Taking a business idea and transforming it into a tangible enterprise is both an exciting and daunting task. The following checklist outlines the critical steps to provide a company with the necessary legal, financial and practical foundations for growth.
- Select and Register Company Name: A company’s name, as well as any logos, should portray the desired image to customers, finance providers and other parties. Trade names need to be registered through the appropriate local systems and a search should ensure the name does not infringe existing registrations. Online businesses provide domain name search and registration services.
- Determine Legal Form of Business: The four basic forms of ownership are: Sole Proprietorship, Partnership, Corporation, and Limited Liability Company. The optimum choice will depend on many factors including the size of the business, tax considerations, administrative and reporting requirements, liability issues and profit distribution aims.
- Prepare a Business and Marketing Plan: A well-researched and comprehensive business plan represents a critical document, both as an internal roadmap and a prospectus for raising capital. The plan should include detailed industry, market and competitive analyses as well as credible financial projections. Management need to take ownership of the plan, but tools including software packages and outside consultants can help with its preparation.
- Establish Key Professional Relationships: This can include selecting a bank, an accountant, a lawyer and business consultants. The service provider should represent a good fit with the business’ needs and demonstrate experience with the company’s industry and stage of development.
- Fulfill Legal Requirements: A company needs to meet all relevant laws and regulations for operating in each locality in which it conducts business. Requirements include, but are not necessarily limited to, labor laws, tax registration and reporting, business registration, licenses and permits and patent and copyright regulations. Local business resource centers as well as legal and professional advisors can provide specific information.
- Raise Financing: The company’s financial projections will outline the size and timing of capital requirements. For a start-up, funding sources may include founders’ savings, bank loans, personal contacts, government and small business program loans, individual or angel investors, and venture capital firms. The scale and focus of the business together with management credentials will determine available financing options.
- Locate Premises and Acquire Supplies: A company need to address all practical issues concerned with the day-to-day running of the business. This includes suitable office or production space, equipment and supplies.
- Establish Reporting and Management Systems: Appropriate risk management procedures, such as back-up systems, and insurance arrangements need to be in place. It is imperative to institute formal recordkeeping procedures including financial management reporting systems.
- Hire Employees: If the start-up requires additional personnel, the entrepreneur needs to address selection and hiring, training and development, as well as human resources policies, procedures and recordkeeping.
Addressing the above tasks at the outset, as opposed to as the business evolves, will lead to greater efficiency in terms of time and resource management at this critical stage of business development. Conversely, failure to prepare can lead to costly mistakes and missed opportunities.