The first thing you need to do is decide on the goals for your business. What do you personally want to get out of it? How many hours do you want to work? How many employees do you want to have? How much money do you want to make? The idea here is to get as clear a vision as possible of what your business will look like when it is established so you'll know what needs to be done to get there. For a very clear step-by-step method to do this, I highly recommend a program called E-Myth.
Next, do the math. So many people—including me—have learned the hard way that the business they created is not capable of meeting the goals they set for themselves. To help avoid this problem, do some market research to determine how much you'll be able to charge for your product or service and what volume you'll be able to sell. Think about how many hours you'll be able to work in a day and get a rough idea of the maximum amount you could make. Once you have rough estimates for those figures, you can decide if the money you could make or the time you need to put in will be worth the effort. You'd be surprised at how many people spend years working in a business that is just not capable of becoming what they hoped it would, even if everything went perfectly.
Many new entrepreneurs think success is all about developing a great product or service, but actually it's all about selling it. Before you spend tons of time and money developing your product, make a prototype or develop a clear and concise description of what it will be, and do some market research. Figure out who your prospective customers will be, and go talk to them! Ask questions. Find out what they'll pay. Consider their feedback and modify your design accordingly. Look at other companies that are selling similar products or services. Find out what they charge, how they market and what their competitive advantage is. Go into their stores and watch their customers. Find out what they are doing and why, and how customers respond. Once you think you have a clear understanding of what the market wants, then move ahead with your product or develop your service.
You'll also need to decide what kind of company structure will best fit your plans (S Corp., LLC, sole proprietorship and so on).
If possible, work out of your home for awhile or rent the minimum space and equipment necessary to run your business. It's important to keep your overhead as low as possible, at least until things start to take off. Resist the temptation to rent a nice office and fill it with furniture and equipment. I used to think that was impressive, but I came to realize it was just expensive.
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