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Explanation of the basic requirements to start up a business enterprise - Strategies to Succeed in Business. Also refer to entrepreneur, idea, product, service, motivations, money, self-expression, plan, implementation, funding, finances, prospects, customers, marketing, selling, process, Ron Kurtus, School for Champions. Copyright © Restrictions

Basic Steps in Starting a Business

by Ron Kurtus (3 October 2004)

A business is an organized activity to sell a product or service to various customers on a regular basis. To start a business enterprise, you first need a good idea and a plan of action. Then you must implement your plan by gaining financing, getting the product or service to sell, finding prospects, selling and making the exchange.

Questions you may have about this are:

• What is the criteria for being in business?
• How do you get a good idea?
• How do you implement your plan of action?

This lesson will answer those questions. There is a mini-quiz near the end of the lesson.

Criteria for a business

The criteria for being in business is that you provide a product and/or service on a regular basis to a number of customers.

Selling on regular basis

A person selling a car or other property is involved in a business activity, but since it is a one-time operation, it is not considered a business enterprise. If the selling is done on a fairly regular basis, it can then be classified as a business.

Selling to more than one person

With providing services in exchange for money, a person usually does it on a regular basis. For example, a boy who mows lawns during the summer in his neighborhood is in business. On the other hand, if the boy is mowing the lawn of only one neighbor, he is no longer in business. Instead, he has a job.

Idea

Every new business starts with a great idea. Usually, the entrepreneur is motivated by wanting to run his or her own business and making a lot of money. There may be other personal motivations such as self-expression or wanting to make a difference in society.

Typically, the entrepreneur hears about something in an area of interest and skill that triggers the idea of a product or service that would be in demand.

Henry Ford saw others making cars and felt he could do it better and cheaper. Steve Jobs saw some of the new personal computers and got the idea of making his own version of user-friendly computer. Michael Dell saw how personal computers were being made and thought it would be a good business to get into.

Plan of action

The next phase in starting a business is to develop a plan of action. In many cases--especially when substantial funding is required--a formal business plan is written. But there are many businesses that start with informal plans that may change as the situation requires.

Next the plan is implemented.

Funding

Some entrepreneurs fund the beginning of their business from their own savings. Others may present their business plan to venture capitalists to get seed money.

Get product or service

The product may be purchased or built. The entrepreneur may make him- or herself or hire others to make the product.

The service may be done by the entrepreneur or people may be hired to perform the service.

Get prospects

Marketing efforts are required to find prospective buyers and make them aware that the product or service is available, as well as the benefits and advantages of the goods.

It is necessary to meet with the prospects to demonstrate the product and convince them to buy.

Make exchange

Once the customer is convinced and a price is negotiated, you make the exchange. You deliver the product or service and they pay for it.

Repeat process

Some of the profits will pay for more products and marketing efforts, resulting in more demonstrations and sales. The business is up and running.

Summary

Starting a business requires a good idea and plan of action. You implement your plan by gaining financing, getting a product or service to sell, finding prospects, selling and making the exchange. Then you repeat the process for further business.

Answers to Readers' Questions

A journey starts with the first step

Resources

The following are resources on this subject.

Websites

Startup Basics - From U.S. Small Business Administration

Business Plan Basics - From U.S. Small Business Administration

Steps to Start a Business - From Entrepreneur Magazine

Starting a Business Categories - Startup resources from Business.com

Business Resources

Books

Top-rated books on Business

Miscellaneous

Mini-quiz to check your understanding

1. How do entrepreneurs often get business ideas?

2. Is a formal business plan really needed?

3. Why is funding needed to start a business?

If you got all three correct, you are on your way to becoming a Champion in Business. If you had problems, you had better look over the material again.

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Basic Steps in Starting a Business