The decision to start a business isn’t one that should be taken lightly. In fact, more than 20 percent of new businesses fail within their first year, and 50 percent of small businesses are forced to close after five years. But starting a company can also be incredibly rewarding. In order to make sure your business is successful, you must take the time to research your industry, find competitors, and understand risk. There are a few other things you need to do before launching your company, such as preparing a business plan and registering your business. But the most important step is finding champions and mentors to chaperon you through the process, particularly on days when it may look like everything is going wrong.
1. Research Your Industry
Start by researching your industry to see what products are already on the market and how they compete with each other. If you can create a product that offers something unique or has the potential to stand out, your company will have a better chance of succeeding. Also, consider how your product or service will be marketed and sold. This will help you determine your target audience, the type of marketing materials you will need to develop, and your pricing structure.
2. Choose a Business Name
Once you’ve settled on your business idea, it’s time to settle on a name. It’s important to find a name that is catchy, easy to pronounce and evokes the essence of your company. It’s also a good idea to reserve the name you want online before someone else does. Additionally, you’ll want to research your state’s business registration laws and any other legal requirements that apply to your business.
3. Write a Business Plan
Your business plan is your blueprint for success, outlining your company’s mission and goals, and detailing the financial details of your operation. A well-prepared business plan will also help you secure necessary funding from lenders, investors and other stakeholders. The plan should include a description of the company, its market, financial projections for several years into the future, and a list of equipment and supplies that the business needs to get off the ground.
4. Consider Your Legal Structure
You’ll need to decide if you want to launch your business as a partnership, LLP or corporation, depending on how much liability you are willing to assume. You’ll also need to identify your tax structure and any licensing or insurance you may require.
5. Understand Income Fluctuations
Lastly, you’ll need to understand the ins and outs of the income taxes for your business and how they will fluctuate throughout the year. The best way to prepare for this is to hire a tax consultant or research your particular industry’s laws. It’s also a good idea for companies that are seasonal to start one quarter before their expected busy season, and to be prepared for the income spikes and dips that will come with it.