If you are considering opening your own business, but are not quite sure how to get it up and running, the following steps will help get you started on the road to success.
Take a Personal Inventory
Are your ready to be your own boss? The benefits of being in charge are obvious, but have you considered the risks? By taking a personal inventory you can figure out whether you are ready to take on the challenge. It’s not easy but can be very rewarding if approached properly. A few of the questions you should ask yourself include:
- Do you understand that amount of time it will take to run the business?
- Are you confident that you have a good product, service or business model?
- Do you have the management, accounting and marketing skills to run a business?
- Do you have a strong business network for support?
- Are you afraid of failure?
Talk to the people who are in the business you want to go into. They’ll give you the real picture of what it’s like. While you do not have to do everything yourself, you need to be aware of the responsibilities you will have as a business owner and have an idea of how you will get the support you need for areas where you lack the time, skill or resources to manage.
Decide How You Will Structure Your Company
There are several structures that you can choose from. They all have their own advantages and disadvantages but choosing wisely from the start can avoid many headaches in the future.
- You are the sole owner
- Easy and inexpensive to form
- low cost to start your business
- Lowest amount of red tape
- Low working capital required to start
- The profits are all yours
- Unlimited liability and your personal asset would be at risk
- Lack of continuity for your business
- As with a sole proprietorship it’s easy to start up
- Start-up costs would be shared equally with a partner
- Equal responsibilities in the managing of the business
- Equal split of the profits and assets
- No legal distinction between the business and you
- Unlimited personal liability
- Difficult to find a partner that you can work with and trust
- Conflict between you and your partner could be difficult to resolve
- You are held financially responsible for business decisions made by your partner
- Limited liability helping to protect personal assets
- Ownership is transferable
- Continuous existence
- Is treated as a separate legal entity
- Easier to raise large amounts of capital
- More Regulations
- More expensive to operate
- A greater degree of corporate records required
- Possible conflict between shareholders and directors
Expand on Your Business Idea
Research your market by asking the right questions.
- What products or service will you offer?
- Who is your target customer?
- Who are your competitors and how many are there?
- Who are the key suppliers?
- What will differentiate you from your competitors?
Being as specific as possible with your answers to these questions will help you create a more effective business plan.
Understanding your Future Customer
It will be your customers who determine your success or failure. You will need to understand what motivates them to make their purchasing decisions. How can you differentiate yourself and convince them to come to you rather than a competitor. Careful research in this area is a must if you want to be successful. Talk to people who might be your potential customers and get their views and opinions.
Create a Budget
It will be important to determine your potential cash flow.Create a budget that will take into account start-up costs along with anticipated expenses and income. Decide what working capital you will need in the first few years.Deduct any personal investment you will be able to make in the business to determine what your financing needs will be.Take the time to make your budget as accurate as possible to avoid financial shortages down the road.
Understand Business Regulations and Liability Risks.
Depending on the products or services you will be offering, you may need to obtain a government-granted license or permit. Complying with all business regulations for your business type will ensure that you can do business with major suppliers and customers. It will also help you avoid costly fines or even the treat of being shut down for non-compliance. The Canadian Federation of Independent Business (CFIB) can be a great resource in this area.
Talk to your Insurance Broker
You should also consult with your insurance broker about the type of business insurance you will require and the associated cost. Business insurance can ensure that your business will continue even if it were to experience a devastating loss. Coverage can protect your business from lawsuits, loss of business property, loss of business income and even the loss of a business partner.
Develop a Business Plan
A good business plan will serve as your company’s road map to success. You’ll never be done as you will refine, tweak and improve it as you go. It should include both your short and long-term goals as well as the steps you plan to take to achieve them. The more you learn from your successes and failures, the better you can make your business plan and ultimately position your company for long term success.
Wishing you good luck and much success for the future,
The L.D. Dermody Insurance Team.