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Business Start-Up
Starting and successfully managing a business takes motivation, knowledge, skill, research and planning. The City of Ontario's resources provide businesses with tools to proactively shape their future.
With essential resources readily available, considerations for business start-up include:
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DETERMINE THE TYPE AND LOCATION OF THE BUSINESS
Assess business knowledge and strengths in considering the type of business to start. Identify the niche the business will fill, how it is practical and meets currently unmet needs. Become aware of the competition and define business advantages over existing firms. Explore avenues for creating a demand for the business. Determine the appropriate staffing and overall business size to optimize efforts.
Location plays an important part in the success of any business. In the assessment process, consider business needs and factors such as transportation access, high-traffic and visibility, parking, etc.
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CONSIDER BUSINESS STRUCTURE
A business may be conducted through a variety of organizational structures. A business structure is generally chosen for liability and/or tax reasons. It is important to seek the counsel of a legal or financial advisor for the status best suited to the business's operations.
Briefly explained, common types of business structures are:
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Sole Proprietorship
Generally easy to set up and maintain. There are few tax benefits; owner is personally responsible for all business debts. |
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General Partnership
Easier to establish and register than a corporation; filing tax returns is generally easy. Partners can be personally liable for business debts and liabilities such as a legal judgment. |
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"C" Corporation
Shields personal assets from business debts and liabilities and offers tax benefits. Can be complicated and expensive to establish and maintain. |
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Subchapter "S" Corporation
Benefits corporations that want a simpler tax structure that passes through income to owner. Many of the tax benefits now are available through Limited Liability Company (LLC) with fewer restrictions. |
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Limited Liability Company - LLC
Provides benefits of corporations but less complicated to set up and maintain. |
For more information about the benefits of these organizational structures- view this website: www.quickmba.com/law/org
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PREPARE A BUSINESS PLAN
After carefully considering the business, prepare a business plan --- a formal document specifically explaining plans to develop a financially successful business. Preparation of a business plan forces consideration of nearly every aspect of the business. It serves as an assessment tool providing the essential opportunity to reaffirm the viability of business start-up ideas. As the business grows, the business plan helps to track details and ensure the business is progressing as intended.
Briefly outlined, common business plan content includes:
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Introduction
Give a detailed description of the business and its goals. Discuss the ownership of the business and the legal structure. List the skills and experience used to start the business. Discuss the advantages the business has over competitors. |
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Marketing
Discuss the products and/or services offered. Identify the customer demand for these products and/or services. Identify the target market, its size and locations. Explain how the business's products and/or services will be advertised and marketed. Explain the pricing strategy. |
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Financial Management
Explain the source and the amount of initial equity capital. Develop a monthly operating budget for the first year. Develop an expected return on investment and monthly cash flow for the first year. Provide projected income statements and balance sheets for a two-year period. Discuss the break-even point. Explain the personal balance sheet of the owner(s) or partners and method of compensation. Discuss who will maintain accounting records and how they will be kept. Provide "what if" statements that address alternative approaches to any problem that may develop. |
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Operations
Explain how the business will be managed on a day-to-day basis. Discuss hiring and personnel procedures. Discuss insurance, lease or rental agreements and issues pertinent to the business. Account for the equipment necessary to produce the products and/or services. Account for production and delivery of products and/or services. |
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Conclusion
Summarize business goals and objectives, and express the commitment to the success of the business. |
Once completed, review the business plan and revise accordingly. The business plan is a flexible document that should change and evolve as the business grows.
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