How to start a business

When a person decides to open his business, he is faced with a huge number of questions. Is there a chance of success? What is a business plan and how to write it? What to choose: PI or LLC? How is it easier to pay taxes? We tell you what a beginning entrepreneur needs to know and where to start if you want to start your own business.

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Rate the viability of the idea

So far you only have an idea, so it’s worth starting from. To assess whether to start a business or not, answer yourself a few questions.

  • What do I offer to customers? 
    Try to assess in an unbiased way whether your product or service is needed by customers and how it will differ from similar products and services. Be sure to look at what your competitors are offering, and appreciate what they do well and what is not very good – try to find your niche in the market.
  • Who will I offer my product? 
    Find your target audience – those who may be interested in your product. Find out what their obvious or so far hidden need it will help to satisfy. You need to introduce your potential buyer: gender, age, marital status, social status. Ideally, you also need to understand the problems and desires of the client, the specifics of his behavior and character, to imagine situations when he may need your service or product. This will help you at all stages – from the choice of premises to advertising and promotion.
  • Where will I sell my product? 
    Perhaps your audience is used to buying everything on the Internet, or maybe your product needs to be touched or tried on – then you will need a room for a store. Where should he be – in the center or in a residential area? Think maybe you still need a warehouse or office. If you are going to sell goods exclusively online, then think about delivery. Delivery of jewelry and delivery of swimming pools – various services.
  • How much is it? 
    Estimate, at what price you will sell the goods. Estimate the approximate cost of the goods, analyze at what price your goods will be ready to buy. Remember that you must cover all expenses and make a profit. At the same time, it is important not to make an excessively high mark-up on your goods or services, otherwise there will be no demand and it is possible to burn out. Focus on the market.
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If you end up with a business idea as a promising and profitable one, test it with your target audience. After the first tests, your idea may be transformed a little more.

The result of this initial analysis should be a business strategy that will help you turn the idea into a plan of concrete actions.

Stepan all childhood was fond of artistic forging. Now he decided to open a silver jewelry shop. Most of his audience is girls. He arranged a survey in his social networks among friends of girls, to find out if they like his sketches, how much they are willing to buy such products and whether they will follow them to the sleeping area. As a result, it became clear that at first there would be enough online store.

Write a business plan

After you have made a general strategy, you need to calculate everything in detail. This will help you a business plan. You will need this plan yourself, and your business partners, and potential investors or lenders.

The business plan should contain a detailed description of the product with options for its further transformation, market analysis with a description of all groups of competitors and the characteristics of potential buyers.

Without numbers, a business plan, of course, will not be convincing. You need to understand in advance how profitable the business will be. Therefore, the business plan should include several mandatory components:

  • production plan and calculation of the cost of goods or services;
  • plan promotion and cost estimates for advertising and other types of communication with customers;
  • an organizational plan and assessment of employee salaries, as well as external (for example, courier) services;
  • a financial plan that takes into account all sources of financing and revenues, as well as everything, including one-time expenses and taxes.

As a result, the business plan should show how much money you need to launch a project, when it comes to self-sufficiency, after what time it will be possible to return the invested funds and how much profit you can count on.

In order to draw up a business plan, you can use, for example, the form that Vnesheconombank has developed.

Think about attracting investment

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Now you can think about how to attract money to your business. This can be done in different ways:

  • Apply for state support
    If your business is important for people from your region or even the whole country, the state can help you with guarantees , cheap loans or loans, preferential leasing and rent.
  • Collect money with the help of crowdfunding
    If you are sure that your project will be interesting and useful to a large number of people, you can try to reach them directly through special Internet sites. The crowdfunding format will depend on the type of your business.
  • Attract investors
    Private investors sometimes invest in start-ups, most often in technology. To search for venture investors, too, there are special Internet sites.

Register a business

You can conduct business as an individual entrepreneur (IP) or as a legal entity (usually an LLC).

  • IP is suitable for those who have a small business – for example, a small store or production.
  • Ltd. is a company that you can open yourself or with partners. Suitable for those who are planning a business with high turnover, and those who will transfer large sums by bank transfer.

Each form has its advantages and disadvantages. Read more about this – in a comparative material about the LLC and FE.

Choose tax form

  • General taxation system. Suitable for those who need VAT (value added tax, in Russia it is 20%).
  • Simplified tax system. Suitable for small businesses.
  • Patent. Suitable for those who are easier to pay a fixed amount than to deal with documentation.
  • A single tax on imputed income. Suitable for those who have a room for business (but not in Moscow). Not suitable for those with more than 100 employees.

For information on how the forms of taxation differ from each other and how to choose the one that suits you, read our article .

Take care of the details

Once you have decided on the main issues, you still have to deal with many details.

  • Open a bank account in the bank .
  • Create an online cashier. By law,  many entrepreneurs (mostly those engaged in trade) were supposed to start using the online cashier before July 1, 2018. But some businessmen were given a reprieve until July 1, 2019. On the tax site, you can take the test “ Do I need a cashier? “. This will let you know if you can take advantage of a deferment or if you need a cashier now.
  • Check the compliance of the premises with fire safety requirements.
  • Clarify sanitary requirements if you plan to work with food.
  • To study the rights of consumers .
  • Check the compliance of your product with state standards .
  • Find out whether you need to certify, declare or register goods if you import them from abroad (lists of such goods are on the websites of certification companies).

If you open a business, remember

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  • You should start by evaluating the idea and drawing up a general strategy for your business.
  • If the idea is worthwhile, you need to write a detailed business plan. It will become your main reference point for the first six months or a year. Then you may need to adjust it.
  • Find sources of funding.
  • Decide on a convenient form of doing business and reports before tax
  • Pay attention to details. Connecting the online ticket office, fire safety and certification conditions are subtleties that need to be considered in order not to pay fines. If you can not figure out the nuances themselves, consult with a more experienced entrepreneur who works in the same field as you. Or consult business consultants to help resolve difficult issues. Consultants can offer both partial and full support of your business.

The tasks of any novice entrepreneur are worth a lot. But its business, which will bring you money and satisfaction, is worth it.

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