Successful Businesses Require Thorough Planning

The  inspiration for starting a small business comes from previous work experiences, education, training, hobbies, talents, personal interests, or recognizing an unanswered need or market opportunity. Starting a business is the stage after having a dream and having a plan. This article discusses the necessary steps people must take after they have decided to start a home-based business.

BECOMING A BUSINESS ENTITY
After making this decision, you will need to do a lot of planning and organizing before you actually can become a business entity. Steps to take include

* writing a business plan,

* determining capital needs,

* deciding on a business name,

* deciding on the structure of the company,

* opening a business bank account,

* pricing your products or services correctly,

* purchasing business insurance,

* setting up a home office,

* buying stationery and business cards,

* installing telephone lines, and

* getting a post office box.

WRITING A BUSINESS PLAN. 
This should be a well thought out plan to build profits and ensure success. A business plan is a look at where you are and where you hope to go. A business plan should look at the future and detail the steps to take to get to where you want to be. It communicates business goals and will help keep the business on track. It should address how the business will be operated, managed, and capitalized. The plan also can be used to obtain outside capital from investors or lenders if needed. A business plan, therefore, should be well researched, thorough, professional, realistic, and revised as needed. It should include

* a description of the business,

* a marketing plan,

* a financial management plan, and

* a management plan.

The description of the business should include a summary of the goals-both long-term and realistic short-term goals-and principle objectives of the business. It also should include information about the type of business it is (eg, service, retail, manufacturing); an explanation of its products or services; details about the location, which should be based on your customers' needs; and specifics on the days and hours of operation.

The marketing plan should identify customer needs, target markets, and how the business will satisfy those needs. This plan should provide information on market growth and its potential for continued growth and expansion, a definition of market segments, strategies to maintain market share and promote sales, methods for pricing products or services, information about the competition, and a plan for advertising or networking to promote the business.

The financial management plan is a vital part of the business plan. Many businesses fail because of mismanaged finances or a lack of money to keep the business going. This section should contain information on the required start-up investment, additional funding that may be necessary in the future, profit-and-loss forecasts and cash flow analysis for several years, and a detailed examination of the amount of sales required to break even or turn a profit.

The management plan describes the day-to-day management required to operate a business. This part of the plan should include biographical information about the manager(s) of the business, the number and type of staff members needed, compensation plans, employee benefits, and any employee recruiting or retention plans. For more information on writing a business plan, visit the Small Business Administration web site at http://www.sba.gov.

DETERMINE CAPITAL NEEDS. 
How much money do you need to start a business? Start-up costs include equipment, professional and licensing fees, inventory and handling costs, and other costs. Factor into these costs money needed to live on before you can expect to draw a salary from your business. This is an important step because the reason most businesses fail is under-capitalization. If you need capital to start your business, explore the following sources to obtain money:

* lending institutions (eg, local bank),

* the Small Business Administration,

* state or local programs for small businesses,

* family members, and

* credit cards.

DECIDE ON A BUSINESS NAME. 
A business name should help customers understand what the company does. The name should be something customers can remember easily or relate to in some manner. After naming the business, register the name with the state business office. You will need approval from the state before you can use the business name. Contact an attorney to help you with this process or contact the state for assistance on how to do it yourself.

DECIDE ON THE STRUCTURE OF THE COMPANY.
Deciding on the type of company ownership is important because it determines how the company will be structured. The four most common forms of legal ownership for small businesses are sole proprietorship, partnership, corporation, and limited liability company. Each form of business has its own set of benefits and disadvantages; therefore, in making your decision, it may be helpful to consult an accountant and attorney to help you select the right form of legal ownership. This decision will be based on the

* vision, size, and nature of the business;

* desired level of control;

* type of business operation;

* business' vulnerability to lawsuits;

* types of tax advantages and disadvantages;

* capital needs;

* earnings distribution; and

* legal restrictions.

LEARN ABOUT LICENSING AND CERTIFICATE REQUIREMENTS. 
Obtain business licenses and/or permits that may be imposed by state and local governing authorities, as well as federal authorities. To accomplish this,

* check with the state to determine whether you are required to have a business license;

* check with the local government to determine whether your home- based business will need any city or county licenses, or both;

* check on applicable city zoning regulations and ordinances;

* find out whether any federal permit or license is needed to operate the business;

* obtain a Federal Employer Identification Number from the local US Internal Revenue Service office; and

* obtain a state sales tax number from the state government offices.

OPEN A BUSINESS BANK ACCOUNT. 
After obtaining a federal tax identification number, set up a business bank account with a local lending institution. This establishes a relationship with the lender and will be a benefit should you have financial needs as your business grows. Any business transactions now are separate from your personal banking account and will be easier to control and manage. It may be helpful to consult an attorney or accountant to determine the implications and potential tax consequences of this.

PRICE YOUR PRODUCTS OR SERVICES CORRECTLY. 
This step is vital when starting a business. Pricing is based on the cost and time involved in operating a business and meeting customer expectations. Knowing competitors' pricing also will help determine the right price for your product or service. An accountant can help you determine the appropriate formula to verify that your pricing is set correctly. Evaluate all pricing initiatives on an ongoing basis. To begin, make sure you have set your product or service pricing correctly, and create price lists or service contracts to share with customers.

PURCHASE BUSINESS INSURANCE. 
Ensure that your business insurance coverage meets your needs. Contact your insurance agent regarding insurance needs, including increasing or adding insurance coverage for

* home office and office equipment;

* liability insurance for products sold to customers;

* property insurance needed to replace or rebuild, as well as limitations or waivers coverage;

* paying fixed expenses if you cannot operate the business due to damage caused by such things as fire, weather conditions, or vandalism;

* "key man." insurance to cover you if you are so critical to the operation of the business that it cannot continue in the event of your illness or death; or

* "non-owned automobile coverage" if you use your personal vehicle on company business-this policy covers any damage incurred during business use.

SET UP A HOME OFFICE. It is important to plan where and what you will need to set up office space in your home. Carefully organize and locate the office to facilitate your ability to conduct business. Also ensure that you have the right equipment and items to perform daily business activities, including

* a computer;

* a fax machine;

* a printer;

* a desk, filing cabinet, chair, and storage units; and

* the necessary office supplies and software.

BUY STATIONERY AND BUSINESS CARDS. 
Professional-looking stationery and business cards are a must. These can be ordered through most office supply stores or, if you have the right equipment and paper, you can make them yourself. Do not be frugal when it comes to these items. Think carefully about how the stationery \should look and what it should communicate to others about the business. Also, make sure that the format and design of all of your business documents are consistent. A graphic designer, desktop publisher, or professional print shop can help you develop stationery that appropriately represents your business.

INSTALL TELEPHONE LINES. 
Establish a dedicated business telephone line. This gives the business a published telephone number. It also simplifies tracking business telephone expenses for tax purposes.

GET A POST OFFICE BOX. 
If you are not comfortable using your home address as your business address, consider setting up a post office box for your business address. This can be done at your local post office or a business that helps you with your mailing needs.

Business and Legal Forms

Financial Record Keeping Kits
Invoices
Payroll Kits
Asset Purchase Agreements
Business Plan Confidentiality Agreement
Business Plans
Invoice
Joint Venture Agreement
Payroll Kit
Spanish Forms
Amendment to Contract
Arbitration Agreements
Assignment of Contract
Employment Contracts/Employment Agreement - Independent Contractor
Employment Contracts/Employment Agreement - Long Form
Employment Contracts/Employment Agreement - Short Form
Mutual Rescission of Contract
Notices/Notice of Assignment of Contract
Notices/Notice of Breach of Contract
Sale of Business Contract/Sale of Business
Sale of Business Contract/Sale of Business Assets
Sale Of Goods Contracts/Sale of Good Contract (Basic)
Sale Of Goods Contracts/Sale Of Goods Contract (Standard)
Sale Of Goods Contracts/Sale Of Goods on Consignment
Waiver of Condition
Waiver of Counsel