Business Startup Planning

Learn more about planning a business launch.

Getting Off the Ground -- Startup Duties You Must Complete

There are many steps that you need to take to turn your fully formed startup idea into a thriving enterprise. Deciding on your organizational form, getting financing and setting up your recordkeeping systems are among the first tasks you will need to tackle.

Once you've decided that you have what it takes to start a business of your own, determined the kind of business you want, and evaluated your chances of success, it's time to start setting it up.

To get started, you'll need to choose professionals to assist you and create a business plan. After that, you can plan your operations. We'll explore these issues in detail below. In addition, you'll want to consider the following:

  • Forming your business by choosing a name and type of organization.
  • Getting a loan for your business to cover your need for startup funds.
  • Setting up your books to make sure your business recordkeeping gets off to a good start, and to spread out some of your startup cost deductions over future years.
  • Protecting yourself and your ideas through the use of business insurance and intellectual property rights, such as patents, trademarks, and copyrights.

Choosing Professionals to Assist You

Nearly every small business owner will need the assistance of an accountant, attorney, banker, and insurance agent at one time or another. Some also hire a management or marketing consultant.

If you decide that you do need the help of a professional, finding a good one should be one of the very first steps you take to start your new business. Some of the first steps you'll be taking, such as deciding on the form of your business, will be easier if you already have professionals lined up.

Which professionals will you need? To answer that question you need to understand how each professional can help you. Here's a quick look at the types of assistance each can provide:

  • Accountant: Sets up your books; prepares your taxes; provides tax advice related to the operation of the business, such as how to choose the best retirement plan and how to take advantage of tax deductions.
  • Attorney: Helps decide the right form of business; makes sure the proper papers are filed; drafts and interprets contracts and leases; defends you if legal action is brought against your business; represents you if you bring legal action against someone else; provides you with legal advice related to the operation of your business, such as the rules for hiring and firing employees.
  • Banker: Helps secure financing; helps establish credit card accounts; works, in many cases, as your silent partner, providing you with business operation advice.
  • Insurance agent: Evaluates your insurance needs; provides you with advice on which types of coverage you need.
  • Management and marketing consultant: Provides basic business operation advice; provides pricing and inventory advice; provides sales and advertising advice.

The next step is to assess your own skills and the needs of your business. For example, do you know how to incorporate yourself or how to set up your own financial recordkeeping system? If so, perhaps you can save some money by doing these tasks yourself.

An assessment of your business needs does not have to be exhaustive, but it should be as comprehensive as possible so you can make an informed decision. Knowing the business's needs allows you to consider suggestions from the professional and make the best decisions for your business.

Once your business's needs have been identified, the next step is to locate a professional. A good place to start is in your own home. If you have an accountant, lawyer, insurance agent, or other professional who handles your personal matters, chances are they will be happy to handle your business matters, or at least provide a reference for someone who will. If you don't have a professional who handles your personal matters, seek referrals from friends and relatives.

You can also try to find a professional as follows:

  • Accountant: Ask business associates and other small business owners. If you have a banker, attorney, or insurance agent, ask him or her for a recommendation. You can also contact the American Institute of Certified Public Accountants (AICPA) at Harborside Financial Center, 301 Plaza Three, Jersey City, New Jersey 07311; (212) 596-6200. If you're interested in joining a professional association, you can get more information from them or from your local chamber of commerce. When all else fails, look in the Yellow Pages. Be sure you shop around and compare rates. Negotiate the fees in advance.
  • Attorney: Ask business associates and other small business owners. If you have a banker, accountant, or insurance agent, ask him or her for a recommendation. Or contact the American Bar Association at 750 North Lake Shore Drive, Chicago, IL 60611; (312) 988-5522. If you're interested in joining a professional association, you can get more information from them or from your local chamber of commerce. When all else fails, look in the Yellow Pages. Initial consultations are usually free, but make sure that's true before you make an appointment. Be sure you shop around and compare rates. Negotiate the fees in advance.
  • Banker: Start with the bank where you have your personal accounts. If that doesn't work out, ask business associates and other small business owners. Or contact the Small Business Administration at 1-800-827-5722. They keep track of which banks in your area have the best small business-lending records.
  • Insurance agent: Again, ask business associates and other small business owners. Look in the Yellow Pages. Be sure you shop around.

 

Work Smart

As a small business owner, you'll probably need several types of business insurance. Having a different insurer for each type of coverage can be a lot of trouble, while having all of your coverages with the same insurer can be needlessly expensive. Your best bet may be to look for an independent insurance agent because you can have one person handle all of your insurance needs and they can shop around for the lowest rates.

Finally, trade associations, local chambers of commerce, rotary clubs, and similar organizations may provide free or limited professional services. At a minimum, they should be able to provide referrals to professionals that serve the organization.

Building a Business Plan

A business plan is a written document that defines the goals of your business and describes the means you will use to attain those goals. Every small business owner should prepare one, even though some do not. Although creating a business plan will take a lot of time, effort, and energy, it'll be well worth the trouble.

Formulating a written business plan will force you to think about where you want your business to go and how you're going to get there. It will become, in effect, a roadmap for you to follow as your business grows and develops. And, of course, if you ever intend to borrow money or establish credit, you'll be asked to produce a business plan.

A business plan can be assembled in any number of ways. However, the essential components that should be included in any plan are listed below:

  • Description of the business: Describe the business, including the products and services.
  • The marketing plan: Describe the target market for your product or service and explain how you will reach that market.
  • The financial management plan: Detail the costs associated with operating your business and explain how you will pay those costs. Will you need financing to start the business? If so, how much?
  • The operations management plan: Describe how you will manage the core processes of your business, including use of human resources.

For a complete explanation of how to put together an effective business plan, see our discussion of planning your business.

Setting Up Operations

At this point, your business might have a name, shareholders, and even a lawyer. But it won't be worth much to you until you've added some of the final "details" -- like customers, suppliers, and employees. For suggestions on how to take care of those last details that are so essential to your business, check out any of the following:

  • Where to open your business discusses issues such as selecting a location, using a home office or leased space, finding a space to lease, and engaging with business incubators.
  • When and how to open your business covers the many aspects that must be completed before opening your doors, such as buying or leasing equipment, marketing your product or service, getting licenses and permits, finding contractors and suppliers, hiring employees, and joining a business association.
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