Four Top Tips For Starting Your Own Business

Congratulations! You have done enough research and gathered enough information to believe that your business idea is a good one and you have decided to move forward with starting your own business. What are the next steps you need to take?

Here are our four top tips for important steps you must take to successfully start your own business.

1. Establish the correct legal structure

Perhaps the most important decision you will make about your business is selecting a legal structure. There are several legal structures you can consider for your business, including:

a. Sole proprietorship

b. General partnership

c. Limited partnership

d. Limited Liability Partnership (LLP)

e. C Corporation

f. S Corporation

g. Limited Liability Company (LLC)

h. Non-Profit Corporation

i. Professional Corporation (PC)

j. Professional Association (PA)

k. Professional Limited Liability Company (PLLC)

The best legal structure for your business will depend on several factors, such as your need to obtain insurance or financing, the type of business you want to run, and how you intend to handle tax issues. It is well worth the time and cost to consult a professional to help you select and establish a proper legal structure.

2. Establish an accounting system

The accounting system will be driven in part by the legal structure of your business. The larger and more complex your business, the more likely it is you will need outside help with your accounting, whether in the form of a bookkeeper for handling daily and weekly transactions or a Certified Public Accountant (CPA) for more comprehensive accounting work.
In most cases it is a good idea to consult a CPA during the business startup phase to get professional advice and insight into the accounting needs you will likely encounter. Even if the ultimate advice is for you to handle accounting tasks yourself via one of the many small business accounting software packages on the market, you will have the peace of mind that you have chosen an accounting system that is best for your business.

3. Register the business name

It is important to register your business name, which often occurs as part of obtaining your business license. When you register the name, you identify your business as a unique entity with a unique identity, and help protect yourself from the potential confusion that could result from someone else taking on the same business name as you.
The registered business name will be reflected in all of your official business paperwork such as tax statements, tax returns, financial statements, etc. Specific registration steps vary from state to state, so check with your Secretary of State for details about the correct process for your location.

4. Establish sound business processes

When you establish sound business processes right from the start, you simplify your business life immensely. The right processes will help you generate sales, properly invoice customers, and manage business growth over time. Key business processes include:

Sales process - prospecting for new customers, making and maintaining contact with customers, follow up and tracking of orders, generating referrals and repeat business

Billing process - invoicing, aging and tracking of invoices, posting payments to accounts, credit and collections

Growth process - hiring employees, evaluating expansion opportunities, risk vs. reward, financial requirements of specific growth options

Evaluate Your Idea And Weigh The Risks

So you think you have a terrific idea for a business. Congratulations! It is very exciting to contemplate taking that big step into entrepreneurship. Before you get too far down the path of dreaming about great success and riches, though, it is important to evaluate your idea and weigh the risks of pursuing it as a business.

Evaluate your idea

There are a number of ways to evaluate your business idea, most of which require a great deal of self-honesty and objective thought. Here are a few questions you should ask yourself when evaluating any entrepreneurial idea:

1. Does the idea truly solve a problem or fulfill a need?
2. What is the exact problem or need it will address?
3. Is your idea original and new?
4. Is your idea a unique combination or update of other existing ideas?
5. What are the limitations of your idea?
6. Are there other variations of your idea?
7. Is your idea appealing and easy to market?
8. Is your idea affordable to potential customers?
9. How complicated is it to put your idea into action?

Some of the questions you will use to evaluate your idea will vary depending on the specific product or service you propose. Use the above list as a starting point, then add or delete questions that are relevant to your particular business proposal.

Weigh the risks

Once you have evaluated your idea and thoroughly explored its potential, you must also weigh the risks of moving forward with starting a business based on that idea. There are always risks inherent in any business, but if you identify them in advance and determine which risks are reasonable you can significantly increase your chances of success. Some of the questions to ask as you are weighing the risks include:

1. What investment will be required to start the business?
2. What are the expected revenues for the first 18 to 24 months of the business?
3. Are the expected revenues enough to keep up payments on any financial debts that may be incurred?
4. What factors need to go right for the projected revenues to become reality?
5. What factors could go wrong and prevent the projected revenues from becoming reality?
6. How much competition is there in the marketplace?
7. Are there enough potential customers to justify the investment of time, effort and money?
8. What needs to go right for you to be successful and how likely is it that those things will occur?
9. What could go wrong and prevent you from being successful, and how likely is it that those things will occur?

It is critical that you be honest and objective about risks associated with your business idea. Only through critical thinking and careful evaluation of risk can you determine if it is appropriate to pursue your idea.

Are You Ready To Launch Your Own Business

Most people think at some point in their lives that they could launch their own business. While this may be true, there is a big difference between just launching a business and launching a business that has a good chance of being successful. How do you know if you are ready to start your own business? Here's a checklist to help you decide.

Personal checklist

1. Do you have a burning desire to start the business?
2. Are you willing to push through adversity and discouragement?
3. Are you confident in yourself and your skills?
4. Are you realistic about yourself and your skills?
5. Do you have a support network of friends, family and others who will provide encouragement along the way?
7. Do you have the motivation to do what it takes to succeed?
8. Do you have a realistic idea of what it takes to succeed?
9. Are you willing to devote long hours to your business?
10. Are you willing to be the primary decision maker and take sole responsibility for the business?
11. Do you have any experience in your proposed business field or industry?
12. Do you have a detailed business plan?
13. Do you have a vision for your business?
14. Are you ready to market and promote your business?
15. Can you manage the many relationships (customers, vendors, suppliers, etc.) required to run a business?
16. Have you thoroughly evaluated your business idea, including weighing the risks of moving forward?
17. Do you have the financial and emotional resources to get through the first 18 to 24 months of your business?
18. Are you willing to put the wants and needs of your customers ahead of your own wants and needs?
19. Are you willing to take risks?
20. Are you competitive enough to persevere?
21. What will you do if you fail?

Some tests, quizzes or checklists will give you a score based on your answers to the questions, then use the score to indicate how ready you are to go into business for yourself. This checklist, though, does not have a specific method of scoring or a minimum score to indicate that you are strong entrepreneur material.
Instead, this checklist is designed to provoke thought and clear, objective self-examination of your motivation and preparedness for starting your own business. Think carefully about each question, and answer it with complete honesty. Once you have completed the list, look back at your answers and use them to help guide your decision making process.