How to Start, Finance & Operate Your Own Business

You can start a successful business

Many people start new businesses each year, but very few of these companies survive more than a year. Those that do are headed by entrepreneurs who planned their business carefully, and worked hard to carry our daily operations in accordance with their plans. If you'd like to start a business, you'll have to not only start it, but figure out how to finance and operate the business day to day. While it is possible to start, finance, and operate your own business successfully, it takes plenty of hard work, planning, and preparation.

Instructions

Start Your Business

1. Write a business plan. Many people believe that because the idea for a business is all worked out in their head, they don't need to put their plan on paper. Writing down a business plan can help spur new ideas, and can let you see where your plan needs additional work. You can find free business plan templates at the Small Business Administration's website.

2. Form a legal business entity. When starting a business, you can form either a sole proprietorship, a corporation, or an LLC/LLP. The form your business takes early on can have a tremendous impact on the taxes you pay and the protection your business offers. Talk to a lawyer about your plans for help with choosing a business type.

3. Set up tax accounts. You can get a federal tax ID number for your new business from the IRS. Next you will need to set up tax accounts with your state or local county, including payroll, income taxes, and sales tax.

Finance your business

1. Self-finance whenever possible. By using your own money, you aren't burdening your new business with huge debts and interest payments. It is better to start small using your own money than to borrow too much money upfront.

2. Borrow from a bank. You will need to present your completed business plan, and sit for an interview about why you should receive a loan. It is very difficult for new businesses to get a bank loan, however, so you will likely need to offer collateral or a personal guarantee.

3. Look into SBA loans. The U.S. Small Business Administration offers a variety of loan programs for new businesses. The requirements are often much less stringent than those of banks, and you will often receive flexible payment terms and low interest rates.

Operate your business

1. Market to your core customers. An old business adage states that if everyone if your customer then no one is your customer. Focus on your niche and concentrate on marketing and selling to them.

2. Build relationships. A lot of business success is tied to personal relationships, including those with suppliers, creditors, and customers. Focus on maintaining strong relationships to help your business succeed in the long term.

3. Review your business plan periodically. Many business owners put a lot of time into a business plan, then never look at it again. Review your plan twice a year to make sure you are running your business the way you planned. If something you're doing is working, add it into your plan. If something isn't working, get back to basics and review how why things didn't go as planned.

Resources

• U.S. Small Business Administration