09 Aug 5 Steps to Starting a Small Business
Starting a small business gives you an opportunity to take control of your work life and become your own boss. However, it also comes with challenges and a strong need for startup capital. Regardless of your industry, there are a few best practices to keep in mind as you start your venture. Here are five steps to starting a small business.
1. Choose an Entity Type
Do you want to incorporate? Is it better to become a limited liability corporation? You can define your business as an entity in a variety of ways. Each business entity has its own specific set of tax, legal, and regulatory issues to consider. According to the U.S. Internal Revenue Service, the most common entities are:
• Sole proprietorships
• S corporations
Do some research on the tax and legal issues that accompany each entity type. Keep in mind that you could choose an initial business entity, and then reevaluate as your business grows.
2. Create a Strong Business Plan
A business plan is a formal document that defines who you are and what you hope to achieve as an organization. To create your business plan, you must explore your financial situation, marketplace, service opportunities, and long-term requirements. The U.S. Small Business Administration (SBA) provides helpful advice on how to develop a detailed business plan. It should act as a tool that helps you run your business effectively.
3. Be Flexible on Products and Services
Plenty of businesses have created great products or offered excellent services, yet still failed. You need a lot to go right to create and sustain profitability. Don’t get so attached to a specific product or service that you fail to adjust to the market. Instead, remember that the most successful startups are those that respond to what is happening around them. The ability to adapt creates strong customer experiences. This, in turn, empowers the business to compete in a way that larger companies can’t match. Use your expertise and culture to stand out.
4. Secure Funding
A lack of working capital can not only hold you back initially, it can also stifle the growth you achieve early on. Your business plan should help you identify how much funding you need to get off the ground and achieve financial health. From there, it’s time to find a source of capital. A variety of options are available, but startups may want to focus on non-traditional lenders. Alternative lenders typically cater better to new businesses because they offer more flexible terms and faster funding.
5. Understand Your Financials
With your business plan and initial funding resources in place, the next step is to research:
• Labor costs in your region
• Prices for materials, such as inventory
• Rental costs for workspace
• Technology expenses – internet, computers, phones, etc.
• Equipment issues, including initial capital and ongoing maintenance and operations
Expenses can add up quickly. But analyzing your spending can help you accurately budget and make better cost-benefit decisions. Once you understand your finances, you can better project profitability and identify how many customers and sales you’ll need to maintain financial health.
Getting Off to a Good Start
QuickBridge offers funding options directly aimed to help small businesses and startups. We take the time to understand your goals so we can choose the right short-term loan for your objectives. Contact us today to get started.