By Satish Patel
After months or years of deliberating an idea, you have determined that it is worth pursuing. You are resolved to launch your own business and bring that idea to life. Before taking the plunge, review this short checklist below to ensure sure you have evaluated some key areas.
Understand The Industry You Are Entering
Ideally, you should assess this prior to launching your business. Research the industry well, including current market trends and competitors. Identify your target audience and market demand. This will assist you in gauging the profitability of the venture before you “jump into it”. Determine if there’s a niche area you can carve out for your business. Understand competitive dynamics you may encounter and how you will confront them.
This will also impact any type of required licensing- Federal, State, or Local. Regulations and permits also vary depending on the industry to which they are applicable.
Draft A Budget
The rule when drafting the initial budget is “Keep it tight”. Remember, you don’t need a large sum of money to begin. If you think you will start your business only after receiving that large capital investment, then you are incorrect. You need tons of enthusiasm to get your plans off the ground, but you don’t need tons of cash. You can start on a small budget with a bit of smart planning.
For example, you don’t need to invest initially in expensive infrastructure. Instead, start with a judicious mix of hard work and tapping into facilities that offer shared services or scalable resources. These types of partnerships can be extraordinarily beneficial in assisting to establish your business on solid footing. A good shared service provider will not simply take over your projects. They will also provide you with high quality deliverables which will help you win over and retain clients.
After drafting a budget, you need to arrange for financing. Determine whether applying for a business loan is the best approach. The US Small Business Administration can help facilitate the loan process for you. Additionally, the government offers financial support to aid small businesses. Investigate different options and your eligibility for assistance before applying for a loan.
Determine A Legal Structure
Research and determine how you will register your entity- sole proprietorship, partnership, or corporation. Remember, your tax structure is dependent upon the legal structure you select. There are several categories of taxes, including income, excise, employer, and self employment tax. Before you launch your business, make certain you understand the short and long term ramifications of the selected legal structure.
Plan Well- Create A Detailed Business Plan Before You Start
Prepare a business plan inclusive of the items discussed above – the nature of the business, the operational details, competitive analysis, and financing options. A business plan should also contain detailed financial information and projections, including loan information, profit and loss forecasts, etc. Ideally, these financial details should be organized by time period, such as on a monthly or quarterly basis.
Your business plan should also list the documents required to establish your business. Supporting documents can include tax papers, legal documents, licenses, etc. Having these important documents readily at hand will save you time and reduce potential headaches when you finally launch.
Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.