One of the most important decisions you can make when starting any business is to determine if your idea will prove profitable, says Peter Decaprio. Here are some questions to ask you before making that decision:
Would my product or service appeal to enough people at a price they would be willing to pay? Am I solving a problem or filling a need for many people? Is there evidence that my product or service would be accepted in the marketplace? What are the major reasons people don’t purchase this kind of product or service now? Can I eliminate those problems or can I minimize their effect on my business?
Can I produce a quality product at an affordable price, given my operating costs and desired profit margin? Will my marketing plan attract enough customers to make my company profitable? Are most competitors taking advantage of economies of scale? Are there ways for me to achieve efficiencies that will allow me to compete with larger companies despite having less capital to invest in production facilities and equipment?
Assuming your idea is sound, you’ll need to start putting it into action. You have several options when starting a business. Also you can sign a contract to buy an existing business; you can also purchase the assets of an existing company; or you can purchase its stock. Or, you could acquire a franchise, which is simply buying the rights to market products or services developed by someone else.
Once you have decided on what type of business structure suits your goals best, your next step is basically one of putting together a business plan. If this sounds overwhelming, don’t worry. You have already done most of the work by researching and developing your idea. It’s just a matter of assembling everything you’ve learned into a cohesive document that will allow others to understand what your business plans are for the future.
Steps To Start A Successful Business?
For example if you want to start a software business you can follow some of the following steps to start a successful business:
- Decide on the Legal Form of Your Business
- Assess your Financing Requirements
- Write a Few Business Plans and Show Them to Advisors and Investors
- Develop an Initial Marketing Plan
- Develop Operations, Management, Accounting Systems and Controls Documents.
Decide on the Legal Form of Your Business:
Peter Decaprio shares the first step is to select your type of business entity. There are several choices: sole proprietorship or general partnership for individuals; limited liability company (LLC) or Sub S corporation for small groups; close corporation or regular C corporation for large groups; cooperative, non-profit organization, association, or religious corporation for unique situations.
For more information on business types, see our article “Choosing the Right Legal Structure for Your Business.”
Assess your Financing Requirements: Your business plan should describe your future financing needs. However, it is almost certain that you will need some money to start the business. Determine what funds are available to you and how much of them will be needed before starting operations; then, try to find financing sources that can accommodate those needs. If you’re starting a sole proprietorship or partnership, this step will involve putting together a personal financial statement. This usually requires getting copies of all your credit reports (see above). You’ll also have to disclose how much money each partner has invested in the company (or, if it’s a sole proprietorship, how much you personally have invested). You’ll need to provide personal financial statements for each partner if the business is a partnership, explains Peter Decaprio.
If you’re starting a corporation, your financing requirements will vary depending on which type of corporation you choose (Sub S or regular C). See “Choosing the Right Legal Structure” above for more information. You may also want to read our article “Financing Your Company: The Ultimate Guide.”
Write a Few Business Plans and Show Them to Advisors and Investors:
After assembling all this information into one cohesive document, write a brief description of everything it contains, as well as one-page summaries of your initial market research and product testing. Be sure there’s a clear correlation between the initial product testing and your final marketing plan. This is where you’ll detail what sacrifices you’ve had to make in order to keep costs down, as well as any plans for future expansion or diversification. So from there, put together a full business plan that shows how all of these elements will work together. Present your plan to potential investors and advisors, including a financial advisor who can also help you determine if it’s feasible based on projected cash flow and return rates.
Develop an Initial Marketing Plan:
Your initial marketing plan should include anything from pricing strategies to market research reports from professionals. Test different price points by using online software such as Google Consumer Surveys.
You can use these simple guidelines to start up your own business. It will be useful to create a good plan for you to achieve success in your business idea says Peter Decaprio.