What Is Really Involved In Starting A Business?

I've spent the past few days working in a DACUM process to help develop curriculum for the entrepreneurship degree at Columbus State and it got me thinking...What are the pieces of creating a business?  In the DACUM process you set up "duties" which are the key pieces then set a series of "tasks" for each duty.  Here is what we came up for as the key, major steps in starting a business:

• Validate and Vet: Everybody has a million dollar business idea when it comes to them in the middle of the night but does it stand up after you research it?  In this step you would take your idea through a series of "Go/No Go desisions to determine feasibility.  I see feasibility meaning two things here. First, will it work in the market?  Is there a real problem or need in the market and are people willing to pay for you to solve that problem?  Second, assuming the answer to the first question is yes will the business meet your needs?  Will you be able to make enough money and will it afford your the lifestyle you desire?  If yes, proceed and build out your business plan.

• Establish Your Legal Structure: A lot of people think this is "starting a business", it isn't.  This is filing forms and paying fees.  Sure it is important but it is a fairly mechanical process.  If you are in Ohio the first step is to go to the state's "First Stop Business Connection" to get the forms needs to start your business.  Next decide what your legal structure will be, the IRS has a nice description on the differences.  Depending on what you decide you may or may not need an attorney.  Finally, look for any regulations or filings particular to your specific industry or location and address those.

• Secure Business Financing: This step is critical.  Make sure you know what amount of money you need to launch and operate your business.  Making this determination is a function of the amount needed for start-up costs and your cash flow needs until you can reach break-even.  Throughout this blog you will see numerous posts and tips on seeking both debt and equity funding.  Keep in mind as you are doing this that everything you do will take more time and money than you projected and you don't want to go into business under-capitalized.

• Prepare For Business Operations: Next prepare to do business.  Move from I'm planning to go into business to I'm in business.  This involves putting the pieces in place to both make sales and deliver on those sales.  Get your business infrastructure in place including equipment, inventory, staffing and marketing.  Start to lay the groundwork here to get sales and payments as quickly as possible once you open officially for business.  Also, take your family out for a nice dinner before your open and tell them to enjoy it because it may be awhile until the business gets rolling and your can do this again.

• Launch: Pop the cork...Now get to work.

• Initiate Sales: This is what it is all about, the exchange of money for your product.  Establish a sales process.  Make the calls, meet with people, close the sale.  Remember..."A" Always, "B" Be, "C" Closing.  Sales is not a dirty word.  Sales is how you will get your solution out to solve the problem you identified in step one. Don't forget the final step of the sales process...deliver.  Once you make the sale you have to get the product to the customer whether they are standing in front of you at a cash register or half way across the world you need to get the product or service to the customer...and while your at it start the sales process over and get your next sale.

• Manage Operations: There are things that need to be done everyday regardless of sales volume.  Could be as simple as opening the mail or as detailed as reviewing the weekly sales results.  This needs to happen and as a business owner if you don't have someone to handle those responsibilities it is on your plate.  For the small business it is not uncommon for the owner to be the chief, cook and bottle washer.  Don't be so proud as to think you are above the small day to day activities.  You are not in the big corporate world anymore, it's on you.  By the way business owner, the trash needs taken out before you leave.

• Grow The Business: By now you are an "official" business owner.  It is very easy to get swept under by the tsunami of the daily activities of running the business and miss opportunities to grow.  It is critical that you continue to think and plan strategically to continue to build your business.  The recent economic meltdown caught many businesses by surprise but the ones that were looking to the future, connecting their goals to the market and customer needs were the ones that were able to maintain momentum and take advantages of opportunities to grow.  At minimum you should go back to your business plan and review and update at least annually.  Be constantly aware of big picture issues in the economy that may impact your business both positive and negative.  Always be aware of your business financial position and cost structure. Don't be afraid to blow a few things up if it will allow you to better meet the changing needs of your customers.

• Prepare For The End: I know the business is your passion but how long do you want to continue to operate it?  Be sure to look at succession or exit options periodically.  This will help you prepare yourself and your business for the day you want to move on and lay on the beach all day (or start another business).  It will also help you prepare for issues that would arrive if you or key personnel are unable to continue to work.  Estate planning will allow you to prepare to leave the business to family or partners if you were to pass away without slamming them with huge tax consequences.  It is always easier to prepare in advance than to scramble at the end.

These are the key things that you need to do to start a business.  Keep in mind that many of these things will be happening at the same time and there are about a million tasks within each area.  All that being said if you combine this map with your passion you'll be well on your way to success.

Comments

[Starting A Business]

The Information present in your site is very informative and, it gives a wide knowledge about Starting A Business. I was very much impressed with your site. It will guide me more.

[Helena Antle]

Sometimes starting a business begins with dreams and expectations - not the reality. Questions like "Where will I get capital?" and "Where will I set up my business?" should also be asked.