Are you interested in owning your own store? Are you ready to take on the role of fashion designer? Starting a company from scratch can seem like a complex and daunting task, but we’ve made it a little simpler by highlighting eleven fundamental areas of focus to get you started:
i. Market Research
The market research report is needed to gather information on competition and customers, while the purpose is to discover what people want, need, or believe. One can obtain this information through primary or secondary research. After completed, you will gain an understanding of how to market your product.
Components
- Customer (demographics, purchasing power, buying habits, psychographics, lifestyle variables)
- Competition
- Industry Trend Analysis
Checklist
- Do you know what is happening in the market?
- Are you aware of the trends?
- Do you know who your competitors are?
- Do you know how consumers talk about products in the market?
- Have you prioritized consumers’ needs?
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ii. Business Plan
The business plan contains a set of goals and steps needed to achieve them. Also included in the plan is background information about the company and team. Seeing it is needed to help keep you focused and gain financing, it’s important to have an organized and professional plan.
Components
- The Executive Summary
- Company Description
- Description of Product or Service
- Market Analysis
- Market Strategy
- Operating Plan
- Management Team
- Funds required and Expected uses
- Financial Statements
- Appendices & Exhibits
Checklist
- Have you clearly and concisely described the opportunity?
- Have you quantified the market size, stage and key market drivers?
- Does your plan clearly articulate what makes your business model different, better, unique?
- Are your business strategies consistent with your business model?
- Are your funding requirements adequate and realistic?
- Do you have research data to backup your market analysis?
- Have you chosen a management team that is up to the task?
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iii. Business Structure
The business structure you choose will determine the amount of control and profit you see. Also, it will affect your liability for lawsuits and the debts of the business, as well as the taxes you pay. Listed below are the four structures, each having their own advantages and disadvantages.
Four Forms
- Sole Proprietorship: A one-person business that is the simplest to form.
- Partnership: Two or more people share ownership and responsibilities of a business.
- Corporation: A legal entity owned by shareholders.
- Limited Liability: Offers business owners the protections of a corporation while giving the tax advantages of a partnership.
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iv. Protect Your Ideas
If you have a great business idea, company name, new product idea, etc. you need to ensure your rights to these ideas are protected. This can be done through trademarks, patents and copyrights. To find out more information on how to acquire and use any of these, please check out the links provided.
Three Ways to Protect Your Ideas
- Trademarks: Used to identify and distinguish the source of goods from those sold or manufactured by others.
- Patents: Grant-issued by the Patent and Trademark Office, of a property right to the inventor.
- Copyright: Form of protection to which authors of original works, including literary, dramatic, musical, artistic, and some other intellectual works, are entitled by law.
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v. Make Your Business Legal
If you are going to start a business, it is important you do it the right way. From the very beginning make sure you obey and address all legal aspects. Failing to do so could result in closure of your business at an early stage.
Seven Steps to Take
- Register your business name
- License your business
- Report income tax
- Pay estimated taxes
- Pay self-employment tax
- Get a state sales tax certificate
- Obey zoning regulations
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vi. Employee Issues
If you need additional help and can afford it, there are numerous managerial and legal issues to consider when hiring. One must be aware of the hiring process in general, the proper way to pay wages and do payroll, insurance issues, ant-discrimination laws, etc.
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vii. Financing
When starting a business one must determine how much money they need and where to get it. The three determining factors of your chances of gaining finance are your projected sales, start-up cost and recurring monthly cost. Once you have those figured out, you can present your plan to a variety of sources to obtain the money. These include family and friends, seller financing, community-based lenders, banks and other conventional lenders and through venture capital.
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viii. Accounting Issues
Before you begin your business you must familiarize yourself with all accounting aspects. You should know how to do a balance sheet, profit and loss statement and a cash flow statement. Even if you are going to hire an accountant, you need to know what to look for.
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ix. Insurance
Owning your own business requires a great deal of insurance. Listed below are eight aspects of your business that require it. It is important to do your research and pick the best plan that works for your business.
Types of Insurance
- Property insurance
- Liability insurance
- Worker’s compensation insurance
- Other insurance coverage
- Excess liability coverage
- Employment practices
- Liability coverage
- Life insurance
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x. Marketing & Advertising
Marketing and advertising refers to the promotion of the product. This step is needed to gain consumer interest and awareness to your product. Done effectively, your product will be positioned uniquely among its competitors. When developing your marketing plan, you must address all four Ps.
Four Ps of Marketing
- Product
- Price
- Place
- Promotion
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xi. Succession Planning
If for any reason you were unable to run your business, a succession plan would need to be provided. This will tell friends/family, employees, etc. what should happen to your business.
Basic Steps
- Get a team together
- Consider incorporation
- Select and train successor
- Document your desires
- Have all plans backed up with insurance
- Develop an estate plan that ensures adequate liquidity
- Discuss plan with all parties involved
- Review and update as needed