How to start a Small Business (10 steps to do it the right way)

Let us say that you have an idea you think will really work and have decided to turn it into a business. Firstly, congratulations! You are a step ahead of those who are still contemplating. Starting a business is not easy, but it’s not difficult to learn. With an intent to adapt to changes and the will to grow, an idea can be turned into a profitable venture.
In this article, we shall look at the basic steps to learn how to start a small business.

One of the first things to do, before jumping into any of the steps, is to conduct market research. Figure out what sort of buzz surrounds similar ideas, and the demand for them. This also gives you a chance to check out your potential competition. It is always better to know what you are entering into and who you are competing with.

Let us now dive right into the steps.

Define your idea

Once you have conducted your market research, you have a clearer picture regarding the demand and scope of your idea. Now it is time to clearly define your idea.
Write down the base idea and the details you gathered from the research. Further, write the alternatives (or modifications) to your idea, that could enhance the scope of your business. Once it has all been listed, you would be able to see a clearer picture and be able to pick the right niche. Your idea should be able to answer a few key questions:

1. Why are you doing this?
2. Who will benefit from it?
3. What is the need of your product/service?

By the end of this step, you should have a well-defined idea, ready to be transformed into a business.

If you need assistance, avail our Feasibility Analysis service and craft the perfect idea.

Assess Finances

While many consider assessing finances at a later stage, we recommend doing so before breaking ground. Financial Management for SMEs is a highly crucial factor in determining the sustainability and future of the business.
Begin with assessing what amount of capital you can invest in the business, by yourself. This is an amount that you should keep aside from your personal finances. This is what you would need immediately to kick-start the business operations and registrations.
Next, assess if you have backup money, in case your capital expenditure increases. This money should be injected into the business only if the need arises. But it is better to stay prepared.
Further, analyse what amount you would need as an external investment (if you are raising capital). This is estimated by calculating what your initial team strength would be, technology to be used, and your operating costs (including marketing and distribution).

Lastly, scan through the range of banks and their various accounts for businesses. Speak with their representatives. Make a pros and cons list and then decide on the best bank that fits your needs.

Write a Business Plan

A Business Plan is a layout of your business idea, the goals you are setting and the steps you schedule to achieve those goals, combined with the strategies you intend on implementing along the way. A Business Plan not only serves as a blueprint to your business goals, but also outlines the competitor analysis and the market and customer segmentation.

A good Business Plan will help your business progress quicker than having none at all. It helps you look at the bigger picture, while also tending to the short-term needs of the business.

Learn how to write the perfect business plan, here.

Determine the legal structure

It is essential for you to pick a legal structure for your business because it is the structure that determines your exposure to liability and the taxation.

The legal structures are broadly classified into 4 categories:

1. Sole Proprietorship – where you are the only owner of the company and assume responsibilities of all liabilities related to the company. This may affect your personal credit score if liabilities prolong.
2. Partnership – as indicated, in this formation, the company has 2 or more owners, who either split the profits equally, or as agreed upon in the contract. The benefits are that the backgrounds and experiences of the partners help complement each other in the running of the business, while dividing the liabilities.
3. Corporation/Company/Private Limited – this structure allows you to form a separate entity, which segregates the business’ liabilities from your personal finances. The business is treated as an entity of its own, allowing it to own assets, purchase property and file taxes.
4. Limited Liability Company/Partnership – In this hybrid structure the formed entity has the legal protections of a corporation/company while allowing for the tax benefits of a partnership.

Register your Company

One of the most critical steps is to register you company with the government of your country (ex. Chamber of Commerce in India). With this, you shall be able to apply for the necessary licenses and certifications needed to operate within your domain. It also provides you with the documentation, like Certificate of Incorporation, required to be presented when opening a business bank account, and filing for taxes.

Once you are registered in the government database, you shall be able to file for taxes too. Read and understand your tax scheme well, and if needed, approach a professional chartered accountant to assist you with the above. A better clarity regarding the registration fees involved, and regarding the process itself, will make it a smooth sail.

Insurance against risk

This is something many small business owners put off until later (or many-a-times don’t even get around to it). Irrespective of what business you run, it must be insured, in order to be protected against risk.

If you are a manufacturing unit, you are dealing with risks related to property damage, safety hazards, product damage, among many others. On the other hand, service providers face the risks surrounding neglect or operational mishaps.

Either way, look into General Liability Insurance and/or Professional Liability Insurance, depending on your requirements, and what needs to be covered.

If your business intends to hire employees, you might want unemployment and worker’s compensation insurance.

Hiring the right team

No business owner can do it all by themselves. Sooner or later, you are going to need people with expertise and knowledge that complements your strengths. It is one of the best ways to grow a business.

But hiring a team is tricky. While the right combination will boost your business, the wrong one can set you back. Always hire for characters and personalities that match the company’s vision and mission. People who can align with the way the business operates, and not simply “yes” persons.

Always remember, skills can be taught, but it is the character that makes the impact.

To learn the best hiring techniques, read the full article on Recruitment, here.

Pick your Automation Channels

For a small business, it is very essential to partner with B2B vendors, who support your day-to-day operations. This is a chance for you and your team to automate your processes, giving you more time to focus on your products and/or services.
But it is advised to be picky when choosing partners. These firms will be linked to your company’s name and also have access to some confidential data, in order to work efficiently with you. The biggest matter to address is trust. Vet the companies carefully before making any decision. Once you have narrowed down, sign an agreement to make it official.
Automating your processes will allow you an ease of operations, which is highly beneficial for small businesses.

Marketing

A lot of you must have been wondering when we will get to this. And here we are. Marketing is a business’ way of showcasing itself and its activities (and products/services) to its audience. Whether it is done online or offline, the objective is the same – spread awareness and turn viewers into paying customers.
For small businesses, it is imperative to allocate a decent amount of financial resources towards branding itself and marketing its products and services. This is a cost to be included, not only in your business plan, but also in your organisational growth strategy.
Speak with a professional and determine the right strategic path to reach your goals.

Re-invest in your business

One of the major factors for growth is re-investing into the business. Once your company has taken off the ground and started performing, putting a chunk of profits back into the business will allow it to grow at a quicker pace than otherwise anticipated.
Many small business owners lose control and start paying themselves the profits, which is good for your personal finances, but not so much for the company you are trying to build. When you pay yourself the profits, you are liable to pay taxes on it. But when you re-invest the profits back into the company, it adds resources into the business, through which it can boom, with the provision of the re-invested amounts being tax deductible. Furthermore, since you are an owner of the company, your net-worth rises as the business grows.

Learn how to re-invest in your business and make it grow, here.

These are the basic, simple steps on how to start a small business. With these steps, you should not only be able to turn your idea into a business, but also run it smoothly, while giving it enough room to grow.
It may all seem overwhelming at times, and hence it is advised to approach experts when the going gets tough. Business owners are skilled at their business but having a team to fill in the gaps and make the perfect product/service is a boon. Further, when you add external experts into the mix, the results can be very rewarding.

Have an idea and need it validated? Or you have a business and wish to scale it? What are you waiting for?
Contact us and let’s get started!