Those looking to launch a business venture often find themselves with a shortage of quality information on how to do that. For ambitious entrepreneurs that are ready to get started, this article will explain what needs to be done before opening a business.
Venture capital is divided between seed capital and general venture capital. Most businesses start with seed capital, which aims primarily to help innovative businesses prove their concept and develop early partnerships. Once the proposition for success has been further substantiated, the next step is to get venture capital. Typically, seed capital provides less than a hundred thousand dollars in financing while venture capital can offer more than one million.
- Do quality market research.
Before opening the company doors, entrepreneurs should aim to engage in substantial market research based on high-quality information. First, several days should be spent doing general industry research from reputable information sources. Next, do a total evaluation of competing firms to find their strengths and weaknesses. The general state of the overall economy should be carefully evaluated as well. Using this information, attempt to find under-served needs and any "gaps" where your venture can add value. Businesses that begin by finding a purpose through this technique will be much more likely to succeed.
- Find partners.
After deciding where you want to go, the next step is to achieve buy-in from potential partners. No person has enough knowledge and manpower to completely start alone. Venture capitalists and banks will be unlikely to work with individuals that don't have the backing of others. Therefore, aspiring entrepreneurs should get in touch with former associates from school, past jobs, or social groups. You should aim to work with individuals that possess knowledge in a particular field, have a good education, are socially intelligent, and are driven to succeed.
- Raise capital.
Once partners have been found, the next step is to raise capital. This can come in several forms, either from a bank or venture capitalist. For businesses primarily based in management expertise, bank financing can be appropriate. Most banks will want to see a formal business plan, ask for collateral, and will require personal guarantees.
- Prepare yourself.
Before launch, those involved in new ventures should be prepared for stress, long hours, and even temporary financial hardship. Many entrepreneurs begin with a vacation, spending extra time with the family, or starting a workout routine. Staying motivated and grounded is critical to success.
- File Papers
Once all of these steps have been completed, the final step is to actually file for an LLC, S-Corp, or general partnership. In most states, this process will cost $100-300 and is typically painless. After being approved, immediately draft articles of incorporation, an operating agreement, and open a bank account. Once all of this is completed, capital can be vested and business operations can begin. It is generally recommended that entrepreneurs work with an accredited attorney to complete this critical process.