Setting up A Small Business: Tips from Ed Richardson

Where do you start when setting up a small business? What is the order or process you should go through? Should you write a business plan or is there something else you can do? Ed R shares his take on these questions and gives some tips to help you out.
You can usually start at the end and work your way backwards - writing down every step in reverse until you get to today. Sounds sort of like a the "Monty Python School of Business."

Let's take a hot dog stand --> I want to sell hot dogs at the fair. I am going to need a stand. Do I buy, rent, build one? I will need a health inspection of that stand - that has to happen after I buy, rent or build. I will need a food vendors license - I can buy that just about anytime. etc. etc. Until you end up with what you just thought up of doing - I want to sell hot dogs at the fair. You just reversed engineered your whole business plan.

At any given time in that process you may stop and access the costs to insure you will remain profitable. The business plan is fairly key. It is worth the time and effort - it will help you stay on course and keep score. It will point out areas that you spent more than you thought you would and therefore your profit plan maybe in jeopardy.

I would spend some time on your local, state and the federal government web-site with respect to starting businesses to determine all the legal boundaries, taxes, licenses, inspections, etc necessary. You may have to (should) get legal help here but it is still a good idea to study it to see if you might have a government restriction in your area with respect to the business you wish to endeavor in.

I would incorporate as soon as possible. This will make some of the investigative costs deductible. If you have multiple ideas - I would use the corporation as an umbrella business and set-up each business as separate entities under the umbrella company.

That way if one fails it should not effect the viability of the other businesses. Also, if one is super successful but you don't like that particular business - you sell off just that leg of your business.