Basics for Starting a Small Business

• they're turning something they've always wanted to do into a business;
• they have an idea and the opportunity to make money from it;
• they have lost their job and are continuing to work in their field on their own.

In all three of these cases, the people involved have given a lot of thought to the product or service they are going to sell and have also looked at how they are going to sell it and to whom. What they usually haven't thought through is the structure of the company, the financing, management, business plan, licenses etc. - in short, the formalities of their project.

Ideally, of course, you'd go about this completely differently. You'd analyze yourself in terms of strengths and weaknesses. You'd take your strengths and look at what's needed in your community or elsewhere. You'd match what you enjoy doing and what you do well to the need for a corresponding product or service. You'd look at whether you could best deliver such a product or service as an employee or as an independent, small business. And that's how, if it made sense, you'd arrive at wanting to start a small business.

Once you had decided, in this way, to operate a small business, you'd look at which of the basic business structures were best suited for the delivery of the product or service you chose. Then you'd do a business plan which would be the blueprint of how you would expect the business to run for the first few years. You'd use the business plan to get adequate financing and the business plan would detail licensing requirements and management structure. This is how you're supposed to do it and I don't know of any small businesses which have been set up this way. Mostly, the owner has simply decided to start a certain kind of business and has gone from there.

Still, no matter how you start your business, there are going to be certain requirements you'll run into. This article on the smartbiz site gives more details on some of the formalities and an overview of what you should watch out for.

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