Starting a business for yourself can and should be a rewarding experience. With good advice and proper planning, problems that may arise can be addressed in advance. Breaking the process down into three stages is an invaluable way to manage the startup.

  1. Preparation of a Business Plan
  2. Selecting a Business Structure
  3. Organization and Formation

Business Plan

The business plan is the roadmap upon which your venture will travel. The plan should be detailed, well thought out and describe the goals, methods and processes that will allow the business to grow. At a minimum the plan should include:

  • What is the purpose of the of the business
  • How strong is the market for your services or products
  • Who are your customers or clients
  • What are the funding needs to begin and carry through to eventual profitability
  • How will the funding needs be met
  • Financial information and projections
  • Who are your competitors
  • To what degree are your competitors addressing market needs and demand
  • What is the marketing planWhere will the business be located
  • What are the regulatory, license and permit requirements
  • Who will manage the business
  • Who are the owners and how are the profits to be divided
  • What are the human resource needs

Selecting the Business Structure

Choosing the type of entity to operate the business under is one of the most important aspects of starting a business. Evaluating risks, liabilities, tax, ownership and management issues are key to selecting the right entity. Some of the more common forms are sole proprietorship, partnership, corporation and limited liability company. Factors to consider when selecting the business structure are:

  • How many owners are contemplated
  • What extent, if any will the owners be involved in the management
  • Is anonymity important to any of the owners
  • Personal liability of the owners
  • Will restrictions on ownership transfer be created
  • How will the business be funded
  • What are the tax advantages and disadvantages of the different options

Business Organization and Business Formation

After all of the initial planning and decision making is complete the final step is organization and formation of the entity. Some of the tasks to be completed include:

  • Preparation and signing of pre formation ownership agreements
  • The filing of the formation documents with the State
  • Drafting bylaws or ownership agreements
  • Issuing ownership interests

Regardless of the nature of the business, proper planning is vital for the success and profitability of your new business. Taking the time to plan up front can equate to significant savings down the road, lead to better communication and narrow the sphere of issues that could arise at a later date, thus leaving you the ability to focus on developing your new business.