I am going to write over the next few days several lessons that are going to help you learn how to start a small business – your own small business.
This first lesson is going to discuss briefly about what a small business is and the steps that are essential for you to take in order to start your own small business.
The phrase “Small Business” is used every day world over by millions of people. The reason why the phrase has become a household name is that the rise of small business in the past decade has been phenomenal – growing faster than in any other decade earlier. There’s growth in the number of services that are available to small business owners which makes it possible for them to run their business.
We don’t really have any guidelines as to when to use the term small business but it can simply be defined as any business that has a small number of employees generally less than 100 employees. How few the numbers of employees is actually debatable, and the definition of when such small business changes to a bigger business varies both by industry as well as country.
Due to their nature, small businesses are often sole proprietorship, partnerships or they are privately owned. In many countries, you commonly see smaller businesses in the following fields: restaurants, guest houses, hairdressers, small shops, photographers, tradesmen, small-scale manufacturing, photographers, lawyers, accountants, fashion designers, laundry etc.
For two main reasons, small businesses are usually located in private homes. The first reason is that in most cases it convenient and cost-effective. The second reason is that by having your business at home, there are several tax benefits you derive.
It is an exciting opportunity to run a small business, a great means of gaining business sense and to introduce oneself into the business world.
It is very important to know some very important facts before you spend a lot of money on your small business. So take time, get on the internet or go to the library and research the basics of starting a small business. Where possible, discuss with other small business owners or a few experts. This will help you ascertain whether entrepreneurship is the right thing for you.
Let us delve into a quick list of things a person can do to get started with a small business;
- Conduct a feasibility study of your business idea
In doing this, you need to ask some questions. Who is your typical customer? What is your product and who are your competitors? Who will your suppliers be? What are you going to charge for your product? How are you going to market your product? These are but few questions you need to get answers to.
- Write a complete business plan
This can be done using the information you gathered from the feasibility study you conducted. This is often an overlooked step but it is vitally important. The business plan will include a description of your company, what its goals are, market, competitors, information about finance, and ultimately how you intend to achieve your goals.
- Get your financing in place
There are 101 ways you can finance your business. This could be from personal savings, family and friends, grants, personal credit card, bank loans and so forth. If you are going to need credit, you will need to know your business plan from cover to cover.
- Decide what kind of structure your company will have
From a legal perspective, three basic choices are available, sole proprietorship, partnership and incorporation. They all have their advantages and disadvantages.
- Choose a name for your company and check on name availability
Your company name is the first thing associated with your business; therefore care must be taken when choosing one. Your name choices need to be checked for uniqueness against a database of names of other businesses. Depending on your country, a reserved name can be valid for 60 to 90 days. In Nigeria, you are to register with the CAC (Corporate Affairs Commission of Nigeria) and there is a 50% reduction in the registration fee offer going on now.
- Determine whether there are special permits or licenses that your business will need
Check your local tax collectors office for the appropriate forms. You can also check up other regulatory bodies related to your field of business for proper guidance.
- Set up your business bank account and record keeping system
To open a bank account, you’ll need to present your business documents. Record keeping can be done with a computer system or manually.
- Purchase Insurance
There are quite a number of insurance packages available out there. But your company may need at least one of them. Workers compensation insurance may be appropriate for you if you’re going to have employees.
- Decide where your business will be located
If it is feasible, you may choose to start your business from home. Alternatively, you should lease your business’ space. Starting your business from home has its advantages and disadvantages. You for example get tax write-offs, but sometimes people don’t take your business seriously if you’re doing it from home.
- Purchase supplies and office equipment
Each business will have different needs. You might need a computer and printer. Some basic things you would need are paper, calculator, pens and pencils.
Getting armed with the information and facts you need to run your business right from the beginning is a huge step towards achieving success with your small business. Therefore, take your time and do proper research before you launch your small business.
These are by no means all that can be said on this subject matter. I welcome your contributions and questions in the comment box below. Your questions may trigger answers along the line of thought that I haven’t talked about here.
Thank you so much for taking out time to read through this first lesson that is on how to start a small business. I hope you found the lesson informative.
In our next lesson, we will be taking a look at funding options for a small business.
Good luck as you roll-out your new business venture!