The dream of owning a business can become a reality with planning and hard work. However, there are important to decisions to make ahead of time, such as determining what kind of business you want to start. Will you start a business from scratch, buy an existing business or buy into a franchise operation? While each of these paths has its pros and cons, there are fundamental issues that all of these approaches share. Here are some valuable tips on how to become a business owner.
First, you'll need a business plan. In it, you'll include a description of your business, how you'll market it, your competition, operating procedures, personnel, financial data on loan applications, capital equipment, pro-forma income projections and a variety of supporting documents. You'll need copies of your tax returns for the past three years, a personal financial statement, relevant contracts, lease and purchase agreements, resumes of principal owners and more.
It sounds like a lot and that's not even half of it. More details on how to develop a business plan can be found at the U.S. Small Business Administration's website. The more time you spend on your business plan upfront, the better. It will become your roadmap to success.
You'll also need to define your unique selling proposition (USP), also known as your unique value proposition. This isn't required for your business plan, but it should be a part of your introduction and marketing plan. A USP is a statement that defines the benefits, costs and value that a company brings to the buyer. Some examples of USPs are: "When your package absolutely, positively has to get there overnight," (FedEx) and "The milk chocolate melts in your mouth, not in your hand," (M&Ms). These aren't just slogans. They define the product's core benefit to customers.
As your business grows and you further define your role to your customers, you may look at revising your USP. However, starting out with a very clear, well-defined benefit to the customer will increase your odds for success. You'll be able to communicate exactly why someone should buy your product or service.
Be sure to register the name of your business early on. It's at this point you'll decide your legal structure. Will your company be a sole proprietorship, a limited liability corporation (LLC), an S corporation, or a general partnership? You should also purchase the domain name for your website as well. Don't be surprised if your first choice is taken. You might need to either adjust your domain name or change the name of your company. Certainly, it's better to address this issue early on, rather than waiting until you're hanging the sign over your front door.
A major component of your business plan will be your location. This generally makes or breaks a business, whether you're a walk-in retail store, a manufacturer, or a home-based Internet business. You must research your location carefully, and understand all of its ramifications on your business. A manufacturer will need to assess roads and access to suppliers. A retail store will need to assess visibility. Even if you're working out of your home, there may be licensing requirements. Additionally, you may out grow your home quickly and be forced to seek office or retail space. Smart and successful businesses plan for these contingencies.