"You want to start your own business, but don't know from where to start?Ē|
The evolution of "business" reveal to the state of being busy, either doing it individually or with a group of people. The term "business" is an activity of providing community goods and services. However, the actual definition is to do a legal activity either alone or with the help of other persons to generate revenue.
This is not wrong to say that businesses are always better than jobs because of freedom of decisions. Many people who are in jobs they always have desire to start their own business. This is also not wrong to say that everyone is not successful in businesses and in most of the cases businesses get flopped due to lack of management and idea. Idea changes the life and before starting a business, you need to choose/create a business idea. To be an entrepreneur, there are many options. Choose the idea and work with keen interest to convert it into reality or buying a running business or franchise. Once you have decided what business you wish to start, then the real task begins.
Ownerís Checklist for Starting a New Business
Few points should be kept in mind by the entrepreneurs before starting a new business.
Assess your strengths and weaknesses
Major Type of Businesses
- Establish the business and personal goals
- Assess your financial resources
- Identify the financial risks
- Determine the start-up costs
- Decide your business location
- Do market research
- Identify your customers
- Identify your competitors
- Develop a marketing plan
- Choose a form of organization (proprietorship, partnership, or corporation)
- Create your business (register your name, incorporate the business etc.)
- Select an accountant
- Prepare a business plan
- Select a banker
- Establish a line of credit
- Review the local business code
- Line up the suppliers
- Get furniture and equipments
- Obtain a business license or permit (go to How to get business license in India )
- Set a starting date
A Sole proprietorship is the easiest way to start your business. In sole proprietorship business, only one person runs the show. You can judge from the name that sole means one. In this type of business, the capital invested by the owner is not much and due to which capital risk is also low. He can shut down the working any time, if the business is not giving fruitful results. You do not have to register a business name and obtain other local licenses for this type of business.
The main benefit of sloe proprietorship is that in this kind of business, owner is totally free to make decisions. The owner of the business can take whole responsibility and make his decisions in the favor of his business.
Partnerships are the form of business commonly seen by us in our lives. Partnership occurs when two or more than two people jointly engage in an activity to earn profit. There are different types of Partnership, limited partnerships and general partnerships. Itís more successful than the sole proprietorship because of some additional benefits which the sole proprietorship can not avail. A large amount of capital can be collected because more than one person is running the business. The main advantage of partnership is that, the risk of loss is divided in to all partners and less chances of huge business loss.
Some essential parts of partnership agreement are:
1. The compensation for partners in case of any accident.
2. How long will the partnership last, this is mentioned in time bounded Partnership.
3. How will the profits or losses be divided among the partners and in what ratio?
4. What type of business it will be? Is it is manufacturing, retailing or wholesaling.
5. What each partner is investing into the business? Are they contributing in equal ratios or in different ratios?
6. If the partnership dissolves, then how will the assets be distributed among the partners?
7. Provisions for the dissolution of the partnership among the partners.
8. Defining of the authority.
9. Provisions in case of death or incapacity of the partner.
Corporation is divided in two main classes, Public limited company and Private limited company. Both are different from each other in controlling and running the operation of the organization. The forming procedure is also different from each other. The structure of a corporation is complex. It is more expensive to organize and to handle than the other two entities (sole proprietorship & partnership). In the public limited company, shares are issued whereas, in private limited company, shares are not issued. In public limited company, the share holders are the owner but in private limited company, the directors are the owner of the company. In public limited company, the share holders elect their board of director who runs the management of the organization but in private limited company, the owner is the board of directors and they run the management of the company. The private limited company can start its operation after receiving the certificate of incorporation whereas; the public limited company canít start the operations until it receives the certificate of the commencement of the business. Corporations will have annual meetings of stockholders and regularly scheduled meetings for the board of directors with records to keep the share holders and the owner or board of director aware of the current position of the organization.
The above mentioned is the type of business which a person can start according to the availability of the resources by keeping in mind the following steps:
STEP 1 Business Ideas
Starting a business needs generation or creation of a business idea that will allow the owner to start the operation of business. Everybody wants to be an owner but nobody can have a mind to think how, where and when they can start a business. Before starting any business, developing an idea is the most critical and analytical part. Whether he wants to be a manufacturer or retailer or he might just want to sit around and provide services. This all depends on the creation of the idea. Once the idea is chosen and confirmed, one should do market research and collect enough finding, facts and figure which can support their idea. Once you have decided on the business, you wish to start and then the real work begins.
STEP 2 Businesses Planning, Organizing, Leading and Controlling
Management means coordinating the work so that it can be completed efficiently and effectively. Business can only be flourishing when the management arranges human and non human resources and action for achieving some predetermined task. Planning is very essential part of business and no business can run without planning. Imagine, you wake up in the morning, buy a ticket of train and you donít know where to go? Business canít be run without organizing. If work in an organization is not organized, then the business cannot be successful. There must be a leader in the organization in the form of manager who will guide the workers of the organization. He must have some skills to motivate them. Controlling is an essential part of business success. If you donít have control over your employees, then the aims of the business canít be achieved.
When you have a business plan in mind then you must have the capabilities of planning, organizing, leading, controlling and most importantly the availability of capital. Most small businesses have three options for financing i.e. friends & relatives, investors or loans. Each of these options has different considerations for your business. Some want to take part in the activities, some may want to be a sleeping partner or some just want to have their interest on the amount which they lend to you for developing a business. Investors and even friends & family usually want ownership and control of their portion of the business.
STEP 4 Getting started
You have the plan, enthusiasm and got the capital. Now, you have to choose your legal position in the society as may be sole proprietorship, partnership, or company .Your financing decisions will have an effect on what legal structure you choose. Now, according to your plan and availability of capital you can file with the state to incorporate and obtain a federal Identification number.
STEP 5 Opening the Doors
It's time to get in the market to make some money. Where are you going to run your business? Whether it be at home or in commercial areas, this depends on the plan and nature of the business. Do you need to hire employees to help you run the business? Do you need an accountant? Now, that your business is in the start-up phase, you can now look forward to the issues of managing the business.
If you are planning to start a new business, it is highly recommended to get the best idea and for that idea you must consult people and organizations. A business always takes some time to establish but it is always better than jobs.
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