ask yourself questions like: How do I plan to penetrate the market? How will I grow my business and reach my performance objectives? Which channels will I focus on for product distribution? What is my social media marketing strategy?
For your sales strategy, you’ll need to answer questions such as: What is my sales strategy? Do I need a sales team? What will my sales team look like if I have one? How will I differentiate myself from my competitors and steal their market share? How do I plan to grow my business over time once I have reached some of my goals?
How many sales calls will I need to make to make a sale? What’s the average price per sale? You should elaborate on your pricing strategy and be able to calculate your customer acquisition costs.
Most of us need to be doing business online in some fashion, it’s where all of our customers are hanging out. Don’t forget to set up your website hosting and eCommerce. Here are a couple links to hosting companies that I have used successfully:
6. Business Plan
The Business Plan. Get a well thought out plan typed up on your electronic device of choice. This is your “business plan” or your playbook for business success. A well thought out business plan acts like a compass prior to an important journey. Similarly, would you build a new house on the fly and just improvise as you go? Of course not. That would result in wasted time and money and the same principle applies to your new business. Additionally, the business plan is often used to help secure funding if you should need it. Don’t worry, you have already completed much of this work in previous steps.
Now you are just putting it all together in a professional document that banks and private venture capitalists will expect when you ask them to invest in your dream business. It also serves as a working document that you will use to help you stay organized and achieve your business goals.
Again, more on this topic from the article that I have researched and curated from Hubspot.com
Article Source: www.hubspot.com Meg Prater
How To Start A Business: A Complete Guide For Startup Entrepreneurs
link to original article https://blog.hubspot.com/sales/how-to-start-a-business
Business Plan Template
Step 1. Executive Summary
The purpose of the executive summary is to give readers a high-level view of the company and the market before delving into the details. (Pro Tip: Sometimes it’s helpful to write the executive summary after you’ve put together the rest of the plan so you can draw out the key takeaways more easily.)
The executive summary should be about a page long, and should cover (in 1–2 paragraphs each):
Overview: Briefly explain what the company is, where you’ll be located, what you’ll sell, and who you’ll sell to.
Company Profile: Briefly explain the business structure, who owns it and what prior experience/skills they’ll bring to the table, and who the first hires might be.
Products or Services: Briefly explain what you’ll sell.
The Market: Briefly explain your main findings from your market analysis.
Financial Considerations: Briefly explain how you plan to fund the business and what your financial projections are.
Example of an “Overview” section of the Executive Summary (from Bplans):
Jolly’s Java and Bakery (JJB) is a start-up coffee and bakery retail establishment located in southwest Washington. JJB expects to catch the interest of a regular loyal customer base with its broad variety of coffee and pastry products. The company plans to build a strong market position in the town, due to the partners’ industry experience and mild competitive climate in the area.
JJB aims to offer its products at a competitive price to meet the demand of the middle-to higher-income local market area residents and tourists.
Step 2. Company Description
Next, you’ll have your company description. Here’s where you have the chance to give a summary of what your company does, your mission statement, business structure and business owner details, location details, the marketplace needs that your business is trying to meet, and how your products or services actually meet those needs.
Example of a “Company Summary” section (from Bplans):
NALB Creative Center is a startup, scheduled to go into business in the summer of this year. We will offer a large variety of art and craft supplies, focusing on those items that are currently unavailable on this island. The Internet will continue to be a competitor, as artists use websites to buy familiar products. We will stock products that artists don’t necessarily have experience with. We will maintain our price comparisons to include those available online.
We will offer classes in the use of new materials and techniques.
We will build an Artist’s Oasis tour program. We will book local Bed and Breakfasts; provide maps and guides for appropriate plein-air sites; rent easels and materials; sell paint and other supplies and ship completed work to the clients when dry.
We will expand the store into an art center including: A fine art gallery, offering original art at, or near, wholesale prices; Musical instruments/studio space; Classrooms for art/music lessons; Art/Music books; Live music/coffee bar; Do-it-Yourself crafts such as specialty T-Shirts, signs, cards, ceramics for the tourist trade.
Step 3. Market Analysis
One of the first questions to ask yourself when you’re testing your business idea is whether it has a place in the market. The market will ultimately dictate how successful your business will be. Who’s your target market, and why would they be interested in buying from you?
Get specific here. For example, if you’re selling bedding, you can’t just include everyone who sleeps in a bed in your target market. You need to target a smaller group of customers first, like teenagers from middle-income families.
From there, you might answer questions like: How many teenagers from middle-income families are currently in your country? What bedding do they typically need? Is the market growing or stagnant?
Include both an analysis of research that others have done, as well as primary research that you’ve collected yourself — whether by customer surveys, interviews, or other methods.
This is also where you’ll include a competitive analysis. In our example, we’d be answering the question: how many other bedding companies already have a share of the market, and who are they?
Outline the strengths and weaknesses of your potential competitors, as well as strategies that will give you a competitive advantage.
(Check out the rest of these steps for a Business Plan document in the original article.)
7. Last Step: Product Launch. Open For Business
OPEN FOR BUSINESS!! You have done your homework and put yourself in the best position for your new dream business to be successful. It can be nerve racking and there is no guarantee for huge success for any of us who leave our 9-5 jobs and create a business from nothing. However, the payoff and rewards can be great in many ways other than money alone. Remember, the very definition of an entrepreneur is risk taker.” And without some risk there is no reward.
Now it’s time to get out there and put your passion into action, you can do this! I wish you all the best.
How has this article helped you? Anything we should add to it? Share your business idea with us.
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