How To Start A Small Business

Starting a new business

 

Have you been thinking of starting a business but aren't sure how to proceed? The first step is to craft a business plan. Your business plan will serve as a guide throughout the life of your business, and will help to stay true to the principles that inspired you to begin the venture in the first place. A good, well thought out business plan is also a requirement in the loan-seeking process with most lenders. According to the Small Business Administration (SBA) you should take a piece of blank paper and write the following questions:

Who will I sell to?

What will I sell?

Where will I market my product?

When will I make my product available?

Why is my product or service necessary?

How will I market my product?

How much will my product cost to produce and how much can I charge?

Take time to answer each question with a paragraph and then develop it. Start putting together supporting documents that you will be required when presenting the plan. For example, articles of incorporation can show the legal structure of the business. Financial statements can project cash flow and itemize revenue sources. Make a three-year projection which reflects sales forecasts and individual budgets together with a market analysis for the new business. A balance sheet is one of the final pieces, separate current assets and liabilities in a two-column format, as well as a profit & loss or income statement. Don't forget your resume and a personal financial statement.

1. A business plan

There is no prescribed length for a business plan. Some very effective plans have been a single page. However, long your plan is, it should be packaged with a Cover Letter that includes the following information:

The name of your company

Company address

Company phone number (with area code)

Logo (if available)

Name, titles, addresses (including email), phone numbers (with area code) of owners

Date of the plan

Name of preparer

2. Mission statement

 

Think of your mission statement as your calling card. Good mission statements are clear and concise, and let others know exactly what your business does and why (i.e. your purpose).

3. Put it together

An effective professional presentation is a key to success:

  • Packaging:
    • Once you are finished preparing the business plan, make sure it is packaged correctly. Spiral binders in neutral colors: blue, slate gray and black are safe for bankers who tend to be quite conservative folks.
    • Make it businesslike, but don't spend unnecessary time on bells and whistles. Readable type and well-executed graphs should suffice.
  • Appendices:
    • no longer than 30 - 40 pages of supporting documents
  • Table of contents:
    • Make it easy for readers to find what they're looking for.
  • Copies:
    • Make sure you have plenty of copies for every meeting.

4. Keep it current

Make revisions to keep up with any changes affecting the company or plan. Keep up to date and make revisions that reflect current swings of the industry, market and community. Also, anticipate the negative impact to the company if sales decrease and costs increase beyond your projections. An alternate budget my help to assuage lenders.

After you have completed planning and documentation, it's time to move on to the execution phase and make your business a reality. Here are some early considerations:

  • Funding - Opening your business might require raising or borrow capital. A solid plan and good documentation puts you in a good position for those conversations.
  • Choose a location - Selecting the best physical (or virtual) location is critical to success.
  • Pick a name - This deserves plenty of thought. Choose something unique that accurately reflects your business and mission. Consider testing a couple options.
  • Get state and federal tax IDs - Your Employer Identification Number (EIN) is important to make your business viable. Some states also require a tax ID.
  • Apply for business licenses - States and municipalities will determine what kind of licenses you will need.
  • Open a business bank account - Having an EIN will allow you to open a small business account to handle the day to day operations, including legal and tax matters.

 

As a new business owner, you’ll also need to make sure your business is protected. Our friendly agents at Infinity Insurance can help you get started with a Business Owner’s Policy or Commercial General Liability Insurance Policy. Call us today at 1-800-INFINITY or get a quote online by visiting our website.

 

The materials available in the Knowledge Center are for informational purposes only and not for the purpose of providing legal advice. You should contact legal counsel to obtain advice with respect to any particular issue or problem. Use of this website or any of the links contained within the website do not create representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.

The materials available in the Knowledge Center are for informational purposes only and not for the purpose of providing legal advice. You should contact legal counsel to obtain advice with respect to any particular issue or problem. Use of this website or any of the links contained within the website do not create representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.