Starting a Business: The Basics on How to Start a Business (2020 Update)

Starting a Business: The Basics on How to Start a Business (2020 Update)Photo Credit:

We have received a few queries and questions related to starting a business and we have decided to write a post that highlights the basics of starting a business.

If you are wondering how to start a business then this post is for you.

The information we will share in this write-up does not cover every aspect in detail – if it did we will have to write an entire textbook – but nevertheless it is pivotal to every new business no matter what magnitude the business initiative falls in.

To begin we will outline the “Entrepreneurial Process” to establish the basic steps on how a business moves through its relevant phases.

The Entrepreneurial Process:

  1. Identify and Evaluate The Opportunity
  2. Develop The Business Plan
  3. Determine The Resources Required
  4. Start and Manage The Business

As you can see starting a business is the very last step in the process, which is a significant factor because it is evidence that there needs to be a process of planning before a business can open its doors.

But every step in the process plays a role or contributes to the final phase which is starting the business enterprise. Now, let’s scrutinize each step in the process.

Identifying and Evaluating The Opportunity

The opportunity itself could be a gap in the market or could be an innovative idea that is marketable.

To establish the marketability or the market potential of an idea you will have to perform two extremely critical studies:

Feasibility Study: A broad examination of the potential of the idea. The entrepreneur will primarily focus on his/her ability to pursue the idea.

Viability Study: This more of an outward study that examines the idea in detail and analyzes the market to evaluate whether or not the idea possesses potential for profit at that specific time (window of opportunity).

Developing The Business Plan

If the opportunity proves to be viable then the next step will be to develop a business plan.

Developing a business plan is critical to help focus the business and its activities toward a specific direction.

The plan will force the entrepreneur to analyze, research, and evaluate all aspects of the business including the resources that will be required.

The plan will focus on all functions such as financial, operational, and marketing functions.

Determining The Resources Required

The formulation of the business plan will provide the basis to completing this step in a more in-depth manner.

A cash-flow projection which is usually formulated during the business plan creation will aid in determining the resources required.

ALSO READ: Optimizing Your Costs [Business Lesson]

The resources are made up of human resources (employees), financial resources (capital), physical resources (equipment/building/machinery).

There are also other intangibles such as patents, trademarks and other legal obligations that need to be considered and decided upon.

Starting And Managing The Business

Once all the planning is complete, and the start-up capital is acquired the business can begin operating in accordance to the plan stipulated in the business plan.

Remember, that the location of the business would have already being decided upon during the planning process as well.

The new business will often begin operating on a small scale. But the basic management activities of planning, organizing, leading, and controlling will still be implemented.

It is clearly evident that starting a business requires detailed and thorough planning.

These initial steps are vital to ensure the success of any business venture.

Pursuing any venture blindly is a recipe for disaster.

The knowledge on how to start a business isn’t as complicated as it may seem and you should not be intimidated by the overall process.

If you have a great a idea then kick-start a business is the obvious next step to transform your idea into a profitable venture.

As you learn how to start a business and when you finally start the business the best advice we can offer is – Enjoy The Ride!