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What Should I Consider Before I Start a Business?

Article Details
  • Written By: Shannon Kietzman
  • Edited By: Niki Foster
  • Last Modified Date: 10 November 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
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Before a person can start a business, there are several important steps to follow. First, the entrepreneur must be prepared to work long and erratic hours. Twelve hour work days for six or seven days per week is common in the first few months of launching a new business. The business owner must also be driven and self-motivated in order to start a business. A person who needs direction at all times should not start a business because an entrepreneur must be able to work independently and make decisions quickly.

A substantial portion of a business owner's day is usually spent making contacts and attracting clients. If sales and public relations are not something the business owner enjoys, he or she will need to partner with someone who excels in this area in order to successfully start a business. The entrepreneur also needs to be sure there is a market for the goods or services offered by the business. Opening a bakery in a small town that already has four bakeries may not be a good idea because the market is saturated. Similarly, opening an arcade in a community composed primarily of senior citizens may not be a good idea because such a business does not fulfill a need in that area.

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Financial backing is also necessary to start a business. When seeking financial backing, be aware that banks and other financial institutions often want proof the business owner has his or her own reserve capital to invest in the business. The financial institution will also request a business plan, which often must include a rationale as to why one's particular business is needed in the area. Financial institutions impose these requirements because they demonstrate the entrepreneur's commitment to the business and help the institution determine whether the loan they will provide is a solid investment.

Often, it is necessary to rent or buy space in order to start a business. Generally, renting is a better option when first starting a business because it does not require as much of a financial commitment as buying. Since there is no guarantee the business will thrive, purchasing a building can cause financial hardships if the building needs to be sold later.

It is also essential for the entrepreneur to check state requirements for licenses and permits needed to start a business. Daycares, restaurants, bakeries, plumbers, and electricians, for example, all require special licenses. Individual towns often require additional permits in order to install signs on a property. Any improvements made to the building space also require building permits before construction can begin.

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