All businesses have one thing in common - someone came up with an idea that they could provide a unique need or a solution. Whether that solution is to provide a better cup of coffee, a great haircut to your dog or sell insurance, the premise started with one idea that someone had the courage to go after. There are many good reasons to start a small business with the popular draw being that it gives you the freedom and the flexibility of being your own boss and creating your own schedule.

Starting a business can seem like a daunting and overwhelming experience but with a little bit of understanding as to what needs to be completed and what steps are to be taken in order to start your journey, the process can be a fun one.

The Business Plan

Creating a business plan is one of the most important steps you will complete as it will provide the direction in which you need to progress in order to give yourself a timeline and attach specific goals to that timeline for starting your business. By creating a solid outline and thinking through what needs to be done, it can help you evaluate what you really want to achieve and what is realistic.

The business plan does not have to be a long detailed document but something that is well thought out, but short and to the point.

A basic overview of your business, what you are selling or providing and why there is a need for this in the marketplace is essential so that you can keep your focus as to what it is you are trying to achieve.

Next, decide who are audience or target consumer is? Is there a gender preference, is there an age group, or will your business relate to everyone young and old?

You will want to state what the milestones are that you want to achieve in next year, 3 years and 5 years as well as assign a timeline to achieve goals along the way.

Another point to add into the business plan is your marketing plan or what steps you will take to get the word out about your business.

As you work through your business plan and think about different aspects, you are essential building your business. Plan to review your business plan quarterly, especially in the first year, as your business will be evolving and changing as you see fit.

Show Me the Money

Unless you have a tree growing money in your backyard, you will need to think about where the money will come from in order to start your business. When applying for small business loans and/or grants, you will need your completed business plan in order to attach with the application. However, with a business that is just starting, banks and lending organizations are hesitant to loan money and so relying on money from other methods may become a necessity.

Profile Tree lists a variety of ways in which you gain enough money to start a business. You may need to combine methods in order to get the total amount needed.

Personal Savings

Diving into your own pocketbook is the most popular method of getting money to open your business. According to Entrepreneur, after pulling from personal savings, you should always have no less than $5,000 in your account to fall back on for emergencies and to borrow against yourself. Another way to get money is to borrow against your 401K plan

Friends and Family

Asking friends and family can be a difficult one because you are asking them to have faith in your ability to achieve success. Be realistic in the amount of money that you are asking for and be willing to show how you plan to use their money. Sharing with them your business plan will show them that you are serious about success. Another idea is to draw up a contract and have both parties read and agree to all factors within the contract and sign off on it. Points should include how to pay back the borrowed money and how much involvement they have in your business if any at all. Detail out the specifics, no matter how silly they may seem.

Credit Cards

This way of financing is one that many use because the money is readily available if you have a good financial history and can obtain enough credit to get you what you need. According to creditcards.com, the National Small Business Association found that about 33 percent of small businesses had used credit card financing in the past 12 months to meet their capital needs. These can be very expensive and should be used as a last resort.

Small Business Loan

States have the authority to provide grants for various programs and small businesses as well as nonprofit organizations will provide grants. There are many local organisations that will support new business ideas – with grants or reduced fee services. Free advice may also be on offer.

Small Business Grants

States have the authority to provide grants for various programs and small businesses as well as nonprofit organizations will provide grants. There are many local organisations that will support new business ideas – with grants or reduced fee services. Free advice may also be on offer.

Woman or Minority-Owned

If you are a woman who is opening a small business, getting your business as a woman-owned business will help you qualify for US government programs that will help women entrepreneurs start a business. Also, if you are a minority or planting your business in an area that is financially challenged, you can apply for government programs as well.

A Name is Worth Everything

Naming your business is the fun part and you may have thought of the perfect name, doodled it many different ways in many different colors on napkins, and small scraps and paper and can envision it in neon. Before you register your name and it becomes permanent, ask yourself some questions:

Another resource to use before registering your business is checking the U.S. Patent and Trademark Office’s trademark search tool to see if the name you have chosen is already in use. A quick google search can reveal if the name is already in use and will help you gauge if it might be possible to use it.

Once you have decided on a name that you feel encompasses what you and your business are all about, you want to register your “doing business as” name with your local government office.

The Financial Forecast for a Small Business

Part of your business plan is to figure out your financial plan. This is perhaps the most important part of planning your business details but also the most difficult. Writing a financial forecast is what will help you get financed when you go to the bank to get a loan or win out the pockets of an investor.

Because you have no financial history to refer to when starting a business, your financial forecast is a bit of a realistic guess. You’ll first want to give an educated sales forecast for each year for the next three years.

Next, you’ll want to create a budget for your expenses. This is basically understanding how much money you will initially spend in order to earn money. Things to think about are:

Include what you fixed costs which include bills that will occur monthly such as rent and payroll. You will also want to include as many variable costs that you can think of which for starting up, will be you want to include your variable costs which are items such as advertising costs and delivery or shipping charges. Variable costs are those where the charge or the billed amount is not the same set, cost each time.

The next item to tend to is assets and liabilities. Assets are the things you own or something of value and is like money in the bank. Liabilities are the things you owe, or your debts, such as a small business loan.

Location, location, location!

The key component of choosing a location is to first check the zoning laws as well as the ordinances and regulations that are in effect for the location. You need to ensure that the property you are purchasing or space you are moving into is in compliance with how you intend to use the space. Check your local planning agency to find these ordinances as well as see what the building restrictions are or if you plan to renovate and what limitations you may run into.

Location in a particular area of town will determine who your prime audience will be. If you are opening a coffee shop, for instance, the main consumer will be those who live or work near your store location. Taking that into consideration, you want to make sure where you are opening your store is catering to the financial target that you are seeking. If you want to sell a $5.00 specialty cup of coffee, you need to have a demographic history indicating that those in the area are willing to spend $5.00 for a cup of coffee.

Another detail to pay attention to is those businesses that will be your neighbor as well as how near or far your competition is located. You want to ensure that those businesses in the area compliment your small business idea to ensure that you can thrive.

With choosing a location also comes the financial aspect of the location. What is the monthly rent? What is the income and sales tax for your area? What about property taxes? If moving into an existing space, what upfront cash will you need for renovations?

Business Structure of a Small Business

The IRS wants to know what type of small business you are so that you know want the type of tax form is that you need to have on file. The two most common forms of small business types are:

Sole Proprietorships – This is the most common type of small business types and is an unincorporated business that you own by yourself.

Partnerships – This is a business where two or more people own the business and you both share in the profits and losses.

Becoming the Boss

Depending on the size of your business and what services you are offering, you might need to hire employees right away or stand on your own two feet until you have a need to hire. The longer you can go without hiring employees is money saved and so don’t hire until you absolutely have the need to do so.

When you are ready to hire, there are many federal and state rules that must be followed in order to protect yourself as well as your employee. Take the time to research and educate yourself to make sure you are in compliance with federal and state laws.

The first step you must take is to get an Employer Tax ID number. This is what you will need in order to report your taxes. You can contact the IRS in order to apply for it. When you hire your employee, you must have them fill out a Form W-4 which tells what to withhold from their wages. In addition, you as an employer will have to report what you paid your employees and what taxes were withheld. This report is commonly called the Form W-2. You will turn both of these forms into the IRS as they are federal forms. For the state taxes, the same must be done in accordance to your state law.

Health and dental insurance are an optional benefit to offer your employees but as an employee, you are required to have worker’s compensation insurance coverage.

Online Business

Will you avoid the costs of a bricks and mortar location and settle with promoting your business online? There are advantages and disadvantages to both – some businesses models would not work if they were operated offline. Online can be an excellent way to keep costs down – from setting up a simple website, to advertising your service on small business directories such as ProfileTree, LinkedIn, Yellow Pages and so on – customers will be able to find you once they search online for your service or product.

Some online marketing should be actioned – Creating a website is one of the first things you want to create. If you do not have the extra cash flow to drop into having one custom designed, there are many websites that offer free basic templates that can serve as a starting point until you can upgrade.

Getting the Word Out

Now that your business is a go and you’re ready to open, you want to promote your business and get the word out. With a little creativity, your advertising budget does not need to be a big one and you can work on a budget.

Social media is essential in today’s market and creating a Facebook page as well as Twitter, Instagram and Pinterest account and continuously updating these pages are an easy, free quick way to get your message out to those who follow you.

Start an email newsletter to those that come into your store or express an interest when you are out and about. Sending weekly or monthly emails to those who opt-in to receive emails is a good way to continuously keep your name in front of consumers.

Attend local business meetings or meet-and-greets. Check with your local Chamber of Commerce to see what meetings are in your area and when they are. Make a point to attend these meetings and get to know the town leaders and build your network. The more you become involved in the community in which you are doing business, the more word-of-mouth will spread.

If you are starting a food-driven business, select local businesses each week to deliver samples of your food along with a menu and business card.

Advertise in the local newspaper and give a promotion in order to entice new customers into your store. It is also advisable to follow the local news especially on business. This is to ensure you keep up to date on anything that might impact what you are doing, such as grants, financing, loans, taxes, small business week, businesses for sale and potential marketing opportunities.

And Away You Go…Follow These Steps on How to Start a Small Business

Your first year in business will surely be one that is rewarding, enjoyable, hardest and most frustrating years of your life.

The U.S. Small Business Administration offers a website that is invaluable and can answer or explain almost any question you might have about starting and maintaining a small business. Continually planning goals and being adaptable to where your business leads you will only pave the way to success.

According to Forbes, the U.S. Bureau of Labor indication that 75% of new businesses survive the first year, 69% survive the first two years, and 50% make it to five years. Looking at different statistics from around the world – many organisations report different numbers. By being smart, not fearing failure and pivoting quickly if needed will give you the best chance of success. The start-up community tries to breathe a new perspective into the stigma around “failing” in business. It would seem this has been successful in the USA, especially in places like Silicon Valley – yet has not really filtered through to the rest of the world yet. Also – does the attitude to tech failure mirror what is seen in more traditional industry? I do not think so, sadly. So prepare for the tough times and the good times will follow. Below are some interesting statistics we found from around the world in regards new start up business success or failure.

New Zealand: Ministry of Business Innovation and Employment released its report on small business stating:

The Australian government published a report on business failure. Interesting it stated “around two-thirds of businesses are still operating after five years”. But more importantly it stated “the majority of businesses that cease operations are not 'failures'- they are solvent businesses closing for reasons unrelated to their financial position (such as when the owner retires or seeks a different lifestyle).” The report does date from 2000 – but it is very interesting to see this perspective in regards the facts and figures we so often hear regarding business failure.

Thankfully the Australis Bureau of Statistics also published the following hard facts. “Of the 294,210 new business entries during the 2010-11 financial year:

In the UK – some research by British Commercial Insurance Company RSA suggested that more than half of UK businesses did not survive beyond 5 years. They quoted many reasons, including the economic crisis that reduced bank funding to small companies. Interestingly different industries were impacted to a lesser extent – for example health care had a 56% survival rate compared to construction with 44%.

In South Africa according to the ABSA Small Business – 63% of small business fail in their first two years. They put this high number down to a number of reasons including lack of structure and infrastructure. Poor Management and lack of financial know how. The lesson to learn here is passion is no substitute for experience or poor planning.

With all this information – it is important to start a small business that it is approached with a clear business vision and goals set. Financial risks need to be managed closely to ensure the enterprise has the best chances to survive and grow into a very profitable venture. As ever – claim your free profile on this website to promote your service or business to new customers.