The process of starting a new venture can be daunting, especially if you do not know where to start or what the order of procedures are to follow. The following steps are a guideline of the order in which to do things before starting up.
Step 1: Prepare a business plan
The business plan forces the entrepreneur to think about and plan the marketing, production, operations, management and finances of the new business venture. The importance of meticulous planning cannot be stressed enough, many small business owners will say that they rely on a “gut feel”, but lack of planning or strategy is the number one reason why businesses fail.
Step 2: Decide on a legal form of business
Review the different tax benefits and other factors that will play the deciding factor on which legal form of business to choose. The options to choose from are Sole Proprietorship, Partnership, Close Corporation (CC), Private Company or Public Company. It is advisable to seek the help of an auditor in order to make an informed choice.
Step 3: Register you business
Apply for registration. If you are working from home, contact the municipality with regard to by-laws that may affect the business. Once you have a business registration number, you can apply for a business bank account and obtain an income tax number from SARS. If it is applicable for your business, you can also apply for a VAT number.
Step 4: Find premises
Formal businesses that rent office, trading or manufacturing space are required to pay closer attention to location factors than informal businesses, because of the permanency of their decisions. Find a premesis that is most suitable for your type of business, to ensure that your business receive optimal exposure. This is the time to determine fixtures, fittings and equipment costs.
Step 5: Apply for financing
This is only applicable if your business is going to need external financing in terms of a long term loan or bank overdraft facility.
Step 6: Consider the legal needs of the business
Apply for any licences, certificates, etc. that will be required for your business to legally trade. If your business needs protection such as copyrights, trademarks or patents, apply for these as well. Appoint an accountant or bookkeeper and an attorney.
Step 7: Locate suppliers
Locate key suppliers and negotiate for prices and discounts, credit terms and delivery options. Establish inventory requirements and create systems that will ensure the timely replacement of inventory. Decide on product/service prices and discounts.