- Financing: One of the major questions involves financing the small business operation. Some people have enough capital to start from scratch, but others may need assistance through loans and grants.
- Insurance: It is highly recommended for small business owners to have some type of business or commercial insurance. Basic coverage can suffice at first, which can then be expanded or modified as needs arise once the business is up and running.
- Taxes and deductions: Some small business forms may qualify for tax breaks or deductions. You may want to look into your options to see whether your business qualifies.
- Legal considerations: Local and state laws may vary when it comes to business zoning and ordinances. You may need to hire a professional to help point out where your small business might encounter compliance issues.
There can also be very specific issues to consider that depend on your own business’ characteristics. For instance, if your company is tech-oriented, you may need to research the online advertisement laws in your area. Or, if your company is more production-oriented, you may have additional considerations for employee safety.
What Are Some Common Small Business Mistakes?
The most common mistake that small business owners can make is not having a thorough business plan in place. Some small business owners may think that they have “everything in their head” and do not need a formal plan when it comes to small business start-up procedures. However, even smaller business operations will be complex and require thorough planning for success.
A good business plan should be comprehensive (cover a broad range of matters) and detailed. The plan should have solid guidelines and should be able to anticipate potential conflicts or problems that might arise in the future.
Many other small business mistakes arise when the owner or management begins “cutting corners.” For instance, failing to double-check employee paperwork or keep accurate record books can spell disaster for the future, especially if an audit is needed. Sloppy advertising practices or waste management practices can lead to fines, disputes, or losses in the long run.
How Do I Conduct Market Research?
Market research helps you discover consumer behavior and economic trends to improve your business ideas. It’s important to understand your customer base from the outset. Market research allows you to reduce risks, even before your business has been created.
Gather information about consumer demographics to better understand opportunities to gain customers. Customer demographic information may include population data on age, wealth, interests, family, or anything else that’s relevant for your business interests.
By answering the following questions, you will gain a good sense of your market:
- Demand: Is there a demand for your product or service?
- Market size: How many people would be interested in your offering?
- Economic indicators: What are your customers’ income ranges and employment rates?
- Location: Where do your customers live, and how far can your business reach?
- Market saturation: How many similar products are already available to consumers?
- Pricing: What prices do potential customers pay for alternatives?
Use market research to keep up with the latest small business trends. It’s important to get a sense of the market share that will impact your profit margins. You can do market research by using existing resources or reach customers directly and do the research yourself. Using existing sources may save you time and energy, but the information may not be as tailored to your target market as you’d like. Use existing research to answer questions about industry trends, demographics, or household incomes.
Conducting personalized research can give you a nuanced understanding of your specific target market. However, direct research can be expensive and time-consuming. Use direct research to answer specific questions about your business or customer base. Direct research is great for getting feedback on your logo, improvements you could make to the buying experience, and where customers may shop other than your business.
Common direct research methods include:
- Focus groups
You learn from businesses competing for your customer base by analyzing the competition. This type of research is key to defining what gives your business a competitive edge and a sustainable revenue source.
Competitive analyses should identify your competitor’s product line or service and the percentage of the market they own. Assess the following characteristics of your competitors:
- Market share
- Strengths and weaknesses
- Opportunities to enter the market
- The importance of your target market to your competitors
- Any barriers that may block your entrance into the market
- Indirect or secondary competitors who may impact your sales
How Do I Write a Business Plan?
Business plans guide you through each step of starting your business. Use a business plan as a guide for structuring, running, and growing your business.
Business plans can help you bring in funding or new business partners. Investors will want to see a confident business plan before they invest. A business plan is a tool that you’ll use to convince people that investing in your company is a wise choice.
There is no right or wrong way to write a business plan. Simply draft a plan that meets all of your business needs. You may choose to detail each section of your business plan, or you may choose to summarize only the most key elements of your plan.
Describe your company with detailed information about the problems your business solves. Be specific and list out the consumers, organizations, or businesses your company plans to serve.
Make sure you understand your industry outlook and your target market well. Competitive research into what other businesses are doing and what their strengths are will help you find trends and themes. Find out what successful competitors do and why it works. Next, find ways that you can do it better.
There is no single way to approach a business strategy. Your strategy should constantly evolve and change to fit your business needs.
Describe what you sell and what you offer. Explain how it benefits your customers and what your product looks like. Share plans for intellectual property, copyright, and patent filings. If you’re researching new services or products, describe them in detail.
Do I Need a Lawyer for Help Starting a Small Business?
It’s also important to lay out the legal structure of your business. You’ll have to decide whether you want to incorporate your business as a C or S corporation. It’s also possible to form a general or limited partnership. You may also choose to register as a sole proprietor or a limited liability company (LLC).
In order to avoid many of the legal issues and pitfalls associated with small businesses, it is recommended that you work closely with a small business lawyer. Your attorney can help you create and implement a business plan for your organization. Also, your lawyer can help ensure business compliance, negotiate with other businesses, and do other tasks. If you need to attend any court hearings or meetings, your lawyer can be available to represent you.