1. Evaluate your goals
Begin by asking yourself basic questions about your idea to start a new business:
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- WHY? Explain what is the purpose of your business or what need it fills. (You should be clear enough on why you’re starting your business that you can describe the purpose in one sentence.)
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- WHAT? What is the product or service you’ll be offering?
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- WHO? Who is your target customer base or audience? You should be specific in describing such demographic characteristics as age, gender, income level, location and other factors.
- HOW? Describe your plan for developing your product and delivering it to your customers.
TIP: Feel free to brainstorm on a business name at this stage, but you probably don’t want to get too attached to anything now. Later, you can consult with a marketing professional to help you decide on a name, website domain and tagline.
2. Start writing your business plan
It’s never too early to get started with your business plan. It will serve as a guide for every aspect of your new organization, a road map that takes you from a simple inspiring idea to a successful enterprise. You can find business plan templates online, but be sure your plan answers the Why, Who, What, How questions above. In addition, you should include market strategies, competitive analysis, design and development, operations and management as well as financial data. Business plans take time to complete, sometimes as long as a year. Consider your business plan a “living” document. As you move through the process and gain more knowledge, you’ll make adjustments and expand on certain sections.
3. Conduct market research
Market research is critical to determine whether your earth-shaking idea really has legs. It examines customers’ behaviours and economic trends to help you hone your business strategy. This research looks at product demand, demographic data, market size, economic indicators, location appeal and pricing. Employ competitive analysis to determine how to zero-in on a market advantage. You can gather this information through existing sources or by getting answers yourself by conducting surveys, focus groups and interviews of potential customers. Through careful market research, you’ll be able to figure out your target customer base and how to develop products and services that will sell. Marketing research can also help you determine the name of your business, design colour schemes and other marketing issues. TIP: Include the results of your research in your business plan. Make adjustments to your why, what, who, how answers if necessary.
4. Business structure and logistics
At this stage, you’ll need to make some important decisions that define your business: Business name and domains—If your marketing research was done well, you should by now have chosen a great, unique, business name. Purchase website domains if you haven’t already secured them. Domains are inexpensive, so buy as many as you need to ensure that potential customers find you online. Business structure—Decide what kind of structure your business needs to have, such as a sole proprietorship, partnership, limited liability company or LLC, a corporation – there are different kinds of profit and nonprofit corporations – or a cooperative. Business location—You’ll not only have to decide where your business headquarters is located but its style of operation, whether that’s a retail outlet or a home office. In addition to your online presence, will it also be brick-and-mortar? If so, you’ll need to think about such issues as foot traffic, parking, ordinances, utilities, crime, convenience and nearby competition. Once you’ve figured out those two key components, take care of these red-tape tasks:
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- Register your busines
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- Get federal and state tax IDs
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- Apply for a business license and permits
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- Open a business bank account
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- Apply for appropriate trademarks, copyrights, or patents
- Purchase insurance policies
TIP: Consider hiring an attorney to make sure you’re setting up your business using the right structure and that you’ve taken care of all legal requirements.
5. Get funding
The first step to finding funding is to figure out just how much money you actually need. Therefore, your business plan must contain a budget for operating for one year, using a spreadsheet. Include every expense you anticipate, including costs for overhead, production and marketing. Once you have your yearly budget, you can look to a plethora of options for how to fund your business. Some examples include:
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- Self-funding
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- Borrowing from friends and family
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- Small business loan or grant
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- Online crowdfunding campaign
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- Angel investors (individuals who provide capital in exchange for convertible debt or ownership equity)
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- Venture capitalists (for large-scale projects)
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- Accelerators (for short bursts of funding)
- Incubators (sustained mentorship network)
6. Design prototypes and get feedback
Work with designers and engineers to create product prototypes. If your business is service-oriented, it may include designing proprietary products used only by your employees in the field. Then test your designs by setting up focus groups or scenarios in which randomly chosen individuals can put your product to the test and complete surveys about their experience. If you’re selling a service, enlist the help of individuals who agree to try it out for free and then give anonymous, unbiased feedback.
7. Put together your leadership team
Put together the team of people who will make your operation hum. It could include partners, employees, contractors and consultants. Your team should decide on an accounting system and develop a plan for manufacturing, choosing vendors and hiring workers and independent contractors. It should also establish protocols for communication and reporting and responding to harassment and other complaints by employees. Much of this planning will determine what kind of culture your company fosters.
8. Develop your product
Here is where you see the fruits of your efforts. Once you have finalized the design of your product, make the necessary purchases to produce. That could mean setting up a manufacturing process to create a physical product or installing computers for the purpose of creating software. Hire specialists, managers and workers necessary to make the operation hum. Develop policies for quality control and safety.
9. Get the word out
What do you need to sell your product? How will you get the word out so your target audience gets the message? What social media platforms should you jump on? What kinds of ads will sell your product and where should they appear? How can you appeal to the media so that the public learns about what you’re offering? These are the kinds of questions you’ll need to answer to make sure you’re connecting with people who are your potential customers through sales, marketing, advertising and public relations.
10. Plan for growth
We’ve all heard stories about wildly successful companies that lose sales or even go out of business because they took off too fast and were essentially unprepared for success. You’ll need to look ahead and make decisions so that you’re not caught off-guard when your business takes off. Such plans could include:
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- Study market trends
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- Test new ideas
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- Acquire another business
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- Grow into new markets
- Expand product lines and services
Small to medium-sized businesses make up 98% of all businesses in Canada. This means that in order for you to enter the fray, you’ll want to take proper steps to make sure that you offer products and services that people want to purchase and you know how to get it to them.
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