You’ve made the significant decision to start a business. As you might be aware, many new ventures end up failing. Fortunately, there are steps you can take to avoid wasting time and money and improve your chances of success. Although each business is unique with its own challenges and opportunities, there are some fundamental steps to consider when getting started—such as writing a business plan, validating your concept, securing funding, and choosing a legal structure. Here’s a closer look:
The Business Plan
Creating a business plan might seem like a chore, but it’s essential, especially when learning how to start a trucking company.. It doesn’t need to be lengthy or overly formal—just a few pages will suffice. However, you should cover the basic sections, especially if you plan to pitch to investors or lenders. These sections typically include an overview of the business, industry background, details about the product or service, the business model (how you plan to make money), the strategy, and the team. For guidance, consider hiring Company Formation Consultants in Dubai or using Score’s business plan template.
Think of the business plan as a tool to better understand the opportunity and risks. It may even reveal if the business is too challenging. If that’s the case, it’s better to discover it early on.
In your business plan, try to address the following questions:
- Who is your customer?
Focus on a specific market segment. For instance, if you’re targeting lawyers, it might be straightforward. However, if your product is relevant to a broad audience, you’ll need to narrow it down. Consider how Amazon initially focused on books before expanding into other categories once it established a solid foundation.
Start by identifying the customer segment that faces the most significant pain points or is more likely to embrace new ideas, especially when exploring how to register a company in Singapore.
- What’s happening in your market?
Dive deep into the market. What are the major trends? How might they impact your business positively or negatively? In addition to Google searches, explore trade publications and industry association websites.
If you’re in retail, tools like ZoomProspector can provide valuable local economic data (such as population, income, and demographics). Check Yelp.com to assess the level of competition in your area. Is the market too saturated?
- What are the start-up costs?
Be realistic about the expenses involved. Entrepreneurs often underestimate the time and costs associated with starting and running a business and Hong Kong business registration. Develop a detailed start-up budget and a financial forecast (Score’s template includes a helpful worksheet).
As you plan, look for opportunities to reduce costs. For instance, consider buying used equipment on Craigslist, bartering your services, and using free or low-cost online tools like Skype for calls, Web.com for setting up a website, and VistaPrint for printing business cards and brochures. Always ask for discounts when possible.
Additionally, think creatively about ways to boost revenue. You might consider running an online marketing campaign through Google Adwords or using VerticalResponse for email newsletters.
Raising Capital
Raising capital is a time-consuming process that can divert your focus from running the business. It can take up to six months to secure your first investment, as investors are cautious and require proof of your business’s viability.
This often means you’ll need to bootstrap your business. While challenging, bootstrapping allows you to retain more control and a larger equity stake. You might consider borrowing against your 401(k), life insurance, or home, using credit cards, or taking on consulting projects.
Next, you can reach out to friends, family, and colleagues. Even if they trust you, having a solid business plan and investor agreements is crucial. Virgin Money is an online service that can help with legal documents, administer loan payments, and report to credit agencies, which can help build your business’s credit history.
While it’s tempting to seek funds from banks, angel investors, or venture capitalists, these sources typically look for more established businesses.
Choosing a Legal Structure
If you’re bringing on investors, partners, or signing contracts, setting up a legal structure for your business is wise. Here are the main options:
- Sole Proprietorship: You are the sole owner, with minimal paperwork and expense. However, this structure comes with unlimited liability, meaning your personal assets are at risk if the business faces legal issues or significant debt. A sole proprietorship is a “pass-through” entity, meaning income is taxed on your personal tax return.
- Partnership: Involves more than one owner and, like a sole proprietorship, requires little paperwork and is also a pass-through entity for tax purposes. However, partnerships also carry unlimited liability exposure.
- Corporation: Costs can range from $200 to $1,000, and while online services like LegalZoom can assist, having a lawyer review the documents and filings is advisable. Qualified attorneys can be found on sites like Avvo. Corporations offer limited liability protection, meaning the owner’s risk is limited to their investment in the company.
There are different types of corporations based on tax treatment. For example, a Limited Liability Company (LLC) and S-Corp are pass-through entities, while a C-Corp is taxed separately, including on dividends. Consult a certified public accountant before deciding, as this can save you money.
Regardless of the legal structure, consider the legal aspects of choosing a business name. Aim for a name that is memorable and distinctive. Anders Heie, founder of KaDonk, shared, “When thinking of a name, I hit my head against the wall, and the sound it made was kadonk, kadonk, kadonk. Our lawyers loved it. It was unique, had nothing to do with our product, so we grabbed all the domains and went with it.”
A lawyer can assist with this process.