Every company, large or small, has to start somewhere. Often, entrepreneurs may find themselves at odds with a competitive, quickly growing marketplace. Careful consideration of several factors can streamline the business formation process and set your company up for success.
1. The Big Picture
Think ahead – You likely have plans to grow your business, but you must also ensure that the business is capable of managing this growth. Could your company’s service or product retain the same quality if the demand were increased? What steps will you take to make this happen?
A business owner can get ahead of the curve by visualizing the business on a timeline separate from day-to-day operations. It is important to take the time to reflect on an overall business plan, such as incorporating new technology, hiring employees, or developing methods to improve the customer experience.
You may also want to create a business succession plan to prepare for the time when you are no longer able or willing to run the business. A business succession plan will facilitate a transfer of ownership or business dissolution.
2. Business Structure
One should decide on a business structure at an early stage of their business plan. This will effectively allow a business owner to recognize and comply with the legal regulations associated with the structure. Among others, common business structures include the Sole Proprietorship, General Partnership, Limited Liability Company (LLC), and the Corporation.
Each structure has advantages and limitations in relation to liabilities, taxation, and company management. For example, an individual may choose to form a Sole Proprietorship, which allows them full command of business proceedings. However, they must also be aware that in a Sole Proprietorship, the owner is held accountable for any debts that the business incurs, which puts the owner’s personal assets at stake. As such, it is essential for an entrepreneur to familiarize themselves with each type of business structure to make a selection that works best for their particular business.
(Link – English only) While there is no one-size-fits-all answer to business funding, entrepreneurs have several options for funding their start-up. Investors, business partnerships, loans, and grants can all increase a company’s budget. As with other elements of business formation, the best funding options are unique to each business.
Investors can be found within a business owner’s personal circle (family members often invest in the businesses of their relatives) or through networking. Attending business events and sponsoring community functions are great ways to gain exposure for your business and mingle with potential investors. Keep in mind that potential investors may be put off by solicitations – Instead, attempt to create meaningful, mutually beneficial business relationships that could lead to future investment opportunities.
Business loans and grants are a popular funding method. It is crucial that a business plan be thoroughly developed, as it will build trust with lenders and funders. Further, federal, state, and private grants exist to fulfill a particular objective or need, which your business may satisfy. Exploring these options will allow you to clearly define a course of action and build your business accordingly.