How to Start a Business – Steps – Tips
Table of Contents
How to Start a Business
Start a Business: is the process of founding a company or improving it with the ultimate goal of generating income. It often involves risks and a lot of uncertainty, but it is also an opportunity to overcome those challenges and learn how to manage various aspects of a Start Business operation. From marketing and accounting to logistics and beyond, entrepreneurs know all facets of a business.
However, this is not an easy task. The data reveals that 90% of startups fail: 21.5% in the first year, 30% in the second year, 50% in the fifth year and 70% in the tenth year.
Despite this discouraging figure, becoming an entrepreneur is still very attractive. Like other high-risk activities, it attracts adrenaline-seekers who feel stimulated by this challenge far from seeing it as a warning.
After all, an entrepreneur is a risk-taker; he knows how to identify a business need and start MVP development to satisfy it. As Howard Stevenson, a professor at Harvard Business School, puts it, “Entrepreneurship is the pursuit of opportunity beyond available resources.”
Entrepreneurs dedicate time, energy, and resources to create a unique offering that sparks consumer interest. They go ahead despite any limitations (for example, lack of budget, working capital, production facilities, etc.).
And let’s not forget that every risk has its reward. Starting an industry is one of the most creative business activities, and it can bring a lot of satisfaction on a personal level.
Trends and Statistics for Entrepreneurs
In general, one thing is sure about the entrepreneurial trend: it grows bigger and bigger. According to NEO magazine :
In the case of Spain, despite the situation experienced by the COVID-19 pandemic, entrepreneurship also grew:
Here are some interesting facts:
While skills and experience are critical to the success of a new business, ignoring market needs and lack of capital are two of the biggest reasons a business can fail.
Why do new Businesses Fail?
More than 40% of entrepreneurs in 35 out of 50 countries have a common motivation: making a difference globally. ( Hub Spot )
Entrepreneurs seek to achieve a more significant positive social and economic impact by resolving social problems or needs. ( The Financier )
70% of small businesses are owned and operated by one person. ( Review42 )
33% of these business owners work about 50 hours a week. ( Business Efforts )
Start a Business
Some new ventures do not have a regular budget. Although 58% have a specific annual budget, another very relevant group (42%) must request ad hoc resources to function each year. ( IDB )
The six highest levels of TEA (Total Early-stage Entrepreneurial Activity) are found in Latin America and the Caribbean. ( HubSpot ) _
As a result of COVD-19, Latin America experienced a total growth of 230% in electronic commerce, with Peru and Mexico standing out. ( statist )
Despite receiving less funding, female-founded startups generate twice the profitability and have proven to be better payers. ( Forbes Central America )
How to Start a Business step by Step
- Find a good business idea.
- Determine the legal Framework of your company.
- Choose and register your business name.
- Make sure you have the proper licenses and permits.
- Decide what your mission and vision statement will be.
- Get Financing for your new Business.
- Write the marketing plan.
To create a company, some initial steps must be followed. Let’s analyze each of them.
1. Find a Good Business Idea
Although many people consider that finding a business idea is secondary and that the main thing will always be its execution, starting with a solid argument is critical for your project to succeed and come to fruition. If you still don’t have a good idea, you should first look for it.
Good Start a Business idea usually appears after analyzing the market where you would like to develop your brand; however, in many cases, attractive ideas arise simply by looking carefully around us and relating our knowledge, competitive advantages, and situation with our profile.
Logically, more than one idea occurs to you! So you must subject them to negative scenarios and validate them with friends and colleagues who know the matter. Contrary to popular belief, hiding your ideas doesn’t turn out to be a good idea; ideally, you get feedback from different angles to enrich it. Anyway, one day you will have to make it public.
2. Determine the legal Framework of your Company
Moreover, You need to decide the type of Business you want from a legal perspective. This could change as your company grows. The most popular options include:
Sole proprietorship. In a company constituted by a single individual, who is solely responsible from the legal and tax point of view. While this option is easy to set up, it can be problematic when raising funds, as it involves asking financiers to invest in an individual rather than a company. In addition, the owner is solely responsible in case of debts or losses.
Limited Liability Company (SRL). SRLs are commercial companies with a certain number of partners. These are more difficult and expensive to form, but they have some tax advantages and protect their owners from being solely liable (hence their name).
3. Choose and Register your Business Name
Selecting and registering your business name may sound like fun, but it’s a paper-intensive legal process that could have significant repercussions.
If you start an LLC, your name will automatically be registered when you register your Business with the state. First, do a trademark search; in Mexico, you can do it in the external consultation service of the IMPI, and in Spain, you can verify this information in the portal of the Spanish Patent and Trademark Office. This is important because you must confirm that the name you want for your brand is available. You can register your name and logo for approximately 300 USD.
4. Make sure you have the Corresponding Licenses and Permits
You have to make sure you have all the keys and licenses to operate legally. You will need a sales permit if you sell “tangible goods” (meaning physical products). This will enable you to charge sales tax to your customers. In some countries, this permission is also required for companies that offer services.
Get advice on the government’s economy page and the website of the tax collection agency corresponding to your country. Indeed, there you will also find other resources and valuable tools for the confirmation of your company.
5. Decide what your Mission and Vision Statement will be
What is the function of your company? How do you plan to make the world a better place? The mission and vision will answer these questions.
And also, This step will be critical in your marketing strategy. However, These brands with a clear identity and a vital mission and vision produce more authentic and relevant content that effectively communicates their core values. If you need inspiration, check out the websites of your favourite startups. What is your mission? How do they share their vision?
6. Get Financing for your new Start a Business
However, Those who have found one or several companies will tell you that there is always money for the relevant projects. And also, If you have valuable ideas, execute them effectively, and communicate your purpose, you should have no problem getting funding. But if you lack these essential qualities, not all the money can help you.
Instead of worrying, focus on determining which financing strategy would be the most suitable for your Business. Believe in how you can present the charge to your clients and potential investors. Take a look at the most common options: