Things You Should Do Before Starting A Business

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1. Write a business plan.Experts agree writing a business plan is the first real step any entrepreneur or prospective business owner should take. Not only does this show a true level of commitment, it also forces real and tangible answers to important, and sometimes challenging, questions. A business plan is also the first thing any potential investor is going to request. This gives them a full understanding of the business venture being proposed, the owner's level of expertise and understanding of the opportunity, and the financial requirements and potential upside. 2. Choose a legal structure.How a company is incorporated is important, and not always an easy thing to change after the fact. While not overly complex to understand, each type of legal entity comes with certain requirements and restrictions. Certain types of corporations may not be available or appropriate for your type of business. If you need help, a corporate attorney or experienced business accountant can offer timely and accurate advice on the exact legal structure of your proposed company.3. Get your business registration, licenses, and tax identification.There are various resources to assist with various things like business names, filing incorporation paperwork, obtaining necessary licenses and registrations with your local municipality, and getting your federal tax information squared away. Aside from the Internal Revenue Service (IRS) for federal tax matters, local corporation commissions (typically at the county level) can assist any new business owner in meeting the regulatory requirements for each locale around the country.4. Know your competition and marketplace.There's nothing wrong with a little competition. In fact, it's what gives business owners the opportunity to come out with a better product or service. Knowing your marketplace, what your competition is doing, and how you're going to compete and win customers is a critically important step in the business setup process. Including this information is your business plan, will show your mastery of the type of business you're proposing to start. Without this information, no serious investor will rise to the occasion. Know your marketplace, know your competition, and know how your company is going to be different5. Finance your business.Unless you're an accountant, have a degree in finances, or are a sophisticated investor, chances are you'll need some help nailing down this part of your pre-business planning. Investors are going to want to know how much money your company has to start and how much it's going to need in the future. No matter where your revenue will come from, list it. Will you use your credit cards and home equity to start? Will you have sales the day you open your door and will you need a loan you can service as debt? Are you willing to give up a percentage of your ownership in exchange for cash?No matter how you propose to finance and fund your business, share that information in your business plan. There are a myriad of investors out there and they've seen it all. Don't assume no one will invest just because you aren't also bringing some capital to the table. Investors typically want to know three things:How much?For how long?What is the exit strategy?Answer these three things to an investor's satisfaction and you're very likely to strike a deal.