So you have decided to start a business. Congratulations! Deciding to do something for yourself prompts numerous emotions – excitement, fear and curiosity to name a few. The biggest challenge most entrepreneurs face is knowing where to begin. If you are interested in pursuing a new venture, then this article should provide you insight into key steps that will help you through the initial stage of building your infrastructure. As you will discover, many of the decisions you make at the nascent stages of a business can, and likely will, have material implications. As part of your due diligence, this article offers 5 key steps to take when starting a business.
1. Define your business
The Business Model Canvas (the “BMC”) is a common approach used by MBA students and venture capitalist as it helps establish the foundation for all of the other segments of a business. Whether you use the BMC or any other technique, the act of writing down your ideas and developing a roadmap for your business is critical. Examples of what to define are your value proposition, channels, customer segments, key activities and key resources.
2. Identify the type of entity that best suits your needs
LLCs, corporations, partnerships and sole proprietorships are a few examples of business entities you may want to utilize when forming your business. Each entity structure offers pros and cons and the choice you make should be evaluated against tax implications, governance requirements, equity holders, employees and risk aversion.
3. Find an attorney who has experience in your industry
Identify a business attorney that understands business. At some point, legal support is needed for almost every business. Scope of support can be related to buying an existing business, drafting contracts and reviewing commercial leases. As you interview different options, ask about the attorney’s background in your specific industry and vertical and his or her experience working with companies.
4. Seek a qualified CPA to handle your tax and accounting concerns
Can you internalize and handle your own books and accounting? Probably. Is this the best use of your time, especially if you do not have a financial background? Probably not. Most new businesses have limited cash and consequently, look to save where possible; however, having a bookkeeper and/or CPA set up your books and advise of tax deductions will prove invaluable as you grow your business.
5. Paralysis by analysis
Throughout the years, we have seen businesses labor over details with countless iterations of the same business plan. Does this result in a great business plan? Absolutely. Does this result in a great business? Maybe. The key when starting a business is to actually start the business. Yes, all of the ideas this article references are important, but if you are serious about starting a business, then at some point, the research and analysis needs to convert into action.