POVLITZ Inc | Business and Entrepreneur

Once you have decided that starting a business is right for you despite the risks, the question becomes: What’s next? People often love the idea of starting a business but get bogged down in the actual nitty gritty of just how to do it. It might help to know that no matter what type of business you decide to start, the essential steps are the same. Different businesses will have slightly different paths but, generally speaking, most businesses follow a formulaic path. While this formula will be discussed in much more detail throughout this book, it will be helpful to have a road map to show you where you are headed.

Step 1: Personal Evaluation
You need to begin by taking stock of yourself and your situation in order to figure out which sort of business is best for you. Why do you want to start a business? Is it money, freedom, creativity, or some other reason? What do you bring to the table? What skills do you have? What industries do you know best? Would you want to provide a service or a product? What do you like to do? How much capital do you have to risk? Will it be a full-time or a part-time venture? Will you have employees? The answers to these types of questions will help you narrow your focus and pick a business. The rest of this chapter will help you do that.

Step 2: Analyze the Industry
Once you decide on a business that fits your goals and lifestyle, you will need to evaluate your idea. Who will buy your product or service? Who will be your competitors?

Step 3: Draft a Business Plan
If you will be seeking outside financing, a business plan is a necessity. But even if you are going to finance the venture yourself, a business plan will help you figure out how much money you will need to get started, what tasks need to be done when, and where you are headed.

Step 4: Make It Legal
There are several ways to form your business. It could be a sole proprietorship, a partnership, or a corporation. Although incorporating can be expensive, it is usually well worth the money. A corporation becomes a separate legal entity that is legally responsible for the business. If something goes wrong, you cannot be held personally liable. Chapter 7 discusses this in detail. Once you form your business, you also need to get the proper business licenses and permits. Depending on the business, you may have to deal with city, county, or state regulations, permits, and licenses. This would also be the time to check into any insurance you may need for the business and find a good accountant.

Step 5: Get Financed
Depending on the size of your venture, you may need to seek financing from an “angel” or from a venture capital firm. Most small businesses begin with private financing from credit cards, personal loans, help from the family, second mortgages, savings, etc. As a rule of thumb, in addition to your start-up costs, you should have at least six months’ worth of your family’s
budget in the bank.

Step 6: Set Up Shop
Find a location. Negotiate leases. Buy inventory. Get the phones installed. Have stationery printed. Hire staff. Set your prices. Throw a grand opening party.

Step 7: Trial and Error
It will take a while to figure out what works and what does not. Follow your business plan, but be open and creative. Advertise! Don’t be afraid to make a mistake. And above all, have a ball running your own business is one of the great joys in life!