Starting a business, however small is no easy task. It involves a lot of procedure and that is why, a lot of people balk at the idea. So, what are the prerequisites that are mandatory when you have a start up in mind?
Have a sound business plan
It is the first phase of starting your business. An entrepreneur has to understand what exactly he is going to do, before starting the business. So, have virtual business models that detail finances, operations, supply chain, marketing etc.
Get hold of funds
Whether you intend using your own money or borrow from other sources, have it ready. Be realistic when you build the financial models. Take into consideration every single factor that can affect your finances.
Know your customers
Your idea might be great. But it is useless if there are no customers. Where from does the moolah flow in? Research on potential customers and learn their habits. What could you possibly offer them that they would switch to your product/service?
Christen it
Get a brand name. Think about it and come up with a name. A lot of people tend to spend too long trying to come up with the perfect name for the company. Don’t make that mistake. Do not put off your startup idea because of this. A name is mandatory for any legal/administrative purpose. You can always have multiple product names, brands names under your company.
Get your Employer Identification number
Get an EIN. It is the federal tax number that is used to identify your business. Research on EIN. It takes minutes to get one. It’s free; you can apply for it online and helps eliminate the risk of identity theft.
Register your trade name
This is done at the local administrative office. This is an easy process but it requires going there in person.
Get a business license
Your EIN and your Social Security Number need to be furnished to get a business license. Also necessary for this is an estimated gross annual receipt. Ask your locality if you need other permits. Every locality has different requirements.
Get a business bank account
A business account is of utmost importance. Using it for all business transactions eliminates the possibility of getting into trouble with the IRS. Furnish all your details- EIN etc. when you open a business account.
Set up an accounting spreadsheet
Have a very simple financial accounting system where you can record inflow and outflow of money. You can worry about the complex ones later on. Learn basic bookkeeping and manage it.
Understand employer responsibilities
If you are hiring employees, learn about what goes into being an employer. There is a lot of fine print and it is prudent that you understand the basics.
Crisis Management
Have Plan B/Plan C/Plan D ready. Hypothesize scenarios where your business does not go the way you want it to. And have rescue plans ready. Prepare for risks. Learn to adapt to newer market conditions.
And now, you are all set to become an entrepreneur. Good luck!