How to start your own business

When a person decides to open his own 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: sole proprietor or LLC? How is it easier to pay taxes? We tell you what a novice entrepreneur needs to know and where to start if you want to open your own business.
Evaluate the viability of the idea 

So far, you only have an idea, so it's worth starting with it. To assess whether it is worth starting a business or not, answer yourself a few questions.

1. What do I offer customers?
Try to evaluate with an open mind 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 offer and evaluate what they do well and what they don't — try to find your niche in the market.

2. Who will I offer my product to?
Find your target audience — those who may be interested in your product. Find out what their explicit or so far hidden need he 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 peculiarities of his behavior and character, imagine situations when he may need your service or product. This will help you at all stages — from choosing a room to advertising and promotion.

3.Where will I sell my product?
Perhaps your audience is used to buying everything online, or maybe your product needs to be touched or tried on — then you will need a room for a store. Where should it be located — in the center or in a residential area? Think about it, you may still need a warehouse or an office. If you are going to sell goods exclusively online, then think about delivery. Jewelry delivery and pool delivery are different services.

4. How much will it cost?
Figure out at what price you will sell the product. Estimate the approximate cost of the product, analyze at what price your product will be ready to buy. Remember that you have to cover all expenses and make a profit. At the same time, it is important not to make too much extra charge on your goods or services, otherwise there will be no demand and you can burn out. Focus on the market.If you eventually evaluate a business idea as promising and capable of making a profit, test it on your target audience. After the first tests, your idea may transform a little more.

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

Write a business plan 

After you have drawn up a general strategy, you need to calculate everything in detail. A business plan will help you with this. You, your business partners, and potential investors or creditors will need this plan.

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

Without numbers, the 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;
  • promotion plan and cost estimate for advertising and other types of communication with customers;
  • organizational plan and assessment of employees' salaries, as well as external (for example, courier) services;
  • a financial plan that takes into account all sources of financing and income, as well as everything, including one-time expenses and taxes.
As a result, the business plan should show how much money you will need to launch the project, when it will be self-sufficient, after what time it will be possible to return the invested funds and what profit you can expect.

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

Think about attracting investments 

Now you can think about how to attract money to your business. There are different ways to do this:

1.Apply for state support
If your business is important to people from your region or even the whole country, then the state can help you with guarantees, inexpensive loans or loans, preferential leasing and rental.
2.Raise money through 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 platforms. The format of crowdfunding will depend on the type of your business.
3.Attract an investor
Private investors sometimes invest in startups, most often in technological ones. There are also special Internet platforms for finding venture investors.

Register a business 

You can conduct business as an individual entrepreneur (IE) or as a legal entity (usually LLC).
  1.  The sole proprietor is suitable for those who have a small business — for example, a small store or production.
  2.  LLC is a company that can be opened by yourself or together with partners. It is suitable for those who are planning a business with high turnover, and those who will transfer large amounts by bank transfer.
Each form has its advantages and disadvantages.

It is easier to register and close an individual entrepreneur than an LLC. There are fewer reporting requirements for an individual entrepreneur. But the sole proprietor cannot attract investments – only take loans and loans or arrange leasing.

In case of violations, the fines of the LLC are an order of magnitude higher than those of the sole proprietor. But the LLC is responsible for the debts only with the property of the organization, and the founder of the sole proprietor is also responsible for his own property, which he owns as a private person.

Choose the form of taxation 

  1.  General taxation regime. Suitable for those who necessarily need to pay VAT, and those who have income tax benefits, for example, educational or medical organizations.
  2.  Simplified taxation system. Very convenient for small businesses.
  3.  Patent. Suitable for those who find it easier to pay a fixed amount than to deal with documentation.
  4.  Tax on professional income. It is optimal for those who do not have hired employees.
  5.  Unified agricultural tax. Profitable, but suitable only for farmers – the company should not just process or sell agricultural products, but produce them itself.
About how the forms of taxation differ from each other and how to choose the right one for yourself, read our article.

Take care of the details 

After you have decided on the main issues, you will have to deal with many more details.
  1.  Open a bank account.
  2.  Start an online sales register. On the website of the tax service, you can take the test "Do I need a cash register?". This way you will find out if you can use the postponement or if you need a cash register right now.
  3.  Check the compliance of the premises with fire safety requirements.
  4.  Clarify the sanitary requirements if you plan to work with food.
  5.  Study the rights of consumers.
  6.  Check the compliance of your product with state standards.
  7.  Find out whether it is necessary to certify, declare or register goods if you import them from abroad (there are lists of such goods on the websites of certification companies).

If you are starting a business, remember 

  1.  You should start by evaluating the idea and drawing up a general strategy for your business.
  2.  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.
  3.  Find sources of funding.
  4.  Decide on a convenient form of doing business and reporting to the tax service
  5.  Pay attention to details. Connecting an online sales register, fire safety and certification conditions are subtleties that need to be taken into account in order not to pay fines later. If you can't figure out the nuances yourself, consult with a more experienced entrepreneur who works in the same field as you. Or contact business consultants, they will help resolve difficult issues. Consultants can offer both partial and full support of your business.

There are a lot of tasks for any aspiring entrepreneur. But your business, which will bring you money and satisfaction, is worth it.