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How to Think About Starting a Small Business

The first stage of starting a small business is thinking about it. But, that alone can seem daunting, if you can't break down the endeavor into smaller, manageable steps, which you can then think about one-at-a-time. The following is a simple outline or template representing all of the steps that generally occur in the initial evaluation of an idea for a small business.

Choosing a Business Idea

Follow your passions to find a business sector. Determine what area within that business sector best suits your abilities and personality. Assess if you can raise enough money to enter that area of business.

Can Your Idea Be a Business?

If you are thinking about starting a completely new type of business, begin by researching how your idea could be turned into a business, whether it would be legal, how much of a market would there be for your product or service, etc.

Part-time or full-time?

Are you ready to start a full time business, or do you want to keep working and run your business on the side?

Home business or office business?

Can this business be run from your home (and do you want to work from home), or does it need to be in its own office or building?

Owner operated, or a business with employees?

Can you run this business alone or will you need employees? If you will need employees, estimate how many would be needed to start the business.

Choose a business structure

You can now incorporate a new business online, or form an LLC, partnership, sole proprietorship, etc. Decide what would be appropriate for your new business.

Write a business plan

Writing a business plan serves many purposes: it creates a detailed description of the entire business, which will force you to think through all aspects of how the business will work; it becomes a presentation document that you can use to apply for business loans or to interest venture capital firms; it becomes an incentive to attract qualified people to join your business as officers or board members; and, it works as a blueprint to be built on as your business grows and expands.

Decide how you will finance your business

Personal credit, business loans from a bank or credit union, venture capital investment, private loans from friends or family, etc.

It is important to note that this process - the assessment of a new business idea - can be done over and over for little or no money. And each time you go through the process of assessing another idea for starting a small business, you will become more knowledgeable about the process, about business, and about what type of business will work for you.

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Information here does not constitute a legal advice. Please contact an attorney or accountant for specific expertise.

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