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Starting a Business
A Systematic Approach to Starting a New Business By Nowshade Kabir, Rusbiz.com Starting a business is one of the most enthralling and rewardingundertakings you can work on in your life. Whether you createdyour business surrounding a new product or you came up with aninnovative marketing method to sell a product, being anentrepreneur is an exciting experience. Apart from bringingfinancial freedom, it also brings a sense of achievement.Unfortunately, there is no guarantee of success in anybusiness. 70 percent of start-ups fail in the first yearof their existence. Success in the business depends on your entrepreneurial spirit,knowledge of your field and niche market, ability to managefinancial and human resources, proper planning and yourpersistence. Meticulous planning and systematic approachare critical in reducing risk factor of your entrepreneurialventure.
Selecting legal form of your business One of the most important decisions you need to take beforestarting a business is the type of legal form of your business.A business can work as a sole proprietorship, generalpartnership, limited liability Company, or a corporation. The easiest and most common legal form is the soleproprietorship. To start a business as sole proprietorship youwill just need a license from designated local authority. Theproblem with sole proprietorship is that all your personalassets are subject to legal liabilities in case of anylawsuit against your business. If two or several people start a business it is considered as apartnership. Normally, a partnership agreement, signed by allpartners, clarifies relationship among the partners and specifiesresponsibilities and functions of every individual. Thisagreement also covers probable business impasses and ways toresolve them. In the case of partnership each partner is legallyliable for all debts the partnership might incur. Starting a Business
Limited Liability Company is very similar to a partnership exceptthat the partners are protected from personal liabilities for thecompany's debt. The other advantage over partnership is even ifyou are a passive partner you still can claim personal taxdeductions on losses incurred from your company. This form isactually a good alternative to a corporation. A corporation exists as a separate entity. It has virtually allthe legal rights and social obligations of an individual. Youincorporate your business by filing with a state appointedagency. A corporation structure consists of three components:shareholders, directors and officers. Corporation issues sharesto the company shareholders in exchange of money or other assets.Shareholders are the owners of the company. Directors areresponsible for company management. Once a year, shareholderselect the board of directors. Directors meet routinely to discussand take decisions on company affairs. Officers are selected bythe board of directors to manage and run day-to-day companybusiness. The disadvantage of the corporation for small companiesis that the company has to pay tax on its earnings andshareholders have to pay taxes on the dividends that theyreceived from the corporation. Starting a Business
One way of avoiding this is not to incorporate a company in yourown state and go for an out of state place where there is noincome tax on nonresident companies. Starting a Business Choosing a name for your company Once you have decided on the legal form of you business, your nextstep is to select a name for your company. Whatever name youchoose, make sure that it is easy to remember andpleasant-sounding. If your form of business is soleproprietorship you can use your own name. You can also decideto use your family name as the name of the company and its brandname. Honda, Bose, Daewoo – all these are family names of theirrespective founders. If you are planning to incorporate yourbusiness, you also have to make sure that no other company hasthe same name as in one state there can't be two corporationsof the same name. Setting up your home office Starting a Business
Initially, to keep costs lower, you may prefer to have youroffice in your home. Today, when almost everything you can dothrough the Internet, it is a viable option, unless your businessrequires hiring people from the very start. Set aside a separatework area. If possible make your home office in a room dedicatedfor work purpose. Make sure that this room is as far as possiblefrom family common area, kitchen and kids' rooms. You don't wantto be distracted while working! The room has to be uncluttered, well-lit and with good air circulation. If space is an issue, youcan use any free space to set up your office, important thing isto have a permanent place dedicated to business related work.Having an office in your home allows you to deduct for taxespart of your household expenses. Starting a Business Branding your new company – designing a logo Branding means to build public awareness of your business nameand logo. A brand can worth more than the money spent ondeveloping it. It starts with the systematic approach indeveloping company brand – first you need to decide howyou want others to distinguish your business and work outa plan to achieve this goal. Your company logo is one of the primary components of yourcorporate identity. A good logo creates lasting and recognizableimpression on people's mind. That's why it's a good idea to useprofessional help in designing a logo. Starting a Business
Opening a bank account After registering your company you have to open a company bankaccount. It's wise to keep your personal and company accountsseparate even at the initial stage of your business. If you areplanning to do business through the Internet, you should alsoconsider opening a Paypal account. Starting a Business Setting up a bookkeeping system Bookkeeping means keeping track of your financial transactions.This is a vital but often neglected area of business. Smallbusiness owners prefer to spend time on actual sales rather thandoing the tedious job of making journal entries. While starting anew business you should take this boring task very seriously.Up-to-date ledger helps you understand present situation of yourbusiness and plan future informatively. Your new business should be based on something you really love todo. If you are not passionate enough about your business, itwould be difficult for you to maintain the rigorous life styleneeded to be successful in business world. Starting a Business About the author:Nowshade Kabir is the CEO of http://www.rusbiz.com,
a leading B2B portal with facilities like Marketplace, Aggregated
Electronic Catalog and Sales and Procurement Management,
where buyers and sellers come together to communicate,
collaborate and conduct business. More information on
eProcurement and Sales
are available on http://www.rusbiz.com/deal_manage.html.
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