A Great Idea Can Create the Perfect Business

One of the things that make this country of ours great is the fact that anyone can start and operate a business. The brave souls in the world who have shook off the constraints of the basic nine to five job and said with no uncertain terms "I will work for myself" are the founding fathers of this movement. However, their success is based on several factors and those factors need to be taken into consideration long before turning in your resignation. Starting a business may be a dream that many people have, but whether or not it is practical is another matter all together.

Let's take a look at the steps that are involved in starting a business. Notice that this does not mention the success of the business, as there is very little that can promise that, but there is a right and wrong way to do everything. Starting a business is no exception. One must follow the proper procedures in order to ensure safety and a measured amount of security.

Planning

As the title of this article states, starting a business requires more than a great idea. It requires planning from the very beginning. Each step is meticulously drawn out to make certain that nothing is forgotten. That is why most of the experts in the field state that writing a business plan is central to the business getting on its feet.

A business plan has several elements, all of which relate to the end result, which is starting a business.

1. Executive Summary - This section of the business plan should always be written last. It contains the highlights from the entire document as a primer to those reading it.
2. Company Description - This establishes the legal part of the company as well as history and other start up related ideas and decisions.
3. Product or Service - Describe what you are selling and why it would benefit the customers who you intend to serve.
4. Market Analysis - Under this heading you will list the competition, the target demographic and how you intend to reach the customers. Be as specific as possible.
5. Strategy - Under this heading you are laying out the time frames, and other issues surrounding the start up. Most often you would include the opening date, advertising campaigns and so on. Details are very important in this area.
6. Management - Describe who will be putting this business plan into action. Each member of the team should be given a title and responsibilities.
7. Financial Analysis - The very heart and soul of the plan. You will need to provide profit and loss statements, projected cash flows and any other pertinent financial information in this section.

Funding

Once the business plan is in place you will need to figure out how you plan to fund this operation. While it may be a dream for many to start a business without being in debt, that is not really a viable dream for the most part. Unless you are independently wealthy you will need help in the money department.

There are several ways to go about funding a business. One of the most common is too take out a loan for the start up and operating costs. Most banks offer loan programs aimed at new business. This is where the business plan we discussed earlier comes into play. A bank will not even talk with you about the loan unless you have the business plan ready for them. They will want to see that you have mapped out the business from start to finish so they have a further guarantee that the money will be paid back.

Of course banks are notoriously tight when it comes to lending funds to anyone, especially a risky situation like a start up business. There is good news though. Organizations, like the SBA, are in place to secure funding for small businesses that meet their criteria.

One of the most common misconceptions about the SBA is that they offer loans. That is not true, instead they act as a security or guarantor for the loan that gives the banks and other financial institutions the peace of mind they need to release the funds. Thousands of businesses are started with this funding source each and every year.

Managing

Once you have the business started you will then need to manage the business as well as your personal financial situation. This is where many people fail when it comes to business. They may have managed to get the business going but when it comes to keeping it afloat they fail in a big way.

Managing takes on many faces. First and foremost you have to be servicing the needs of your customers. The customers are the only reason you have a business to begin with so it is only logical that you make certain that they remain happy.

Secondly comes the financial management of the business. Ensuring that the bills are paid, the profits reinvested where needed and materials purchased is all part of the game. Saving money is also a major concern. Just because there is money does not mean it should be spent.

Finally you need to be managing the financial situation of yourself. When you start a business you are setting out on your own which means you have no job there as a safety net. This could mean tightening your belt a bit if you are used to living a certain lifestyle. Best case scenario for this matter is too set a salary for yourself that allows you to live and pay your expenses but not too much above that.

Lastly you need to be skilled at managing the employees you have. There are many laws and regulations surrounding this area of management and you will need to stay informed as to their meanings. Most experts suggest that you take a course in management prior to hiring employees to ensure that no potentially devastating mistakes are made in this area.

Exit Strategy

Just like the people who work for others, there will come a day when you want to retire or perhaps you no longer wish to own and operate a business. This is why you should have an exit strategy in place long before the day arrives.

If the business you own is successful then you may not want to shut it down. With that in mind there are several ways to go about leaving the business.

1. Passing Down - If you have a child or grandchild that is experienced in the business perhaps you will want to pass the company to them. Have an attorney draft the proper documents for such a transfer.
2. Partners - If you are in business with someone else then the person who holds the other share may want to buy you out. This is something that is normally drafted into the original partnership agreement.
3. Selling Out - This is very common but it can also be very time consuming. Selling a business can be difficult and you will want to make sure that everything is performed legally. It is best to have an attorney on hand to make sure that all the documents are legal and so on. Leave nothing that ties the company and its potential failure to your name.

Of course you may just be in the position to shut the company down and move on with your life. This requires several things as well, the most important being the tax liabilities. You will need to inform the government of your intentions right away to make sure that there are no taxes attached to you or your finances once the business has closed.

This shows you the basis for starting a business. While it can be a thrilling and very lucrative time in your life, there is also the chance that you will be put under enormous pressure. This can mean problems at home and so on. Before setting out on your own make sure that you have what it takes to risk all for the chance at success.