How to Start a Business: Basic Guide

The idea of ​​having your own business crosses the mind of more than one. However, not everyone feels qualified to undertake something on their own due to the challenges and commitments it represents.

Starting a business requires not only financial planning but also structural calculations. This is because the needs of the spaces will not be the same for each employer.

For example, if it is a clothing store, it will require large spaces and at least one warehouse. On the contrary, if what is intended is to set up a restaurant, it is possible that not only the size of the establishment will change but also needs such as the kitchen, storage rooms, bathrooms, and parking, among many other areas.

Next, we will talk about the steps you must follow to start a business and the elements that you must take into account to make it successful.

Steps to Start your own Business

To start a business, you must carry out a series of steps, which we will divide into two main stages:

• Planning Stage
• Execution Stage

Setting up a business can be an easy task if you organize yourself and are constant. It will take a lot of your time as well as extra effort to make it profitable.

Below we leave you a complete guide of the steps you must follow so that you can earn money with your own business.

Planning Stage

As its name indicates, at this stage, we will talk in detail about the planning and organization necessary to start a business.

It is of vital importance since the success of the business will depend on this stage. Why? Thanks to metrics that can be calculated, such as the Return on Investment (ROI), you can know in advance the probability that your project will be profitable and if it is worth investing in it.

Now you may be wondering how to plan effectively. For this, you need to define these points, which will help you establish where to start and what you need.

1. Define your Business Idea

Is there something you like to do or want to specialize in? In general, most people who want to start a business already have some idea in mind and they just need to shape it.

If this is the case, define what category the type of business you want to start belongs to, for example, the food sector such as restaurants or cafeterias, the service sector, and the commercial sector. With this clear, you can take the next step.

If, on the other hand, you want to undertake, but you do not have an idea in mind, you can look around you. There are several types of small businesses from which you can take ideas for your project.

The advantage of small businesses is that they have the flexibility to use pre-designed premises or establishments and adapt them to the needs of the operation. 

These are some examples:

1. Clothing or accessories store 2. Laundries and dry cleaners 3. Grocery stores 4. Hairdressers and aesthetics 5. Coffee shops 6. Fondas (cheap kitchens) 7. Patisseries 8. Bakeries 9. Pharmacy 10. Shoe stores 11. Tailor shops 12. Greengrocers    13. Butchers

There are many small and profitable business options. The important thing is to pay attention to the needs you require to carry it out and look for a site that meets the characteristics.

2. Analyze the Environment to Define the Type of Business

Now, it is important that when defining the turn of your project, you take into account the environment. Have you come across that in the same shopping mall, there is more than one place with the same product or service?

For this point to be carried out, define the location where you would like your project to be and analyze what type of businesses are in the area. Is it feasible to install your business in that area?

It is also convenient to analyze the needs of the area in which you want to start a business. For example, maybe there are no nearby laundries or if you want to start a restaurant, you find that there are several, but they do not serve the same type of food and your project can add variety.

If you already have a place or you are going to start your business from home, you must also confirm that it meets a need of the inhabitants of the area.

3. Market Studies

Perhaps you do not have the necessary resources to carry out a market study that guarantees that your business will be profitable. However, based on what we mentioned in the previous point, you can carry out surveys among the inhabitants of the area, even in surrounding businesses.

Your product or service may also be useful to nearby business owners or employees.

Many entrepreneurs do not have to worry about this step since there are real estate companies —such as Sky Marketing— that have investment lots and macro lots with market studies and suggestions for projects to be developed.

4. Choose the Location of your Business

Once you are clear about the direction of the project and that the area you are interested in is viable continue to choose the exact point where it will be.

In each city, there are better areas than others, and to find the best one for you you must physically visit the ones that interest you. 

If you plan to rent or buy a place to open a physical store, it must meet certain characteristics:

• Be located on avenues or main streets
• The high influx of people and vehicular traffic
• Preferably in a commercial area
• Be accessible

Have the appropriate measures for the service you are going to offer or the product you are going to market.

5. Make a Budget

When we are starting a business, on many occasions, the budget does not fit the plans we have, so our advice is not to get into debt with loans from the beginning.

First, you must define: Buy a place or better rent it? If you have the capital to invest in land in a commercial area like nova city, the benefits are many. For example, the type of land use is already defined. 

Although the land is not as cheap today as it was in our grandparents’ time, there are also opportunities for this generation to acquire properties in installments and with affordable down payments.

If you decide to rent, you will be able to find many well-located premises or land, since this is one of the business ideas carried out by investors to generate income.

Once the above has been defined, write down in your budget the cost of the rent or, where appropriate, the monthly payment of the land or premises. Point out expenses on services such as electricity, drinking water, internet, and advertising.

Knowing your fixed expenses will help you calculate the return on investment and ensure that your business is viable.

6. Establish the Name and Objectives of the Business

Who are you going to sell your product or service to? Establishing the target audience you are going to address will be a necessary step to defining the name of your business; why? Because it is not the same to sell to young people as to older people.

Although many want to sell to everyone, it would not be a wise decision. You must clearly define who your potential customers are and direct your sales and marketing efforts only to them.

The buyer person or ideal client has defined interests and knowing them will be a key piece. The name of your brand must be consistent with the buyer’s persona; a name that is too fresh or youthful may not be to the liking of older people and vice versa.

As for the objectives, determine in advance what you want to achieve with the project, both financially and in terms of business growth.

7. Analyze the Competition

In digital marketing, there is something called benchmarking. This refers to observing the competition and analyzing what works for them. It is not about copying but about being inspired to do something better. 

Analyzing the sales strategies implemented by businesses similar to yours will be the starting point to create your own and improve what already exists in the market.

8. Make a Business Plan

The business plan must include all the above points, it does not have to be extremely extensive, but it must be complete.

Having all the project information in a single document will allow you to better control the progress of the process and detect possible failures or errors and correct or change some details.

This must include a complete marketing plan and consider in the budget if the services of third parties will be contracted for the management of social networks and advertising campaigns, or on the contrary, if you wish to carry them out yourself, you will find a wide variety of online courses.

Execution Stage

The time has come to put everything planned into action. To execute your business plan, we have prepared this list of steps for you:

1. Look for Financing

The ideal when starting a business is to have the resources to make the initial investment. However, circumstances do not always lend themselves to it because the reasons for opening your own business are very varied, from doing it for pleasure to necessity, as is the case of being unemployed.

If you do not have savings or capital destined to invest in your own business, obtaining financing will be the indicated option, as long as it is reasonable and the level of indebtedness does not exceed the expected profitability projections.

At this point, you will ask yourself, where to get the right financing? For this, we have prepared this list with some suggestions:

Banks: They are the most common means of obtaining financial resources. Each bank manages its interest rates, as well as its financing programs for SMEs. Finding the one that best suits your needs will require time and detailed information Financial institutions oriented to SMEs: In addition to banks, there are other entities where you can obtain financing. These focus on small companies and are more accessible than banks, the interest is lower but the amount of the loan is also lower Partners: A partner is a natural person who shares both the profits and the risks of the business. They work with you to grow the project and obtain a percentage of the profits Investors: Unlike the partner, it provides the capital in full or in part in exchange for a percentage of the profits without working together Contests: By contests, we refer to government programs, universities, or other entities whose interest is to promote the creation of new companies. To obtain the financing, you must prepare the business plan and register. If you are selected, they provide you with the capital to start

If you want to know more about the factors to evaluate the risks of an investment, we invite you to read the article we have on this subject.

2. Proceed to the Purchase or Rental of the Premises

In the planning stage, you choose the place with the ideal location for your business. Now proceed to formalize and proceed to buy or rent it.

For this process, we recommend you to have specialized advice in real estate, especially if it is acquired through a third party and not a real estate company.

Buying land with legal certainty will guarantee your investment and provide security to your project, in addition to having the peace of mind that the property has no legal problems and the payment of taxes has been carried out.

In the case of renting land, we have these recommendations for you that it is very important to take into account:

1. Check that the duration of the contract and the renewal are ideal for you Include a clause that allows you to transfer or sell the business in case it does not turn out as expected 2. Ensures the possibility of transferring the contract to the new owner in case of transfer or sale; in this way, you will minimize losses 3. The contract must have clear agreements on construction and improvements that can be made to avoid future problems with the owner of the property

Being sure of all these points before signing the contract will avoid future problems.

3. Remodel and Decorate your Premises

In your budget, you must allocate a part of the capital for this purpose. One of the most common mistakes first-time business owners make is investing too many resources in this step.

Focus on the renovations that are necessary for the operation of your project, and with that as a base, decorate the place with your personal touch and according to the type of business.

We recommend hiring trained personnel to carry out the essential renovations. For tasks that you can do yourself, such as painting and decorating, you can request the help of family and friends who will surely be willing to do it.

4. Install Machinery and Furniture

The machinery and furniture will depend on the line of business. It always points to functionality rather than aesthetics; It is not pleasant, for example, to arrive at a very nice restaurant but with uncomfortable chairs.

As with remodeling and decoration, buy what is necessary to be able to open and function. Over time as you make a profit, you can allocate a part to improve or expand the furniture.

It is always possible to save money and get what you need without investing much; for example: for the restaurant area, suppliers can provide tables, napkin holders, and a refrigerator, among other objects. If it is an office, you can get stationery.

This is common since the tenant obtains the furniture and the suppliers advertise by having their logo on said furniture. 

Another interesting way is to reach an agreement with local artists who are looking for spaces to exhibit their works or products.

5. Find your Suppliers

The next step is to contact the possible suppliers of products or services that you are going to need.

It is not advisable to go for the first one you contact, even if it takes more time, quote and compare prices and quality, this way you will save future expenses.

To find your ideal suppliers take into account these factors:

1. Payment facilities 2. The delivery time of the product or service 3. The guarantees and the duration they have 4. Refund Policies 5. Discounts 6. Experience and reputation

6. Hire and Train New Staff

It’s time to post vacancies and interview candidates for the positions you apply for. For this, there are digital platforms where you can make your requests. Most of them have no cost and are very effective.

It is important to immerse the selected candidate in the mission of the business and that they feel committed to meeting the objectives to achieve the established goals.

One option to lower payroll costs is to hire staff who work for commissions or freelancers. This is recommended at the beginning. When you already have financial stability, you can start putting together a fixed employee payroll.

7. Formalize your Business

Many entrepreneurs ignore this part to avoid paying taxes; however, formalizing your business will give you the security of protecting your assets, in addition to being able to issue proof of payment, qualify as a credit subject and be able to buy and sell without restrictions.

How can you formalize your business?

1. It establishes whether it will be constituted as a natural person or a legal person 2. Determine the type of company or society 3. Register your brand name 4. Submit the minutes of incorporation to a public deed with the help of a lawyer 5. Register your deeds in the Public Registry of Property to obtain your title 6. Choose the tax regime and obtain the taxpayer code 7. Get your operating license

8. Promote and Open to the Public

After all the hard work of planning and execution, the time has come to open to the public and receive all potential clients.

Promote the opening of your new store among family and friends, also in the area where it is located with the opening date and the products or services you will have.

Make your inauguration something special. You can offer special opening promotions on the first purchase, snacks, or a free sample. 

Remember to promote the event on social networks, which provide the necessary tools to reach a large number of people located in the target area.

Final Tips:

We are at a time when entrepreneurship in business has been increasing due to the economic problems left by the Covid 19 pandemic.

Consolidating a business has become a planned goal to which both young and old people aspire.

Summarizing all of the above, we can mention:

Every good decision starts with good saving and planning habits in order to arrive prepared when investing.

In the same way, advice and prior consultation are important to know the most viable options according to the profile of each new investor.

And above all, the environment where the establishment is located must be taken into consideration since property and location are two concepts that must go together to have profitability in the business.

Mostly Asked Questions:

Additionals:

• Tips For Businesses To Preserve Cash Flow And Increase Profits
• How To Use Work Breakdown Structures For Your Business
• The Key Skills You Need To Succeed In Business Analytics
• Run Your Business In 2022: Choose A Virtual Data Room
• Best Startup Visas For Immigrating Business Owners