Checklist for Starting a Small Business

In recent times, the number of new start-ups and emerging businesses has grown extensively. The worldwide economic slowdown, coupled with the increasing number of layoffs, has prompted people to think of various possibilities beyond jobs. In such uncertain times, it makes sense to be involved with something, over which one has maximum control. Naturally, small businesses and new ventures are on the rise, as more and more people delve into entrepreneurship.

However, starting a new commercial enterprise is no child’s play. There are many factors, that an aspiring businessman must take into consideration, during the initial phase. The following checklist provides certain guidelines, which would be helpful to those who want to start various small businesses of their own.

Points to Keep in Mind

☑ Ask yourself why: This is the first question you should tackle before undertaking any step. Ask yourself, “what is the precise reason that you want to start your own venture?” Be honest with your answer, as it will invariably affect the eventual success or failure of your new decision.

☑ Choose a name: Decide a good name for your business and register it with the concerned authorities. It should complement your attitude and clearly project your line of occupation. For example, you don’t want a name that leads prospective customers into thinking of you as an ambulance services provider, if tourism is what you’re actually in!

☑ Understand your domain: Identify and understand your domain area thoroughly. It is always important to know well in advance, the type of work which you would, and would NOT be doing.

☑ Identify your strengths: Focus on your strengths, and at the same time, figure out ways to tackle your weaknesses. Understand your niche areas, and design your work process accordingly to utilize it to the maximum.

☑ Comprehensive market research: It is imperative that you do extensive and thorough market research, pertaining to your domain. Identify your competitors and learn from their successes and failures.

☑ Set realistic goals: Setting goals is very important for your venture in terms of financial targets, sales targets, growth parameters, etc. Decide both short-term as well as long-term goals, but make sure that they’re realistic.

☑ Prepare a detailed business model: Once you are clear with setting your goals, you must decide the ways to achieve them. Prepare a proper business model/plan for this purpose. Thus, one must take into consideration a number of factors, such as the available resources, manpower skills, financial strength, etc. During this process, it is also advisable to take inputs from someone who is well-experienced in the same field. Hire a business consultant, if necessary.

☑ Get your legal licenses and permits in order: Once you start a business venture, you are automatically responsible for all its legalities and licenses. Make sure that you obtain all the necessary permits related to the above mentioned formalities, from the concerned authorities. Hire a legal adviser or an attorney, if needed.

☑ Develop an effective and efficient marketing strategy: During the initial phase, almost every business venture has to invest a considerable amount of time and money, for marketing of their services. Work out different types of marketing strategies, and select one which is the most effective, efficient, and best-suited to your needs.

☑ Have an RMMM plan in place: Preparing a Risk Mitigation, Monitoring, and Management (RMMM) plan is of utmost importance for your venture. It helps in identifying potential risks, dealing with existing ones, and can thereby protect your business from sudden disasters.

☑ Use your finances wisely: Unless you happen to be a billionaire in the first place, it is absolutely crucial that you learn to manage your finances properly. Keep a detailed written record of your expenses, profits, bank transactions, loan statements, etc. Hire a financial consultant, if necessary.

☑ Stay abreast of changing market trends: Market trends always keep evolving over time, and this change is inevitable. Make sure that you remain updated with respect to these changing trends in your line of business. This will enable you to adapt to new situations much quicker, and will also help you to stay ahead of your competitors.

Keeping this checklist in mind will surely be helpful, as you embark upon a new journey of a businessman. Work hard and keep faith in yourself!

Types of Small Businesses

A small business is generally a privately owned and operated organization, which works with a small number of employees and deals in relatively low volume of sales as compared to bigger companies. Besides the number of employees, other factors, such as annual sales (turnover), value of assets and net profit (balance sheet) are also considered to classify any business as a small one. Here are some common types of small businesses.

Sole Proprietorship

Sole proprietorship is a type of business model in which there is just one owner who has all the rights to take decisions. All debts of the business are his personal debts and whenever required, they must be paid from his personal possessions. As there is no partnership in the business, the sole proprietor enjoys unlimited freedom within the precincts of his workplace. Sole proprietorships are easy to start up with relatively fewer regulations and full control over the business. If the business is doing good, the owner takes all the profits. It is very different from a corporation, as instead of paying corporate taxes, the sole proprietor pays self-employment taxes on the profits made, making accounting much simpler. He also does not have to be concerned about issues like double taxation, as a corporate entity would. Sole proprietorship is the easiest way to form a business and compared to other business structures, it is subject to the fewest regulations.


Partnership is a business entity in which some people come together to start a business and share the profits or losses of it collectively. These people are called partners and they own the business together. Partnerships are generally preferred over corporations because of the levied taxes. However, in a partnership the members may be exposed to greater personal liability as compared to the shareholders of a corporation, depending on its structure and the jurisdiction in which it operates. Unlike sole proprietorship, the right of making decisions is distributed amongst the partners in this type of small business. Generally an agreement prepared by a lawyer is signed by all the members who want to form a partnership. This agreement clearly states the terms and conditions of the partnership, the sharing of profits or losses and the distribution of common assets in case the partnership ends. Every time a new member joins the partnership, it is necessary to sign the agreement paper again.

Close Corporation

A Close Corporation is a form of business ownership which combines the aspects of sole proprietorship and partnership. This model of business is particularly helpful and suitable for small to medium-sized enterprises. A close corporation is almost like a company but less expensive and easier to run. It is also known as CC and can be easily registered through a lawyer or an accountant. Unlike a company, a close corporation does not have directors, shareholders, or a chairperson of the board. Suppliers of a close corporation often ask for a signed security from a trusted third party, to ensure the payment of debts in case the CC fails to do so.

Limited Liability Partnership (LLP)

A limited liability partnership is almost similar to a general partnership. However, in this type of business entity, none of the partners are liable for the actions of others. This helps a member to stay clear from another partner’s misconduct or negligence. In case any one of the partners dies, the limited liability partnership automatically ceases.

The formation of a small business and the blueprint of its installation is solely decided by factors, like the number of members and the initial investment. In case one wants to start a small business, one should get a brief idea of the laws governing them.