2. 2
*SOURCES OF NEW IDEAS
The following represent potential ways to develop ideas for a new product or
service before deciding to start a new business.
1. Consumers
2. Existing Companies
3. Distribution Channels
4. Federal, State and Local Government
5. Research and Development
6. New Technology
7. Emerging Economies
*Information in this section partially referenced from the book,
Entrepreneurship, 4th
Edition by Hisrich and Peters.
3. 3
*METHODS FOR GENERATING
NEW IDEAS
The following represent potential methods to develop ideas for a new product
or service before deciding to start a new business.
1.Focus Groups
2.Brainstorming
3.Problem Analysis
4.Test Marketing
5.Surveying
6.Competitive Research
*Information in this section partially referenced from the book,
Entrepreneurship, 4th
Edition by Hisrich and Peters.
4. 4
*PROFESSIONAL SERVICES
CONSIDERATIONS FOR THE ENTREPRENEURS
The following represent professional and other high-level services and protections
that a business should consider as it develops new product or service ideas.
Professional Need Description
Lawyer……………………………….Any business needs to have legal protection and advice
from a good lawyer or law firm.
Accountant…………………………..A good accountant will help an entrepreneur with their tax
and financial records.
Patents……………………………….Patents protect business owners from others who have a
similar idea as their product or service.
Trademarks………………………….A trademark is granted for a particular word, name,
slogan or symbol that only the listed company can use.
Trade Secrets………………………..This is protection against others revealing or disclosing
information which could be damaging to business.
Copyrights…………………………..Right given to prevent others from printing, copying, or
publishing any original works of authorship.
Licensing…………………………….Contractual arrangements giving rights to others to use
intellectual property in return for a royalty or fee.
Product Safety & Liability…………Responsibility of the company to meet any legal
specifications regarding a new product covered by the
Consumer Product Safety Act.
Insurance……………………………Needed to protect against loss of property, equipment and
also used to cover medical costs; and for liability purposes
when company causes damages to consumers.
Contracts……………………………A legally binding agreement between two parties.
Board of Directors………………….An entity of individuals who serve as mentors or final
decision makers for the business for strategic or financial
purposes.
*Information in this section partially referenced from the book,
Entrepreneurship, 4th
Edition by Hisrich and Peters.
5. 5
20 QUESTIONS BEFORE STARTING
1. Why am I starting a business?
2. What kind of business do I want?
3. Who is my ideal customer?
4. What products or services will my business provide?
5. Am I prepared to spend the time and money needed to get
my business started?
6. What differentiates my business idea and the products or
services I will provide from others in the market?
7. Where will my business be located?
8. How many employees will I need?
9. What types of suppliers do I need?
10. How much money do I need to get started?
11. Will I need to get a loan?
12. How soon will it take before my products or services are
available?
13. How long do I have until I start making a profit?
14. Who is my competition?
15. How will I price my product compared to my competition?
16. How will I set up the legal structure of my business?
17. What taxes do I need to pay?
18. What kind of insurance do I need?
19. How will I manage my business?
20. How will I advertise my business?
Source: U.S. Small Business Administration
6. 6
10 STEPS TO STARTING A BUSINESS
Starting a business involves planning, making key financial decisions and completing a series of legal activities.
These 10 easy steps can help you plan, prepare and manage your business. Click on the links to learn more.
Step 1: Write a Business Plan
Use these tools and resources to create a business plan. This written guide will help you map out how you will start and run your business
successfully.
Step 2: Get Business Assistance and Training
Take advantage of free training and counseling services, from preparing a business plan and securing financing, to expanding or relocating a
business.
Step 3: Choose a Business Location
Get advice on how to select a customer-friendly location and comply with zoning laws.
Step 4: Finance Your Business
Find government backed loans, venture capital and research grants to help you get started.
Step 5: Determine the Legal Structure of Your Business
Decide which form of ownership is best for you: sole proprietorship, partnership, Limited Liability Company (LLC), corporation, S corporation,
nonprofit or cooperative.
Step 6: Register a Business Name ("Doing Business As")
Register your business name with your state government.
Step 7: Get a Tax Identification Number
Learn which tax identification number you'll need to obtain from the IRS and your state revenue agency.
Step 8: Register for State and Local Taxes
Register with your state to obtain a tax identification number, workers' compensation, unemployment and disability insurance.
Step 9: Obtain Business Licenses and Permits
Get a list of federal, state and local licenses and permits required for your business.
Step 10: Understand Employer Responsibilities
Learn the legal steps you need to take to hire employees.
Startup Resources
There are a number of available programs to assist startups, micro businesses, and underserved or disadvantaged groups. The following resources
provide information to help specialized audiences start their own businesses.
Environmentally-Friendly "Green" Business
Home-Based Business
Online Business
Self-Employment
Minority Owned Business
Veteran Owned Business
Woman Owned Business
Source: U.S. Small Business Administration
7. 7
CHOOSING A BUSINESS STRUCTURE
Type Characteristics
Sole Proprietorship A sole proprietorship is the most basic type of business to
establish. You alone own the company and are
responsible for its assets and liabilities. Learn more about
the sole proprietor structure.
Limited Liability Company An LLC is designed to provide the limited liability
features of a corporation and the tax efficiencies and
operational flexibility of a partnership. Learn more about
how LLCs are structured.
Cooperative People form cooperatives to meet a collective need or to
provide a service that benefits all member-owners. Learn
more about how cooperatives are structured.
Corporation
Partnership
S Corporation
A corporation is more complex and generally suggested
for larger, established companies with multiple
employees. Learn more about how Corporations are
structured.
There are several different types of partnerships, which
depend on the nature of the arrangement and partner
responsibility for the business. Learn more about how
these are structured.
An S corporation is similar to a C corporation but you are
taxed only on the personal level. Learn more about how S
corporations are structured.
8. 8
FINANCING YOUR BUSINESS
A key to business success involves understanding how to finance the business
before and during launch and on an ongoing basis. The following are some things
to think about for business financing considerations.
Estimate your start-up costs
o How much money is needed to get the business off the ground?
o How much is needed to run the business the first few months?
Use personal finances
o Are you willing to go “all-in” with your own money?
o Will you keep personal funds separate from business financing?
Preparing financial statements
o Are you ready to prepare income statements, balance sheets, etc.?
o Do you have a good accountant that can help with all of these?
Developing a cash flow analysis
o Do you understand how cash flows in and out of the company?
o Do you understand expense management and timing of payouts?
o Have you estimated your sales and receivables?
Understanding your breakeven analysis
o How much do you need in sales to cover your initial investment
amount?
Borrowing money for your business
o Are you willing to ask family and friends for money?
o Are you considering bank loans?
Using crowd funding to raise money
o Have you evaluated online fundraising sites?
o Have you created a proposal for people to be compelled to give?
Understanding if your business is fiscally fit
o Is your business strapped for cash?
Exploring loans, grants and venture capital
o Do you understand the terms of business loans?
o Have you researched grants and venture capitalists for your industry?
Tax implications for your business
o Do you have a good tax accountant?
o Do you know the company structure you have established?
o Are your business and personal taxes kept separate?
