How to Start a Small Business
Get a load of these facts: 95% of all businesses are small businesses (less than 100 employees).
80% of all new jobs created are by small businesses. About 40% of the gross national product is produced by small
businesses. Wow! If you are the entrepreneurial type, but just do not know where to start, read this helpful guide.
1. First you need an idea. Take a look at this chart that summarizes where people get their business ideas:
2. Do you have what it takes? It’s often said that entrepreneurs are naturally risk takers. This
may be true, but not necessary. Entrepreneurs aren’t born, they are made. Instead, concentrate on the activities
that are involved to be successful. Are you the type who can raise capital? Do you like to do research? Are you
organized? Are you determined and committed? Do you have the energy?
3. If your idea is a new product or invention, you first need to determine if it already exists.
The only way to do this is by conducting a patent search. You can do a preliminary search by following this link
to the US Patent and Trademark Office.
Your attorney should conduct a more official search once you are further into the development of your product.
4. Think about what you want to name your business. Visit this tutorial on Naming Your Business. You will have to register this name at your local county
clerks office. It costs about $30 and an hour of your time to search the records to make certain the name is not
5. You will need to decide which form of legal business entity you wish to establish. Most first
time businesses start as sole proprietorships. This is the easiest and least expensive to start. But, you run the
risk of losing your personal assets if you get into financial or legal trouble. You can start as a sole proprietor,
but then incorporate after you are more established and the potential for growth is assured.
6. Hire an attorney and accountant, unless you are an expert in these fields. You are making
a big mistake if you think you can handle the legal and financial aspects alone. You need experts.
7. Finally, before you go any further, you should write a business plan. If you think this is
very time consuming, it is. But preparing a business plan forces you to research your idea. You will learn more
about the product or service you are selling, the competition, your target market, and whether your venture has
the potential to be profitable. Also, a bank or investor will not even look at you without a business plan. Visit
our tutorial on How to Prepare a Business Plan.