Small Business Essay

1881 words - 8 pages

Numerous large businesses that are operating today were once started as small businesses. A new business is established to create a good or service that no other businesses have ever created or simply a product of higher quality than existing products, with the purpose of meeting customers’ needs and earning profits. Due to the technological advances at the present time, starting and operating a new business is less laborious. Nevertheless, would-be entrepreneurs should be familiar with the proper approaches to start their businesses.
The first step to starting a business is to create a business plan. A business plan is a document that outlines the overall strategies of a new venture and how those strategies will be implemented (Ebert & Griffin, 2013). Those strategies are used to guide planning and development in the business to achieve its organizational goals. Consequently, a business plan should first define the business’s objectives that it plans to achieve in the future. It then should include the structure of the business and the particular product that the venture will be selling (Berry, n.d.). The critical element of a business plan is sales predictions, where it helps the business owner to deepen his/her understandings regarding the potential market as well as the strengths and weaknesses of existing enterprises. Sales forecasts are particularly useful for determining the right price of the products and marketing the products (Ferrell, Hirt, & Ferrell, 2009). Moreover, market analysis allows the business owner to become acquainted with all aspects of the market so that he/she can define the target customers and position the company in order to garner its part in the market (Hormozi, 2004). Financial factors are the ultimate plans of a business plan, which indicate the money (capital) needed to start and run a business. The funds to finance the business may come from personal savings, family and friends, lending institutions, investors, and governmental agencies (Urquhart-Brown, 2008). However, the business owner can also attempt to operate his/her business by bootstrapping, which refers to the operation of an entity by using limited sources of capital (Gregory, n.d.). In addition, the financial factors should also include financial planning. Financial planning normally refers to the cash flow and income statement, balance sheet and breakeven analyses. Therefore, there are three major sections to an ideal business plan that are the organizational goals, the sales forecasts, and the financial factors.
After the creation of a business plan, the next step to operating a business is the selection of an appropriate business structure. Different legal forms of business ownerships affect different managerial and financial factors from the business names to the tax obligations (Gregory, n.d.). The most common forms are sole proprietorship, partnership, cooperatives, and corporations. There are different types of corporations in the business...

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