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4 Things You Ought to Know Before Starting a Business

Updated on November 3, 2017
Rebekah Steenbock profile image

Former property manager turned real estate and marketing B2B freelance writer.

Starting your own business is an exhilarating feeling! You can finally do what you are really passionate about and get paid for it. Besides, entrepreneurs consistently have high levels of job satisfaction. However, you don't want to be out of business just as quickly as you jumped in. So, there are some things to take into account prior to opening up shop.

Business Plans

You always want to start with a good business plan. This should include items like:

  • What makes your product or service better than the competition. Do you have a patented product or service that is difficult to duplicate?

  • Who is the competition?

  • Who is your target market? Not everyone is going to be your target market, nor should they. Trying to sell to everyone will inevitably cause you to alienate some customers. Zero in on who your ideal customer is and sell to them. Figure out what makes them tick. What are their pain points and how do you plan to solve them?

  • What kind of start-up costs would you be needing? Itemize this.

  • When do you intend to start turning a profit, this last step is especially important if there are investors involved. The biggest thing venture capitalist want is positive ROI. They are investing other people's money with the explicit goal to make their client's money

Marketing

You want to make sure you have a marketing plan that will reach your target market. If your target market is senior citizens using inbound marketing and social media will not get you very far. Outdoor marketing and newspapers would be much more effective for that demographic. Make sure you know your customer well, and how to reach them, before you begin a marketing campaign.

Make sure you give your self time too. An effective marketing campaign will not yield long term benefits overnight. Even something like a mailer for a coupon will simply get people in the door but it won't make you a millionaire.

Legal Structures

You need to know how you want to set up your business for tax and liability purposes. You want to diminish as much liability from your self as possible.

  • Sole proprietorship – this is fine if you take a contract position with another company. Entrepreneur defines it as : “A business that legally has no separate existence from its owner. Income and losses are taxed on the individual's personal income tax return.”It's not recommended if you are really diving into business ownership. If your business were to go bankrupt you would personally be on the hook for that. It could ruin you.

  • Partnership – This splits the business between two people so is takes a bit of the weight off. However, if want to make sure you really trust your business parter if you go this route. Mark Kohler recommends having an iron clad exit strategy should things go south.

  • Limited Liability Corporations or Corporations- This is a great way to enter in a partnership should you choose to go that route. It takes the individual out of the business. Lets say your partner does something unethical it falls on the business. If the worst happens and your business goes bankrupt or you get sued you don't want your personal accounts seized.

Make sure you consider the worst case scenario when determining which business structure would work best for you.

Learn to Delegate

You need to know how you want to set up your business for tax and liability purposes. You want to diminish as much liability from your self as possible.

  • Sole proprietorship – this is fine if you take a contract position with another company. Entrepreneur defines it as : “A business that legally has no separate existence from its owner. Income and losses are taxed on the individual's personal income tax return.”It's not recommended if you are really diving into business ownership. If your business were to go bankrupt you would personally be on the hook for that. It could ruin you.

  • Partnership – This splits the business between two people so is takes a bit of the weight off. However, if want to make sure you really trust your business parter if you go this route. Mark Kohler recommends having an iron clad exit strategy should things go south.

  • Limited Liability Corporations or Corporations- This is a great way to enter in a partnership should you choose to go that route. It takes the individual out of the business. Lets say your partner does something unethical it falls on the business. If the worst happens and your business goes bankrupt or you get sued you don't want your personal accounts seized.

Make sure you consider the worst case scenario when determining which business structure would work best for you.

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    • Michael-Duncan profile image

      Michael-Duncan 

      11 months ago from Spain

      Informative. Thanks for sharing. Cheers!

    • wheelinallover profile image

      Dennis Thorgesen 

      12 months ago from Beatrice, Nebraska U.S.

      Until recently I have always chosen a corporation when in any kind of partnership. The CEO of the last one was a lawyer. There was never a case where I really needed it, however it was wise to err on the side of caution. In the past four years though I have had only two dissatisfied customers. At this point it seemed no longer necessary.

      A well put together business plan is a must. They really come in handy if you need short term currency to enhance your business. In one case for me it made the business very easy to sell. It did help that I was showing a profit beyond most people's expectations for a business which had only been open six months.

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