There are more opportunities in entrepreneurship than any other aspect of the economy. Today many people are considering opening their businesses for the first time because of the abundant resources available.
That does beg the question though, how do you go about setting up a new business for the first time?
To begin answering that question, let’s first start by defining What Is A Business, and then we will build up from there.
Table of Contents
- What Is A Business?
- Business Basics
- What Must An Entrepreneur Assume When Starting A Business?
- Business Concept Examples
- What Is A Business Venture?
- Business Plan Questions
- Business Principles Definition
- Principles Of Business/Business Principles
- Business Principles Examples
- Keys To A Successful Business/Keys To Success In Business
- Fundamental Of Business
- Questions To Ask A Successful Businessman
- Business Principles In The Nonprofit Sector
- How Bill And Melinda Gates Use Basic Business Principles To Run The Gates Foundation?
- Best Books On Starting A Business
What Is A Business?
The formal definition of the verb, business, is any activity that one partakes in to earn a living by either producing, buying, or selling products and services.
When business is defined as a noun, it is used as a synonym for the company. A company is a particular legal entity that provides unique tax incentives and other liability protections for business owners.
Now that we understand what a business is and what a company does, we can start breaking down what you need to open up your own. The best type of business for you and will depend on your personal expertise, knowledge, and skills.
Not everyone will be the best at every single activity. Play to your strengths, and it will make the entire process much easier for you. If you try to force yourself into an area of business, you will have no interest in the only thing that will happen if you become frustrated and resentful.
You do not need to love what your business idea is, but you should be excited about working on it.
Finding Your Niche
When you first decide to open your own business, you need to figure out which type of business you are opening. A niche is a specific market or demographic that desires a particular product or service. Most likely, there is a niche in your area that is underserved. Underserved niches are particularly opportune for new businesses.
Writing Your Plan Down On Paper
once you have broken down what type of business you will be running, you need to begin the formal process of putting it on paper. This is called a business plan, and it is essentially a map of how your business will be run. This is essential for the next step of the process.
after completing a solid business plan, you can now begin looking at ways to acquire the capital you need to begin your business. A solid business plan will give you a rough estimate of how much funding you need. There are multiple ways that you can acquire Funding, including getting loans or raising the money yourself.
Establishing Legal And Tax Identity For Company
this step of the process will formally create your business entity legally. You need to decide on how you will structure your company and its name. Once you know these two pieces of information, you can begin registering it. Once you have finished registering it, you will get your employer identification number, which is essential for businesses to pay their taxes.
Obtain Any Permitting Required
almost every business in any industry has some type of regulation. These regulations can vary by jurisdiction, so it’s important to look up what the laws are in your local area. Determine what permitting requirements you must meet and call your local City Hall to acquire them.
Open Up Shop
after your business is fully permitted, it has been registered, business taxes set up, and your business plan is on paper, then you are now ready to open up the doors. All you have to do now is start to run your business.
What Must An Entrepreneur Assume When Starting A Business?
An entrepreneur decides to strike out on their own to earn a living rather than being an employee for an employer. Entrepreneurs can be independent contractors, or they can run their own business. If you decide to be an entrepreneur, there are a few things you must truly internalize if you wish to be successful.
There Is A Market
The beliefs that we hold about our businesses impact their performance far more than we would like to admit. While there are always reasons to make you doubt about your future success, the most successful entrepreneurs push these from their minds. They understand that by focusing on what they have under their control and ignoring everything else, they will be able to run their business the most efficiently.
Confidence In Your Ability To Fuel Future Growth
Even if you have never run a business before, you must believe you are capable of it. If you go into opening up your own business with doubts about whether you can handle it, you are setting yourself up for failure. While believing in your ability to succeed is not enough to guarantee that you will be successful, a lack of this belief is a guarantee of failure.
Belief In Your Team
It is not enough to simply have confidence in your self as an entrepreneur. There is not a single entrepreneur on this planet you got where they are today without the help from someone else at some point. Even businesses that seem to be run entirely by one person often have much more support behind-the-scenes than you realize.
If you are unable to have faith in your team, you will not be able to run a business successfully. The best entrepreneurs can select high-quality individuals who have the talent they know will do a good job when they are there.
Business Concept Examples
Business concepts are any idea for a business that includes necessary information about what industry the market would be in, what products the business sells, and any other unique information about the specific business in question.
There are many different potential business concepts so that we will give you three examples. This is by no means an exhaustive list, but it does give you the idea of the wide range of topics business concepts can cover.
Three Examples Of A Business Concept
The Internet has made new business ideas possible that were never thought of in the past. If you have a particular subject that you are interested in, you can earn a living by running a website devoted to that topic.
Niche blogs are becoming one of the fastest-growing segments of the Internet. People make a killing by affiliate marketing through their niche blogs or simple pay-per-click advertising. The most important part is regularly producing engaging content that people want to read, view, or consume in some way.
A classic example that you may be a little more familiar with is a handyman services business. Almost everyone has some project around their home that needs to get taken care of soon.
Even people who can do the work themselves often do not want to because they are tired from their day jobs. You can open a business that offers services helping people out with these types of tasks.
If there is a topic that you are particularly interested in and would rather open a physical store location rather than an online storefront, a niche retailer is probably a good option for you.
Niche retailers can be nearly anything. The best niche retailers for any given market will vary depending on the demographics and current economic conditions in that area.
What Is A Business Venture?
Business ventures are very similar to business concepts, but there are a few key differences. When you are talking about a business venture, they are normally referring to a business concept that is further along the stage of development.
By the time it is considered a business venture, it has either already been legally established and is now in business or is well on its way to becoming in business.
A business concept is an idea while a business venture is real, to put this in other words. You come up with a business concept during the initial planning and research stages of launching a business.
This business concept transforms into a business venture as you work your way through the process of legally establishing the new business. Once the business has been legally established, you can begin referring to it as a business venture rather than a business concept.
Business ventures are a broad topic, and the best business venture for you will depend on your skills and expertise. Take time to reflect on what you think the best business venture for you would be. This is not a process that should be rushed because if you take your time, it will be more enjoyable and more likely to succeed.
Business Plan Questions
A business plan will need to answer several questions. These questions will determine what area of business you will be working in, how the business will run, how likely it is to be successful, and more.
If you are unable to answer all of these questions with your business plan, you need to redo it until you can. You will not be able to acquire Funding unless you have a fully complete business plan.
What Type Of Business Is It?
A business plan should fundamentally answer the question of what type of business are you in? It does not necessarily need to identify everything that your business will be, but it does need to give a general idea of the industry, the product, the services, and more.
What Is Necessary For Your Business To Launch?
The next question that needs to be answered in your business plan is what are the requirements for your business to begin operating?
By the end of your business plan, you should have a ballpark figure for the total amount of Funding you need to seek to begin your business. This will allow you to find funding sources much more straightforward.
Who Is Your Target Demographic?
The third question you will answer in your business plan will be: Who is your target demographic?
You need to have not only the product or service you are offering but also the need to tell in your business plan, which is that you will be marketing your products or services. Target demographics can often impact the business location or many other factors.
How Are You Different From The Others?
Sometimes this is referred to as your value proposition. One of the most fundamental questions for any business, what sets you apart from all of the others in your industry?
If you are unable to delineate yourself from your competitors in your business plan, how do you expect customers to be able to? You need to know exactly what will set you apart from the others before you are finished with your business plan.
What Will Be Your Biggest Obstacle?
Any business in the world will encounter some obstacles on the way to success. There is not a single business that was launched in the world that went off without a hitch.
A successful business person is someone who plans for the best of circumstances and the worst. In your business plan, you need to identify the biggest obstacles your business will encounter during its startup phase and how you plan on overcoming them.
How Will You Become Profitable?
Finally, the entire business plan is to answer this question. How will your business become profitable? If you are unable to show how your business will turn a profit, then it is unlikely that it will be a successful business, or you will be able to find Funding.
As long as you have a good product or service and there is a good demographic for it, then it will be easy for you to turn a profit as long as you charge a reasonable price. This needs to be noted in your business plan details before you submit it for completion.
Business Principles Definition
The definition of business principles is any type of foundational statement held by the organization in question. Business principles can vary from company to company, but you need to establish them. This gives you and your team a framework around which to operate.
The most successful companies in the world will always have high-quality business principles at its core. The best business principles for you will be business principles that you identify with and find easy to hold in your heart as the business owner. This makes it far more likely that you will commit to these business principles and exemplify them in your business dealings.
Principles Of Business/Business Principles
We will show you a few examples of potential business principles that have been adopted by successful companies around the world. There is no need for you to choose any of these four specifically, but it would be wise to decide on at least three business principles of your own to focus on as you launch your company.
Again it is important to keep in mind that the best business principles for you will definitely vary depending on your personal factors.
Quality: By focusing on quality over quantity, it is easier to develop long-lasting relationships with customers who return time and time again. If you chose this business principle, you would focus on producing the highest quality products or services rather than the most.
Honesty: honesty is one of the most fundamental practices in business. If people were unable to trust each other, then all types of negotiations would break down. Committing yourself to honesty ensures that you will not ever commit fraudulent activity against other businesses or your customers.
Integrity: integrity ties in quite nicely with honesty, but it is a little different. Integrity means that you will not compromise your self or your business for any reason. You will always stay true to your principles no matter what the payoff may be to break them.
Teamwork: Teamwork is essential for new businesses when they have more than one employee. If you do not focus on teamwork, it can quickly devolve into a competition, which is detrimental when it occurs inside your own company. Commit yourself to encourage the highest quality teamwork possible to produce the best results for your business.
Business Principles Examples
Now that we have covered the concept of what a business principle is and given you a few examples of what those might look like, we can turn our attention to how these business principles would manifest in real life.
Let’s go through a few examples to have an idea about the kinds of choices you might have to make to stay committed to your business principles as a business owner during the startup phase of your new company.
Choosing A Higher Quality Vendor Over A Lower Cost Vendor
As stated in the examples earlier, quality over quantity could be one business principle. If you decided to choose this principle as one of your own, the way that this would manifest might look a little like this: you have a vendor call you and offer you a similar product for much less than what you are already paying with your current vendor.
You looked into it and learned that it is much cheaper but also lower quality. If you are committed to quality over quantity, your decision will be easy. You will stick with your higher quality vendor even if it cost you more money.
Going The Extra Mile For A Customer
If you decided that excellent customer service would be one of the primary business principles your business had, it could go a little something like this: you have a customer who comes inside the store with a request. You start helping this customer and discover they have other unmet needs your business could improve.
Instead of trying to sell them more, you could offer them a free trial for the product or service. This shows that you are more committed to providing the best quality service to your customers than anything else.
Keys To A Successful Business/Keys To Success In Business
There are a few aspects of any successful business that are held in common by all successful businesses. These are indisputable facts, and if they are not present in your business, it will be impossible to become successful.
There Must Be A Market For Your Product Or Service
This is probably the most crucial of all keys to business success. You need to have a market for your product or service. A business that does not have a market for its products or services will only end up in bankruptcy. All businesses must have customers to be successful.
You Must Offer A Good Value
Having customers alone is not enough for most businesses to remain successful, at least in the long term.
If a company is found out to be ripping its customers off, it will normally begin hemorrhaging customers, and this typically leads to the company’s failure. Providing high value to cost ratio to customers is essential for business performance.
Sales Are The Most Important Aspect Of Business
The bottom line of any business ultimately comes down to its sales numbers. This means that sales are the most important aspect of any business.
If your business is not selling, then it will not be successful. If your business is selling consistently, then success is right around the corner.
Fundamental Of Business
There are some technical terms you should understand about businesses before you begin.
Your debt-to-equity ratio as a company is a measure of how much leverage you have taken on versus your company’s total overall valuation. The more that your company is valued and the lower its overall debt obligations, the better this ratio will be.
Price To Earnings Ratio
Price to earnings ratio is a simple way to look at how much each stock in your company is producing in terms of revenue. The higher this number is, the better it is for the company typically.
Degree Of Financial Leverage
Your degree of financial leverage measures how volatile your company’s earnings-per-share ratio is. The higher this number is, the more unstable your company is considered to be.
Questions To Ask A Successful Businessman
One of the best ways to succeed is to learn from others who have already achieved what you desire. Throughout your life, you will likely encounter at least a few highly successful people in the business. The next time you get the chance to meet someone like this, make sure to ask them the following questions.
How Did You Get Started?
Of course, this is likely one of the most common questions they receive. But you need to learn. Asking business people where they got their start demonizes them and lets you know that everyone starts from somewhere.
What Do You Wish You Knew When You Started?
If you ask a businessman this question, they will likely be able to advise on how to avoid common mistakes that they made whenever they were brand-new. You can learn from others’ experiences rather than make the same mistakes they did and pay the price yourself.
What Is The Most Important Thing You Have Learned In All Of Your Years Of Business?
Finally, this is the most important question of them all. A successful business person will be able to give you exactly what he believes essential for a business’s success. You will be able to get the distillation of years worth of experience through this simple question.
Business Principles In The Nonprofit Sector
Some people wonder whether there are differences when businesses operate in the nonprofit sector versus in the private sector. There are similarly ran, but the focus is definitely a little different. Let’s take a look.
Running a company well is always important, but it is considered to be of the utmost priority in the nonprofit sector.
The Common Good
Most private sector companies are primarily concerned with producing the most value for their investors. When you are operating in the nonprofit sector, and you have more stakeholders. You need to be focused on impacting everyone directly impacted by your company in the best way possible.
Transparency In Business Practices
Of course, private sector businesses need to remain transparent, but there are more permissible restrictions within the private sector. Because of the nature of the nonprofit business, they need to have a fundamental focus on operating in a transparent manner; anyone can audit to engender trust.
How Bill And Melinda Gates Use Basic Business Principles To Run The Gates Foundation?
Now we can look at exactly how Bill and Melinda Gates have used some of the basic business principles to keep their nonprofit organization, the Gates foundation, operating smoothly.
As you will see that these are very similar to the same concepts Bill likely kept in mind when he was the CEO of Microsoft, a private sector company. Although, there are a few fundamental differences that show a shift of focus from profits to maximum beneficial impact.
Responsibly managing the company and its assets is of the utmost importance to Bill and Melinda Gates when they are operating the Gates foundation. If they do not control the company wisely, they will not be able to impact the world positively.
They do their best to keep their business accountable to all of its stakeholders. This is not just the people who have invested in the company but also people who have donated, employees, and the communities that their business impacts.
Return On Investment
While the return on investment that Bill and Melinda Gates analyze when running their nonprofit foundation is a little different from when running their private sector foundation, they ultimately look at how much value can be produced for a given investment.
The way that this is measured is a little different in the nonprofit sector. Instead of measuring your return on investment in terms of dollars worth of profits, you can measure it in other human outcomes like access to clean water, for example.
Best Books On Starting A Business
If you would like to do some further reading, there are plenty of books out there that have been written by successful businessmen to teach others how to achieve the same success they have. Here are a few of the best examples of the best books recently released regarding running businesses successfully.
The Lean Startup by Eric Ries: this book goes in-depth on how managing cash flow is essential in successful businesses. Cash flow management is different when operating a business than personal finances.
This is a great book that will serve you as a guide on your transition into business finances. The main goal is to learn how to manage a business’s budget. Get the Book
The Founder’s Dilemma by Noam Wasserman: this book is a compilation of results from Princeton University Prof. Wasserman’s research. He studied how different founders of businesses approached their business to determine what factors were common between the successful founders.
It helps to identify and map out ways to avoid the same pitfalls that demolish many new businesses. It is a great book for teaching your self how to keep a business operation running smoothly. Get the Book
The Four Hour Workweek by Timothy Ferris: The Four Hour Workweek by Timothy Ferris is a unique type of book. It teaches you about how it is possible to avoid working an eight hour day by learning how to earn income online.
It is part of a new wave of thinking that is taking place in the newest generations of business owners. The Internet has truly revolutionized the way that business can be done and this book is a great introduction into how that can impact your life as you start your own business. Get the Book