You already know that there are various entity types you can choose from when organizing your business. But, this is by no means the only—or even the biggest—decision you’ll be making when it comes to positioning your business to succeed.
If you’re considering starting a business, take a look below to gauge whether you’re ready to move forward, or whether you might benefit from holding off a bit and spending some more time in the planning department.
Your Personal Strengths and Weaknesses
If you’re just starting out, you probably want to avoid hiring a staff of people before you have a clear idea of how much work there is to be done. However, you should take an objective look at yourself and your abilities.
Can you maintain records of your corporate finances yourself, or do you need to hire an accountant (or outsource your accounting)? Do you need someone to proof your publications for grammatical and spelling issues before they reach the public—or do you need someone to write those publications for you?
Take an honest look at what you reasonably can and cannot do. Once your business gets rolling, you could consider strategic partnerships with other companies who can provide the support you need for the roles you can’t see yourself filling. In the meantime, you may need to either hire someone who complements your abilities or find avenues to gain the necessary knowledge you currently lack. Look into any classes or training you can register for that might help develop those aspects of business you may not be experienced with.
Along those lines, an excellent (and perfectly valid) way to gain the necessary training and experience is as an employee in someone else’s business. I’m not talking about stealing trade secrets—think of it as a kind of apprenticeship.
No one says you have to be an employee forever, but think of the valuable experience you could gain from being involved in a field that further develops the strengths that could use a little, well, stengthening. And not only that—working for someone else will give you an insight into your market and your competitors that you may not have found otherwise.
It’s a good idea to spend some time thinking about where you stand in relation to other companies out there and how you’re going to convince your customers they should buy what you’re selling.
Are you offering a product or service that’s already out there? If you are, you need to ask yourself what’s going to make you stand out in the eyes of your consumers—in other words, how you’re going to make it clear that you do what the others do, only better/more affordable/more personalized.
Or are you offering something completely new? If so, your job will be to convince people who have been getting along just fine before you came along why they need what you’re providing and how it will better their lives.
Think about what your target market already has and what they need. Where do they shop? How do they live? What’s their income? How old are they? You’re eventually going to need to get yourself in these people’s line of sight, introduce them to your product, and convince them why they need it—so you’re best served by thinking about this now.
Start thinking about how your business is actually run. Are you storing inventory? Will you have employees? How will the prices of your product be determined? Who is going to supply your office supplies, heat, electricity, internet? What kind of licenses are you going to need in your state, county, and city? Are you aware of the zoning requirements for your site? All of these messy details are things you need to be thinking about.
The Business Plan
A business plan is, quite possibly, the most important document your small business has at its disposal. It’s an arsenal of information, and its whole is greater than the sum of its parts.
On paper, your business plan is a detailed account of your hopes and dreams, designed to attract and inspire the confidence of your toughest, most hardened potential investors or lenders.
But in reality, it’s much more: it’s a way for you to make sure that you’re asking yourself the right questions. If you’re finding it difficult to come up with a strong business plan, you have some thinking to do—either about the specifics, or reevaluating whether your business ideas are strong enough to be successful.
Even if you aren’t planning on wooing investors and lenders, a business plan will be an invaluable way to keep your thoughts organized and your business on track. This document is the authority on how you’re going to grow your business, where you’re going to find your operating funds, and—most importantly—the reasons you’re in business in the first place and the returns you can expect.
It’s a good idea to take your business plan out and review it periodically throughout the year to make sure your business operations are furthering your initial goals. If they’re not, you need to re-asess your operations—or your goals.
Don’t worry: you can always modify your business plan according to what’s working and what’s not working. It’s simply a way for you to keep yourself in check.
Suggested reading: “Benefits of Incorporating”