How To Start A Business

A business plan is important because it will serve as your guide in making major decisions for your business. More importantly, this document is a basic requirement when applying for business loans or business lines of credit.

An efficient business plan should clearly define the type of business you own, the products and services you offer to the market, your target market, as well as your financial projections. Keep in mind that a potential lender can approve or decline your business loan application based on how sound and promising your plan is.

Determining Your Business Structure

In registering your business, you should first define the type of entity you want to establish. The most common business structures are Sole Proprietorship- a business owned by an individual; Partnership- a business owned by two people or a group of people; Corporation- a business owned by shareholders; Limited Liability Company or LLC- a business that is both a corporation and a partnership; a Non Profit Organization; and a Cooperative.

Take note that each type of entity follows its own set of rules with regards to liabilities and taxes. You can also change your business entity from the one you initially registered as your business grows. For instance, you may start as a Sole Proprietorship and later on declare it as a Partnership, Corporation or LLC. Check out www.business.gov for a list of business registration locations in US States.

Preparing Your Business Funding

Some people may excitedly plunge into a business, filled with hope and expectations. But without sufficient preparation, the business is doomed to fail. For instance, it might take a few months to a year before you can truly enjoy profits from your business.

Within that span of time, do you have other means of income or savings that can support you or your family? If you are presently employed, you should take things one step a time before deciding to quit your day job and focus on your business.

Many successful business owners today were able to fund their businesses by acquiring business loans. If you have a property that can be used as collateral, a secured business loan is a good option especially if you need a large amount of financing. However, you need to be able to submit all prerequisites or paperwork including your business plan, business licenses and permits, financial statements, and business loan proposal.

Some small business owners may also get a business credit line or a business credit card to provide back-up for their monthly expenses. A business credit card is technically easier to acquire than a business loan and can be used for building your corporate credit history. You just need to make sure that your chosen business credit card company reports payments to major business credit trackers like Dun & Bradstreet.