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Eager to start? Don't skip these beginning business steps

Posted on:  ,  | Author: ATB Business & Agriculture

Running your own business is one of the most rewarding things you will ever do. Not only does it give you a great sense of independence, but it also offers a sense of freedom and excitement that other careers may not provide, and enables you to challenge yourself each and every day.

However, the path of an entrepreneur also comes with its own unique challenges. For that reason, it’s important that you carefully prepare for every aspect of your business before you launch.

Business owners wear many hats. When you’re at the helm of a company, you must have a good understanding of marketing, finances and all the legalities involved with owning your own business. This article is designed to give you the tools and advice you need to put the proper planning and foundations in place to create a long-term, successful, and profitable venture.

Does your business concept hold up?

As a business owner, you need to have drive, enthusiasm, and entrepreneurial spirit. But there’s one more crucial ingredient you need if you want to build a successful venture: a winning concept. Before taking the plunge and starting your own company, it’s important to determine whether your business idea measures up. Ask yourself: does my concept provide a solution to a problem? Does it fill a gap in the market? Is it the “next big thing”? Have I made a cheaper or better version of an existing product or service? Motivation and sheer determination is important, but will only get you so far.

Researching your target market

A company is considered a success if it makes a profit, yields a good return on investment and maintains a healthy balance sheet and cash flow. Conducting market research will allow you to check the viability of your business and will also help you determine:

  • Who your target customers will be
  • Whether there is a need for your product or service
  • How much people are prepared to pay for your offering
  • Who your competitors are
  • Whether there is room in the market for you

For more information on conducting market research, check out canadabusiness.ca .

Choosing the right business model for you

So you’ve determined that you have a viable business idea. You’ve conducted market research and have realized that there is a definite need for your product or service. The next step is to choose the right business structure for your venture.

There are three types of business model: incorporation, sole proprietorship or partnership, and each one comes with its own set of advantages and disadvantages.

Incorporation:

An incorporated business is considered a legal entity that is separate from its owners and shareholders. This means that, as a shareholder, you will not be personally liable for most of the obligations, debts or acts of the business—provided that you don’t sign personal sureties for the corporation. There are many advantages of having an incorporated business, including limited liability, lower taxes, and easily transferable ownership. Disadvantages may include increased legal requirements, higher accounting costs, and a greater disclosure of financial affairs.

Sole proprietorship:

As a sole proprietor, you would be fully responsible for all debts and obligations related to your business. Similarly, any profits made would be yours to keep. Sole proprietorships are simple to set up and bookkeeping is usually straightforward. However, as a sole proprietor, you will be taxed as an individual and the business will be terminated in the event of the sole proprietor’s death.

Partnership:

In a partnership, both partners combine their financial resources and put them into the business. Partnerships are easy to set up and are an attractive to many new business owners as the financial burden of starting a company is shared. However, both partners are jointly and severally liable and the partnership is automatically dissolved if one partner chooses to leave.

It is advisable that all partners in a business consult a legal professional to draw up a formal agreement before entering a partnership. This protects the partners in case of a disagreement or dissolution of the business, and also outlines how the partners will share the company’s profits.

For more help on launching your business, check out our Business Guides and Templates.

 
 
 

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