STEP BY STEP FULL GUIDE: HOW TO START A BUSINESS

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Your Plan:

Building Your Vision
The first step in building any business is having a vision !
After all, if you have no idea what it is that you are trying to build, you are going
to have a hard time building it. In this chapter, we are going to explore what it takes
to build a vision, what you need to consider, and how you can get really clear and expansive on your ideas.

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What is a Vision ?
A business vision is essentially a plan or idea you come up with to start a business.
The majority of people who desire to get into business for themselves already have some form of pre-existing idea of what they want to get into business with.

This does not mean that you have the entire basis for the business planned out, but it does mean that you have a general idea of what you want to do. The birth of a vision can come in any number of ways. Some people are deeply passionate about something and desire to fill their schedule with this particular activity.
They therefore want to start a business around it.

Others see a need for a certain product or service and decide to create it and take advantage of this opportunity on the market. Furthermore, others may simply know that they want to go into business and so they are looking for a vision to work with.

What is Your Vision ?
If you already have a vision, now is a good time to get clear on what your vision is, exactly. The best way to do this is to write it down to get it out on paper. Consider everything that leads you to create this vision and everything that contributes to bringing it to life.

For example, if you want to recreate an existing product to sell, explain why you want to do this and highlight how yours is going to be different from anyone else’s that already exists. Your vision is the inspiration that you have for your business.

As you go about writing down your vision and the aspects that you already know, be sure to spend some time getting inspired and expanding your view.
The more you know about your vision, the easier it will be to test it and turn it into an actionable plan later on.

What If You Don’t Have One Yet ?
If you don’t already have a business vision, now is the time to come up with one.
What exactly you end up with will be up to you, but it is important that you choose something that you will genuinely be interested in. Picking a business vision that you have zero interest in will likely result in you losing interest in the business in general.

When we don’t pursue something that we are interested in or passionate about, we tend not to experience as much success. That being said, begin exploring your options by considering what you are interested in and passionate about. See what comes up for you and then go from there in researching business ideas that are available to you.
The list of things that can be turned into a business is incredibly expansive.

There truly is no limit on what can be done.
A great place to start in your research is by going on the internet and researching businesses relating to your passion or interest. Then, go down the list of ideas you find until you come to something that you genuinely care about and are interested in doing. From there, you can go ahead and proceed with developing your vision and turning it into a viable plan.


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How Can I Develop my Vision ?
Developing your vision will happen a lot more when you are in the process of turning
it from a vision into a plan. For now, however, an effective thing to do is sit with the vision and brainstorm. Get really creative with this and take some time considering all areas. Write down any way you could be innovative and evolve your vision into something greater.

This will help you immensely when it comes to turning it into a plan and outlining where and why you are going to be most successful. At this time, there is no need
to consider what is “reasonable.” Play around with ideas and have an “anything goes” rule for what you come up with and write down.

The more you flex your imagination now, the more unique your business idea may become. In many cases, this results in a business owner or an entrepreneur being left with an incredibly innovative idea that sets their business apart from others in a major way. Many business owners even experience massive success as a result !

Verifying Your Vision Now that you have your vision and idea down, it is time to begin discovering whether or not it can actually make you money. After all, you do not want to invest your time, energy and resources into launching a business that is not actually going to generate you any income! In this chapter, you are going to discover how you can test your vision and ensure that it is one worth pursuing.

Is the Timing Right? Timing has a lot to do with whether or not a business will be successful. Many people say “there is nothing better than an idea whose time has come.” This is exactly what you need to consider when you are starting your business.

You need to make sure that when you officially hit “launch” on your idea, the world is ready to receive it. For example, many people who went into business in the mid-1990s had massive success in having some level of an online element added into the business. However, the internet was still in its infancy at that time.

This means that anyone who was trying to run an exclusively online business would likely fail as there was simply not enough traffic for them to succeed.

An exception to this rule would be Amazon, which was an exclusively online company  launched by Jeff Bezos in the mid-to-late 1990s, and is now one of the most successful companies in the world. Still, the majority of companies that tried to operate exclusively online back then did not realize a high rate of return.

Unless the owners were willing to pursue it at all costs and ride it out until it became successful, there was little hope for success. Nowadays, the online element of a business is arguably one of the most important. That is of course, depending on what business you are running. Still, even businesses that are not run online in any way whatsoever are still known to benefit from having an online presence.

This is because virtually everyone hangs out online and it is one of the easiest and most cost-effective ways to get directly in front of your audience. If you are not online, you are certainly not taking advantage of one of the most useful tools available to you. This means you are likely not making as much as you could be.

As you can see, timing meant a lot to people who wanted to run an online business.
A few started right away and of those, very few actually made it in the long run.
For those who had the dream and waited, though, they are now living at the most ideal time to be getting online and launching a business. By waiting until the idea’s time had come, they significantly increased their likelihood of success overall.

Are You Willing to Do Whatever It Takes ?
As you read in the previous section, the exception to that wait-it-out internet rule,
was Jeff Bezos who runs Amazon. This was not because he was lucky or did anything differently. In fact, everything he did essentially had the odds stacked against him.

But, because he was willing to pursue it no matter what, he was able to generate
a massively successful online company. The same goes for you! No matter what
you are seeking to pursue, you need to ensure that you have what it takes to make
it successful. You should be willing to go all in. Business is not known to be easy.

People who want it to be easy are employees, not business owners. Sure, there are many great freedoms and benefits that come with being the owner. It’s anything but easy, though, especially in the beginning when you are either completely alone or surrounded by only a limited number of other people sharing your vision. If you want
to know if your idea is going to be successful or not, consider what lengths you are willing to go to in order to actually make it a success.

Are you willing to pursue it at nearly all costs ?
Or are you only doing it because you want to make money and be an entrepreneur ?
If you are not willing to suffer to some degree to make your business a success,
there is a good chance that you will not make it over any of the hurdles you have to face as a business owner.

And that’s extremely important-especially early on-in the life of your business.
This does not mean that doing business is going to be some massive burden.
In fact, it’s typically quite the opposite. The majority of business owners will tell you that even though it can be an intense struggle and far more challenging than they
ever anticipated, the journey of owning your own business can be deeply rewarding.

This is even truer when you pursue something that you are genuinely passionate about. Are Other People Actually Interested In It ?
Finally, if you want to know if your business will take off, consider whether other people will actually be interested in it. As you probably know, a business without customers is no business at all. You need to pay attention to what other people are interested in.

This will also help you determine the timing.
Going back to the internet business industry: just twenty years ago there was nearly no market there. This doesn’t mean that no one was ever going to be interested in shopping online; the time simply had not come and it was not something people were interested in yet. Pay attention to other businesses, and to trends that exist in society.

Often, if you listen around you can hear whether or not people would actually be
interested in what you have to offer.
If the answer is no, you may want to hold on to that idea for a while and let it percolate.
Or, you may wish to pursue something more solid and likable
by the public in the meantime, letting the other idea sit on the back burner and wait
for its time to come.

From Vision to Action Turning your vision into an actionable plan requires a few steps.
In this chapter, we are going to explore what is needed in order for you to transform your great idea into a business. If you’re ready, let’s begin !
Research The first step to turning your vision into an actionable plan is researching.
Now that you have a brilliant idea that you have thought out,
it is time to create something with it.

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You want to research everything from the best structure to pursue,
to your target audience. You are going to learn more about each of these elements throughout the rest of the book, but for now, you need to research enough to make a viable business plan with. You will learn more about business plans in the next chapter.

Essentially, you want to know everything that you can about your business so
that you are able to have a clear idea of what you’ll be doing. With diligent research
and education, you can ensure that everything you do nurtures and supports your business growth. The more you know, the easier it is for you to take action and
build your business.

Make a Timeline No plan is successful if there is not some kind of timeline in place for you to create success with. You need to break your start-up goal into actionable steps so that you can ensure you’re on track. What this will look like exactly will vary from business to business, but ideally, yours will look similar.

Set a date for the following parts of the process, plus any others that you decide will be necessary for starting up your unique business: When you want to have your business plan completed by When you want to have enough start-up funds for you to begin When you want to have your final product/service made by When you want to have the structure for sales in place (i.e. rent a storefront, have your website set up, etc.)

When you want to start market research and testing your products/services When you want to begin building the framework of your brand When you want to start marketing your brand to your audience When you want to officially begin selling to your customers These are all activities that need to happen in order for you to successfully launch your business with every element in place and ready to go.

How long each of these steps will take may vary depending on what you are selling, how your business is structured, and more. This part of the planning stages can take anywhere from three months to a year. Some businesses find themselves continuing to nurture their start-up phase for a little over a year.

The best way to determine how long this will take you and make a reasonable and realistic timeline is to check out Chapters 7 to 9, where we discuss the basics of the different types of businesses. This will help you get a better idea of what to expect.

You can also use those chapters to help you determine everything that needs to go on your timeline. Lastly, you might consider doing some internet research on what other companies similar to yours have done, and how long their start-ups took.

Take Action The final step of having an actionable plan is actually taking action! Once you have your action plan in place, make sure that you are regularly devoting time to it. Set aside a few hours a day, or a few hours a week minimum, to invest in working your way through the timeline.

This will ensure that you have plenty of time devoted to getting what you need done so that you can proceed with your start-up. For many, the early start-up process is where they lose interest and focus and begin to backslide. This can be when finances dwindle, attention or interest begins to fall apart, or you simply don’t feel motivated because you are not seeing instant results.

Remember, if the idea was not worth this time and attention, it is not one that you should be taking into start-up phases. If it is, then you need to practice discipline now. Get serious, get motivated, and stay on task! If you find yourself losing motivation, there are many places you can go where you can actually sign up to receive an accountability partner.

This is someone who has no impact or involvement in your business, but who
supports you and offers words of encouragement as needed to keep you on track. Likewise, you offer the same support and encouragement back to them.
This is a great way to stay on track, as well as to expand your options and perception and receive insight from another individual.

Many people develop “business buddies” this way, which can be invaluable to a start-up. If you find you are struggling to stay motivated, looking for an accountability partner may just help. Alternatively, you might consider looking for a mentor. Business mentors are individuals who have launched a business similar to yours, or who have a company that resembles what you want your company to look like.

Your mentor should carry the same values and morals as you do and should have teachable skills that are directly related to the type of business you want to run for yourself. Having a knowledgeable and skilled mentor can help you greatly when it comes to having your questions answered, receiving support in taking action, or otherwise getting through those early stages of starting your own business.

Support, in general, is invaluable. If you find that you need that extra encouragement or support, know that there are many options available to you as a start-up business owner. Make sure that you stay honest with yourself and that if you feel like you do need help, be sure you reach out and get some.

Building a Business Plan  Now that you have your actionable plan in place, you’ll want to start building your business plan! Your business plan is typically made at the same time as you are conducting research. It’s essentially a well-prepared research paper that validates the likelihood of your business succeeding and helps ensure that you are prepared for the next steps in business.

Business plans tend to outline the five-year objective of the business.
You will learn more about each section of the business plan below, and what you need to do in order to complete it. Why You Need a Proper Business Plan A business plan serves many purposes in a business. The two primary purposes it serves: as a guide to keep the business on track, and as a tool to receive investors should they be needed.

For keeping the business on track, the business plan helps to identify goals. It also helps to identify what needs to be done in order for success to be achieved.
It can be used by the business owner as well as managers and other individuals in charge within the company to keep everyone on track.

The business plan can help ensure that every move the business makes and
every step that is taken contributes to the success plan of the business.
Without it, most businesses will operate with no clear goals in mind,
nor on-brand, relevant and effective steps to succeed.

As a financial tool, your plan shows potential in investors what your numbers look like, what your success strategy is, and why you are worthy of investment. It is used as proof that you have done your research and that you are worth taking the gamble on.

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When you have completed it effectively, you can use it to encourage investors to invest
in your company, allowing you to access start-up funds, or investments to get you past
the start-up stage.

Executive Summary
The first part of the business plan you need to develop is the executive summary.
This summary will highlight the key points in your business plan. It needs to be short and concise and focused on the purpose of the plan. Many people believe this is the most important part of the plan because it is used to catch people’s attention, so make sure it is both clear and interesting.

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In this section you want to include:
- Highlights of each of the other sections.
- A brief explanation of your business
The executive summary should be very clear, short and concise.
This may be up to two pages long but should be no longer than that.
Keep in mind that even though this is going to be the first section in your business plan, it should be the last one that you write.

This will ensure that you are writing it with reference to what is actually in your business plan. Writing it last will keep it clear and accurate, and prevent you from having to redo it at any given time.

Business Strategy
The business strategy needs to be fairly brief, but clear in describing the purpose and intent of your business. The easiest way to write this section is to include the following elements within it: Introduction This will be the shortest part of the section.

The entire purpose of it is to introduce your business idea, offer a brief history of your business (i.e. are you a concept, young business, or already established ?), explain the purpose of your business, and offer a description of products and services.

You should also take a moment to explain the legal structure of your business,
as this is an important element of what your business actually is, especially to
potential investors or anyone else who may be interested in seeing your
business plan. Current Position This is your opportunity to let readers know what
stage you are at in your business.

Let them know the life stage you are in, what industry you are in, what state that industry is in (contracting, stable, or growing) and your achievements to date.

Competitive Advantage Your readers will be curious to know why you are an
eligible competitor against the other businesses that currently exist within your industry. This is your opportunity to explain why you have a competitive advantage, who your competitors are, and how your business model contributes to your competitiveness. Growth Plan Having a solid growth plan is important.

This is your opportunity to show your readers where you intend to be, and when.
You should include a growth timeline here that expresses where you plan to be in one year, three years, and five years. You also want to include milestones, which are essentially your objectives and how you can tell that you are achieving them.
Lastly, include your goals.

These will include the goals you have right away within the coming year and within your 3-5-year range. Including all of this information will ensure that you and anyone else reading this business plan has a clear sense of your direction, which makes
it a lot easier to understand where you are going and what your intentions are.

Marketing Strategy Including a marketing strategy ensures that you are clear on what you are doing to actually get your products or services to market. In this section, you are going to highlight these strategies and explain why they work. Your marketing strategy should consist of the four “P”s that are included in any strong marketing recipe. These include product, price, place, and promotion.

You can learn more about each respective one below.
Product Begin by explaining why your product or service is needed in the first place. What need are you meeting for your target audience ?
How is your product meeting this need ?
You should also take a moment to explain why your product or service is competitive against others that already exist in the market.

Price Take a moment to explain what price point you have your product or
service at, and why you have chosen this one. This doesn’t need to be long,
but providing a strong statement as to why you have chosen this will ensure
that you and anyone else reading your business plan understands that thought
has gone into your pricing structure.

Place This is your opportunity to express how you are getting
Your products to the market. Where are you selling them ?
Are they going in a storefront ?
Are you selling them online, or through infomercials ?
Explain what you are doing to get your products to the market,
And be sure to explain why this is the most efficient method available to you.
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Give your reader an idea as to why you have chosen this route.
Promotion Lastly, explain how you are going to create connections and relationships with your target market. What will you do that will have people paying attention to you, your brand, and your product ?
How are you going to ensure that people hear about you and that they are actively interested in purchasing what you have to offer ?
This is where your marketing materials and content comes into play.

Be sure to give it some thought, as this is the actual process of connecting
with potential customers and you want to make sure you are doing that effectively !
Operational Plan This section needs to give a general overview of how you are going to operate your day-to-day operations in your business over a prolonged period of time.

This should include what you are currently doing, as well as what you project
that you will need to be doing in 3-5 years’ time to ensure that you stay up-to-date
with operational requirements. The things that should be included in this section include day-to-day operations, facility requirements, management information
systems and information technology requirements.

This means that you ensure that everyone understands what you are currently
doing as well as what you project you’ll be doing to keep your business operating.
Here is what you need to include for each subject:
Day-to-Day Operations Here, you want to make sure that your reader has a general sense of what is required to operate your business on a daily basis.

Include information such as your hours of operation, whether or not your business is seasonal, who supplies your business and what their credit terms are, and anything else relevant to your day-to-day operations. Facility Requirements Here, you need to identify what you need in order of physical space.

If you require a physical landmark for your business, be specific about what size and location you need to be in now, and what you project you will need to be in when you reach your 3-5 year milestone. If you are currently holding any lease agreements or supplier quotations, you will want to include this information in your appendix later on and cite it here. If there are any special requirements you have, or licensing specifics, include this in your appendix as well.

Management Information Systems
Any business that has customers, needs a strategy for management. Your management information systems include how you are managing customers and accounts, as well as how you are managing stock if you have any. In this section, include any information relevant to how you are managing this information. If you have quality control measures, this should be included here as well.

Information Technology (IT) Requirements If you have any IT systems you are using
for your business, which virtually every business does, you want to include it now.
It is important to indicate here if you are using a consultant or if you have an IT
support service that you use. You should also include outlines to any planned developments you have in your IT department.

Strengths, Weaknesses,
Opportunities and Threats Analysis
The strengths, weaknesses, opportunities and threats analysis is often known
as the SWOT analysis in business.
This analysis is essential when you are planning
a business, as it provides your potential investors with the assurance that you are being realistic about these four key elements.

Even if you do not plan in asking for financial support right now, having the SWOT analysis is still an important part of completing your business plan.

It allows you to get realistic with what you are up against and how you can secure your success in the business world. When you have a proper SWOT analysis, you are better able to make decisions for your business and plans for its future. It becomes easier for you to anticipate any problems that may arise and proactively face them.

It also helps ensure that you take advantage of any opportunities that align with your growth, and see that your business stays healthy and thriving. You should review your SWOT analysis on a regular basis (at least every three months) to ensure that it remains accurate and focuses on where you can grow in your business. It also helps hedge you against potential risks due to threats and weaknesses. Human Resources Plan Businesses typically require some form of employee structure.

The only instance where this may not be true is if you are running a sole proprietorship. At that point, you may still want to consider completing this section, as you can include valuable information as to who, when, and how you intend to hire people when it comes to scaling your business in the future.

In the meantime, your human resources plan needs to discuss short-term and long-term plans when it comes to recruiting, training, and retaining employees. What should be included in this section is a brief layout or chart of the business and where different employees fit in.
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This includes who is doing what, what their position entails, the skills that are
required for each position, how you are training your employees, and anything
else that may be relevant to your employee hiring structure.

For example, if there are any gaps in your team, explain why,
and if you need a budget for training your employees to explain what that is.
This section is actually essential when it comes to potential investors,
but is also a great tool for organizing your business.

It is important that you take advantage of it and structure it accordingly.
Take the time to ensure that whoever is reading your business plan understands that you have taken great care and interest in ensuring that your business is being scaled in a way that is reasonable, realistic, and effective toward your end goals for growth.

Social Responsibility Strategy
A part of running a good business is having good environmental and social practices incorporated into your business. Not only does this give you a great competitive advantage, but it also boosts the reputation and goodwill toward your business.
Pay attention to ethical values surrounding your business and use this section to highlight how your company is going to uphold its social responsibility. This should include those surrounding both the community and the environment.

Some information you can include in this section would be: -
Environmental initiatives and policies your company has- How you are contributing to your community (current as well as in the future)
- Any relevant certifications you have contributing to this(i.e. organic certification, fair-trade certification, etc.)
- Any environmental programs you may become involved in to improve your business
- Where your corporate social responsibility fits in E-Business Strategy These days,
the internet is an essential tool for virtually everyone, especially businesses.

It is a good idea to include some information regarding what your online strategy is for your business. Use this section as an opportunity to outline how you intend to use the technology of the internet to further reach, and interact with your customers, manage and scale your business, and reduce costs that you incur in running it.

You can include information in this section such as:
- Any e-commerce activities you are going to be engaging in (how you sell your products and/or services on the internet)
- Your website and how you intend to develop it to be effective for customer use
- Any hardware or software requirements you have to manage and scale
your business online
- The relationships you have with outsourced specialists who are helping maintain this side of your business If you are using the internet as a means to reduce costs and save money in your business, it may be a good idea to highlight this factor in this section.

Doing so will ensure that if you are seeking investors, they see that you are paying attention to how you can reduce costs effectively in your business.
Financial Forecasts and Other Information Every business plan needs some information regarding cash flow and financial forecasts.

This section is going to give you space to discuss how your business plan
turns into a bottom line. This will include your current standings,
as well as your forecast for the next 3-5 years in business.

It is important, however, to include more expansive detail in the first 12 months
outlined in this section, as this is your immediate future and will provide proof for
what you have forecast in your long-term future. It is important that you think about your plan objectively when it comes to finances, staying clear on what your optimistic, pessimistic and realistic numbers could be.

This ensures that you know what to expect moving forward. It also means that, should you choose to seek financing, you have considered all views and you know how to explain your financial situation to anyone with any perspective.

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In this section, you need to include the following:
- Statements for cash flow – this includes what your cash flow looks like for the first 12-18 months in your business. If you have already been in business for some time, you can use your existing cash flow charts and build from there.

If you have not, you will need to do research and see what the most probable and realistic circumstance is and go from there. This needs to include working capital, sales, and salaries.

- Forecast for profits and losses
– make sure you are clear on how much you believe you will make, as well as how much you will lose given the cost of running your business.
Again, be realistic and clear here to avoid sounding over-optimistic
and unrealistic to potential investors.
- Sales forecast – this is specifically how much you intend to sell.
In this section, discuss what your revenue will look like and why.

As you are writing this section, you need to consider what your purpose for your business plan is. If you are seeking investors, consider what you need from them and include a “request statement” here.

You also need to consider what you are going to do to ensure the security of your investors, how you plan to repay them, and how many different sources of revenue
and income you are earning from your business to repay them as quickly as possible. Business Exit Strategy Every business needs an exit strategy.

While you likely don’t want to be considering the demise of your business, it is something that could happen and having a proper exit strategy will ensure that everything is in place should you come to this point in the future.

This is good for yourself, but also for your investors, should you have any.
An exit strategy allows you to determine how you know when to exit the business,
and what you are going to do in order to leave it behind. If you plan on passing this business on to your children, then you need to incorporate your exit strategy, too.
For example, the amount of time it will take you to effectively train them to take over.

To prepare a strong exit strategy, include the following information in this section:
- When am I going to leave my business?
- What do I plan on doing with my business when I do
(i.e. sell it, pass it on to family, close it and liquidate its assets, etc.) ?
- What will determine the value of the business ?
- After exiting my business, how much money do I need to lead a comfortable life ?
Appendix The final section you need to incorporate in your business plan is your appendix. Here, you want to include all information that is relevant to your business.

For example, if you cited employees in your business, use this as a place to include resumes. You can also include lease agreements, licensing papers, patents, and anything else relevant to your business here.

This is essentially the point where you include the “in-depth” information, should anyone desire to see it when they are looking over your business plan. This keeps it organized and complete, and also ensures that if you approach any investors, that they have access to all of the information they need right away. Including this shows that you are organized and prepared, which is important in any business venture and move.
Part Two: Your Structure

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What Structures Are Available ?
There are many different structures that are used to operate businesses.
These structures describe how the business is run, including the model of the business itself. They also includes information about how each structure is likely to grow, what you can do to scale, and more. It is important that you pick the right structure for your business. Not only will this help with the model of your business, but it also contributes to the legality factor.

Below, you will find information about all of the different legal structures you may consider when it comes to developing and running your business. Sole Proprietorship A sole proprietorship is the type of structure that is used by individuals or married couples who are in business alone. These tend to be the most commonly developed business structures, as they are simple to create and operate.

There are fewer legal controls in these structures in general, which allows greater flexibility when it comes to operation. There are also fewer taxes involved. The primary downside to this structure is that you carry all liability personally. Home Business Some businesses, typically sole proprietorship businesses, may be run as what is known as a “home business.”

This means that the business is run from the individual’s home. Businesses like this have a broad range in what activities are fulfilled. They also still have a certain amount of legal requirements to ensure that protection standards are met. If you are running a home business online, the number of legal requirements you have are low, if any. If you are running a home business where clients will be coming into your home for any reason, you need to look into your local legal requirements.

Most require you to have a business/home inspection done, have your space licensed, and purchase insurance to protect your clients and yourself. Certain requirements will likely need to be met in order to ensure the safety of the general public. General Partnership General partnerships include two or more partners together who have agreed to each contribute to the business. They typically contribute through money, labor, or their skills.

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The two or more individuals are typically not in a marital relationship when they are in a general partnership legal structure. In this structure, each person is included in profits, losses, and general management over the business itself. They typically carry equal partnership rights, meaning they are equally able to receive benefits, as well as to receive liability for the business.

Typically, general partnerships are drafted up with a formal partnership agreement that is written as a contract between the partners. Limited Partnership Limited partnerships are like general partnerships, except that one or more of the partners involved in the structure are considered to be limited.

This means that the general partners are responsible for managing the business itself and are each involved in sharing in the profits and losses that the business realizes. Limited partners will share in the profits, but will be protected against any losses based on how much they have invested in the company. A limited partner will not typically become involved in day-to-day operations for the business.

These structures are generally required by law to be filed with your local government.
Limited Liability Partnership (LLP) Most professionals use this structure.
It is essentially the same as a general partnership, except that partners will not have personal liability should another partner be negligent in their business.

These are really common structures in lawyers and accountant offices, where the individuals are typically at higher risk of negligence and partners want to be protected from someone else’s potential mistakes. Limited Liability Limited Partnership (LLLP) This limited liability limited partnership is typically the exact same as a limited liability partnership, except there are statements in the certificate that indicate the limited partnership.

These structures are also known to be useful in protecting general partners as well as limited partners. Corporation Corporations carry a far more complex system compared to sole proprietorships or partnerships. Corporations become their own independent identity outside of the individual or partners, and therefore the corporation carries its own privileges, rights, and liabilities.

There are typically many tax and financial benefits that come with running a corporation.
However, they may be offset by other things that business owners need to consider, such as the increased cost of licensing fees, or the decreased amount of personal control that the individual has over their company.

Non-Profit Corporation
A corporation that registers as a non-profit, is one that is structured exactly like a corporation. However, the goal is more in the interest of the business than in the profit it
can create. These are typically used to serve public interest, such as charities or otherwise.

If you run a non-profit corporation that also intends to raise donations from public donors, you will likely need to register for a Charity Program as per your local laws.
This will provide you with a charity number, legitimizing your charity and further protecting both yourself and your donors and [customers] from potential fraud.

Limited Liability Company (LLC) Limited liability companies are comprised of
one or more individuals. These companies include a special written agreement
that details the organization of the LLC, assigns interests, includes any provisions
for management, and how profits and losses are distributed.

A company that registers as an LLC is generally capable of carrying out any for-profit business activities, other than banking or insurance. Choosing Your Structure Hearing how many different structures exist can be daunting. It is important that you choose the proper structure for your business.

This ensures that you are able to run it accordingly, that it is legally structured in
a way which protects you and your partners (if applicable) to the maximum extent,
and that the structure serves the best interests of your company. Choosing what structure you need is not as hard as it may seem. In fact, it truly varies from
person to person, and situation to situation.

This is especially true in the circumstances of small businesses or start-ups that are intended to launch into the small business world. In some cases, talking to an attorney may be the best strategy for you to discover what the best structure for your unique business will be. This ensures that your legal interests are covered and that you understand what the laws for your local area are.

Remember, they do vary from place to place, meaning that you need to ensure
that you are clear on what is applicable to you when it comes to structuring your business. This will keep you, your business, and your clients safe.

Outside of the
idea of talking to an attorney to get access to the best information possible, you can also consider the following. Answering the questions below will give you an idea of where you are at in your business. How many individuals are currently involved in running your business ?
If the answer is just you, or just you and your spouse, you might want to consider running a sole proprietorship.
■♡♡♡■

This is one of the easiest structures to form and has the ability to give you flexibility
in how you run your business. If you want to limit your personal liability, you might consider registering as a Limited Liability Company. If the answer is you and other individuals, consider looking into starting a partnership.

This will enable you all to be legally accounted for and protected in your business.
Be sure to work with an attorney to get this set up in the best structure for each of you.
This will determine what type of partnership will best suit the needs of your business,
and the partners involved. If you are looking to build a business with partners and with multiple employees, you might consider starting a corporation.

This allows the business to become its own entity and be supported legally in a way that mitigates any legal liability from each individual involved in running the company.
How much liability are you willing to take on ?
Liability equals risk.

If you are held personally liable for anything, this means you could potentially stand to
lose a lot. In a situation such as a sole proprietorship, for example,
you are on the line with unlimited liability.
This means should anything tragic happen, you are held personally responsible
and have to face any and all consequences as a result.

If you are running a company where the liability is seemingly low or you are protected,
you might consider maintaining your status as a sole proprietorship. If you are a partnership, you might consider becoming limited liability partners to prevent any of you from being held responsible for the other’s mistakes.

Or, you might consider becoming limited liability partners to protect you to the max
against any mistakes in the business in general. Alternatively, if you don’t want to hold any responsibility and you have enough individuals to form the structure, you might consider starting a corporation.

This takes the personal liability load off everyone involved and ensures that you are all protected in the event of a tragic accident. In this circumstance, the corporation would
take all of the risks and you, personally, would take none. This means that the corporation could lose everything, but you are likely going to remain safe (depending on the details
of the circumstance).

What legal structure best serves your business ?
Of course, you need to think about your business goals and objectives.
Naturally, certain structures will serve specific goals that you may desire to achieve.

For example, if you are looking to start a charity, you will likely want to register as a non-profit corporation. Alternatively, if you are starting a business on your own, you may want to start a sole proprietorship. That is unless you want to limit your risk, then you might consider a limited liability company. If you were going into business by yourself, for example, you would not want to enter into any form of partnership agreement, as it would not hold up for you.

Ensuring that you choose the structure which is going to best serve your business now and in the future is important. While you can generally amend what you initially choose, it tends to be easiest to start off in the way that is going to serve your future goals the best. That way you do not have to incur expensive legal fees later on to advance to where you desire to go.
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Once you have considered these questions, you will likely have a strong idea of what legal structure will best serve your business. If not, again, going to speak with a business attorney may be your best opportunity to ensure that you are structured the proper way. It is essential that you choose the proper structure, as this will protect you and set you up for success in the future of your business.

Chptr 7:
Home Business Basics Running a home-based business is one of the most popular types of entrepreneurship at this time. More and more people are joining home-based business opportunities, or creating their own opportunities and using their home as the “head office” of their business. If this is the structure you are looking into, it is important to ensure that you understand what this entails and how it affects you as a business owner.

There are many legal considerations when you are putting together a home-based business.
This includes running your business with a direct sales, multi-level marketing, or network marketing structure.

Ensuring that your legal responsibilities are met and that you understand your requirements to operate a sound business are important. Here is what you should consider if you are starting a home-based business: Pick the Right Structure As we have just discussed, picking the right structure for your home-based business is important.

The majority of home-based businesses are run as a sole proprietorship. However, you might consider running yours as a limited liability company to protect the safety of yourself and your family in the event of a tragic legal battle.

Get Your Business License Your local government will more than likely require you to have a business license. These licenses do not regulate your business, but instead, keep your business legally registered.

The best way to tell if you will need a business license is to answer this question:
Will you need to file taxes for the income you are making ?
If the answer is yes, you need a business license. If Necessary, Obtain an Occupational License Depending on what you are doing, you might need to acquire an occupational license. Certain careers are more restricted than others, and it is important that you are operating with the correct licenses.

For example, if you are providing childcare for other people’s children, you will need an occupational license. To discover whether your occupation requires an occupational license or not, contact your local governing body. They will have the most accurate answers. It is important that you receive accurate information regarding this, as you do not want to be without a license and later find out one is required for your occupation.

Set Up Your Accounts with Sales
Tax Agencies Virtually all businesses that sell products and/or services are required to pay taxes on their sales. You want to make sure that you get these accounts set up right away. Using these numbers will ensure that you receive the appropriate amount of tax from each sale. You will collect this tax and then pay it to the appropriate governing body.

If you are required to tax the products or services you are offering, you may also need to acquire a “seller’s permit,” “resale license,” or “certificate of authority” depending on what you are offering and what your local legal requirements are.

Protect Your Business Name It is essential that you have your business name protected. Unless your business name is literally your own name, you will need to check into it to see
if it is legally protected yet or not. If not, you will want to purchase the rights to the name.

This includes if you are using a name such as “[your name] and associates.” Even just adding additional words to your name may result in legal considerations, so marking your name as your trade name is important.

Consider Your Zoning Restrictions
Because you are running your business from your home, you need to consider the restrictions that may exist for you. Some homeowner associations, strata properties, and municipal zones are not eligible for home business ownership.

Ensuring that you are legally entitled to run your business as per your zone, homeowner’s association, and strata rules is important. This ensures that you are not in violation of any legally governing documents that may deem your business illegally zoned or ineligible to operate in its current location.

It is best to consider this before you start, rather than to start and later realize you are not legally allowed to! Direct Sales Specifics Lastly, if you are operating as a sales consultant for a direct sales, multi-level marketing, or network marketing company,

it is essential that you read the fine print in the legal documents you agreed to upon joining your chosen company. Ensure that you remain within your legal obligations, rights, and restrictions as per the contract you have signed. This will protect you against potentially
D liable for a mistake you make that could be outside of your agreement.

■♡♡♡■ 
Health and Personal Care

Proprietorship Basics Sole proprietorships are the most common form of small business
that exists to date. These are one of the simplest forms to create and run,
and therefore they are highly popular in the small business industry.

Chances are if you have already launched your business, this is the structure under which you are presently running. It is important that you know how to run your sole proprietorship properly, so in this chapter, we are going to explore how you can educate yourself on this business structure and understand what it means for you.

This will give you an idea of everything that you need to do to run your business effectively, within your legal obligations, and otherwise. It will also help you determine whether you want to remain operating as a sole proprietorship, or switch to operating a limited liability company or other choice.

Legal Structure of a Sole Proprietorship
When it comes to legal structures, sole proprietorships are one of the easiest to form, operate, and understand. They also tend to be one of the riskiest. As a sole proprietor, you agree to do business as yourself. This means that you are personally holding yourself liable for any mistakes or mishaps that happen in your business.

Your business is not a legal entity; it is merely a way of legally identifying that you operate a business. You can operate under the name of yourself if you run a sole proprietorship, or you can create a trade name to operate under.

A trade name is a business name that is owned by a sole proprietor.
These trade names do not create legal entities that are separate from the owner. Instead, they simply identify the name of the business. This still identifies you as the owner, operator, and liable party. Sole proprietors use their own name and/or trade names to secure licenses.

At that point, they are ready to operate their business legally. How to Form a Sole Proprietorship Forming a sole proprietorship is generally as easy as declaring you are in business and then operating your business. Legally, you may need to acquire local licenses to qualify your business.

However, there is not a lot else to do. No legal contracts, agreements, or other documents legitimize the business since you are in business by yourself.
No formal filing is legally required if you are going to form a sole proprietorship. Instead, this status is automatic the moment you choose to engage in business activities on your own.

Disadvantages to Sole Proprietorships
Some disadvantages that you are sure to face as a sole proprietor includes the most common: the fact that you are personally unlimitedly liable for the debts, liabilities,
and losses that are incurred by your business.

This means that should anything potentially go wrong, you are going to be held personally responsible, and you may lose all that you own as a result of this.
Another disadvantage is that you cannot approach potential investors to raise capital.

You may be able to take out a business loan from the bank, but you will not be able to engage in investor relationships. This is because there are no ways to sell shares in a business that does not have shares to be sold.

Lastly, if the owner of the sole proprietorship passes away or otherwise becomes incapable of running their business, the business will likely end as well. Sole proprietorships do not carry or retain value in the same way that incorporated businesses do. Therefore they cannot be traded, passed down, or sold. They are strictly held as business operations by the owner, and that is it.

Advantages to Sole Proprietorships
Despite the fact that there are heavy risks and that your business will not carry value on its own, sole proprietorships do have many advantages that they carry. These include things such as the fact that a sole proprietorship can be instantly established with minimal expenses and no filing requirements.

As well, there are little if any ongoing formalities that are required with sole proprietorships. Whereas larger legal structures regularly have to vote on things, work together on coming to decisions, and otherwise consult each other on business activities, sole proprietorships can run on their own and do their own thing.

This makes it extremely easy to run your business your way, in a flexible manner. Another reason is that, if you choose you do not want to, sole proprietors don’t
have to pay unemployment taxes for themselves.

They do still have to pay for their employees should they hire any, however. Lastly, you can freely mix any business and personal assets you have. Therefore, if you purchase a new car, it can be used for both business and personal purposes interchangeably with no legal considerations to be made. This goes for many different assets.

Even though this does carry risk in the liability department, it also makes it really easy for you to operate a business fluidly alongside your lifestyle. Tax Considerations There are some tax considerations to think about when it comes to running a sole proprietorship. Because you and your business share a single identity, the taxes you pay are extremely simple.

Rather than having to file multiple tax reports, you can simply fill out the personal income report. The page you fill out is simply a self-employment report. This is an extremely simple report to fill out, and it makes filing your taxes incredibly easy. As well, you will not owe any personal unemployment tax because you are not required to pay this as a sole proprietor.

(You are, however, required to pay the unemployment tax of your employees.)
Legal Implications One thing you really need to consider when it comes to running a sole proprietorship is your legal implications. For example, if you are sued, you are being personally sued since you are not separate from your business.

This means that your own assets can be held for any implications you may encounter.
For instance: say you take out a loan so you can afford to run your business. Then, for some reason, you default on the loan and are unable to repay it. Your own personal assets such as your home or car could be used as collateral to repay the loan.

This can result in personal losses because of a loss to your business.
Another circumstance to consider
-even though it can be a challenging one
-is a sudden tragic event.

For example, say as a result of an accident within your business, someone
is injured or killed. You would be held personally responsible for this.

This means any legal consequences that are served as a result of this experience
would be given directly to you, and not mitigated by your company.
As a sole proprietor, your company can quickly become a legal nightmare for you
if you are not careful. The owner is consistently held personally responsible,
even if the mistake is on the shoulders of one of the employees.

For that reason, it may be ideal to consider choosing a more supported structure,
such as a limited liability company, where you can continue to be the single owner
of the company, but your legal liability is not as risky compared to sole proprietorships.



Ch9:

Partnership and LLC Basics When you choose to go into a more legal structure with your business, the most commonly chosen routes are partnerships and LLCs. In this chapter, we are going to explore the differences between these two structures, and why you might consider them.

LLC as an Individual Since operating an LLC as an individual is so much different than operating it with a partner, let’s take a moment to discuss this option. Running an LLC on your own essentially means that you are running a company similar to that of a sole proprietorship, but the legal structure is quite different. In an LLC, you are operating as a part of a legally recognized company.

Your structure limits your liability but also means that you are legally obligated
to fulfill certain requirements. For example, the licensing and certifications you
must acquire are quite different. Additionally, your LLC could be subjected to different financial structures. Lastly, when you run an LLC, you have to pay yourself from your
business account.

Unlike in a sole proprietorship where you are paid directly, individuals will pay your company and then you are paid out of those funds. If you choose to transition your sole proprietorship into an LLC, it is important that you do so with the assistance
of a business attorney.

This will ensure that you are clearly aware of all of your local legal obligations,
as well as anything that you may need to know in order to run your business legally and effectively. LLC vs Partnership Although the process of forming an LLC and partnerships is similar, there are clear differences between the two.

LLCs are formed in specific localities and are required to file articles of organization with their government. LLC owners are referred to as “members,” and function under what is called an operating agreement. The operating agreement defines the percentage of the business owned by each member, as well as any other questions that are typically based on “what if” scenarios.

Partnerships are businesses that are owned by two or more individuals which are legally identified as partners. Like an LLC, you register your partnership with your
local government. Which partnership structure you choose will heavily depend on
how it varies from the LLC structure, but essentially the partners each become “stockholders” in the company.

There is no stock to sell to potential investors, however, this is the easiest way to explain the division of the company between the partners. The percentage owned by each partner may vary and will be outlined in the partnership agreement.

Each partner involved in a partnership becomes personally responsible for their respective share of the profits and losses based on the amount of the company they own. So, for example, if each partner owns 25% of the company and the company is sued, each partner is liable for 25% of the final result.

The biggest difference between an LLC and partnership comes down to liability.
In a general partnership, for example, each partner is personally liable. In a limited partnership, limited liability partnership, or limited liability limited partnership, as well as in limited liability companies, the amount of liability held by each individual involved in the company varies depending upon the structure chosen.

Choosing Your Partner When going into business, it is essential that you choose a partner whom you will enjoy working with and whom you will be able to work with for a long period of time. Going into business with someone can put a lot of stress and strain on a relationship, so choosing to do so with someone whom you can trust, who is reliable, and who is effective at communicating with you, is going to be important.

However, there are many other things that you need to consider when it comes to starting a business together. When you transition from having an idea with someone to actually starting a business with them, there are some more things that you need to consider. This will help you truly determine whether they are going to be worth going into business with or not.

While the decision is ultimately up to you and technically nothing legally disqualifies a partner, you do want to make sure that you take appropriate action in protecting yourself. Here are some things to consider when choosing a business partner:
Decide If You Actually Need a Partner Before you pick a partner, it is a good idea to decide if you actually need one in the first place.

Signing a partner does come with a great deal of responsibility and additional legal obligations in your business. You need to be certain that having a partner makes
sense. Going into business on your own can have benefits, but so can going into business with a partner.

For that reason, you need to consider the reality of your unique circumstance.
If you feel that having a partner is the best route to go, then carry on reading this chapter! If not, you may wish to revisit the previous chapter and learn about running
a sole proprietorship.

Do you trust this person ?
Working with someone whom you cannot trust will only lead to greater struggles
in the future. Remember, businesses with a partnership have legally binding agreements. Do you really want to be in a legally binding agreement with this person ?
Consider it carefully.

Are you friends ?
Being friends with your partner can be both a blessing and a curse. First off, being friends with someone means that the chemistry is already there. You know that you enjoy their company and that they enjoy yours, and that you both get along well.

You likely also have a good idea as to how you handle conflict in general, as well as with each other. And, because you already know this person, you can get a pretty strong gauge on whether or not they are reliable enough to go into business with.

However, you also need to consider how being friends could complicate things.
Going into business only because you are friends can be edging toward dangerous waters. Consider the personal problems your friend has and how this may implicate
the business. While they may be a great friend, someone with a poor ability to manage their finances, minimal discipline, and a lack of professionalism could result in you going into partnership with a friend who is not reliable.

You also need to make sure that you share the same values and goals in business. Lastly, make sure that they take on responsibility and that they do so in a way that aligns with how you do. Clashing personality types between friends can lead to complications in a business, as well as the potential loss of a friend.

This can be a lot to lose. The same should be considered when it comes to family members. Truly take the time to consider how this relationship could both benefit and implicate your business, and determine whether or not you think you can successfully run your business with this person.

Be objective and realistic.
This will ensure that you protect yourself against potential risks
to the best of your ability. Can You Do A Trial Run ?
If you can, try doing a trial run with your potential partner
Consider doing something work-related for a short period of time, perhaps working together on a nonprofit cause or something else.

Having both of you in a work-related environment at the same time,
handling and facing challenges together is a great way to see how well you both
work together. This gives you the opportunity to see how they react in challenging situations, what their experiences are, how their strengths complement yours,
or how they are as a partner in general.

Doing this can give you a really clear example of what it would be like to work together, potentially making it easier to make your final decision.
Consider This: Partner, Employee, or Consultant ?
If you are already running a business and you are considering bringing someone
in as a partner, consider your motives.
Are you bringing them in as a partner because you cannot afford to hire them ?
Or are you bringing them in because you genuinely believe that they can
benefit your company ?

Take your time and hire someone as a consultant if you cannot afford to hire them as an employee, and have them work with you for a short period of time. It is better to hire someone than it is to give away part of your company in a partnership, only to find out that the partner does not fit with your company despite their qualifications in business.

Consider Your Varied Strengths When you partner with someone, it is always a good idea to consider partnering with someone who has different strengths then you do. This means that you have varied strengths across the board. As a team, this gives you a much higher chance of winning in business.

Rather than having an excessive amount of strength (and potentially clashing hard in certain areas,) you can distribute your strength across the board and each carries the company in a unique way.  Balance the Responsibilities It is important that you agree immediately upfront on how the responsibilities will be balanced between partners.

If you cannot agree, then the partnership may not be ideal. Being able to agree on how responsibility should be distributed and each taking ownership of their responsibilities is important. You do not want to have one partner unknowingly carrying more responsibility because one has decided not to.

This can result in resentment and can quickly unravel any partnership.
Consider Money In partnerships, money can be a major problem between partners.
It will virtually always come up in one way or another, so it is best to be prepared for this early on. Agree from the very beginning how funds will be used, how they will be raised, and how profits will be distributed.

This ensures that the expectations are clearly defined and no one can later come back and feel as though they have been ripped off, lied to, or otherwise taken advantage of. Determine Valuation and Contracts It is important to determine how you will come up with the valuation of your company early on so that, should a partner choose to leave, you are both clear on how the company is valued.

As well, you should have any necessary contracts in place, such as buy/sell agreements, to ensure that each party knows exactly what will occur should they decide to sell their part of the company. Choosing Your Partnership Structure Once you have determined if your partner is the right fit for you, it is time to determine your legal structure. As you know, there are many legal structures you can consider.

The best way to determine your legal structure in a partnership is to go back to Chapter 5 and look at the different types of structures that exist. Then, you should speak with a business attorney about which structure would best suit your mutual interests and needs in business.

When you are choosing your partnership structure, it will largely depend on how much liability you are willing to take on, what the future of your company looks like, what industry you are in, and other aspects. Having the support of a legally trained and educated business attorney can ensure that you and your partner are well-represented and that all of the minor details are ironed out.

To Last Long, Start Out Strong Lastly,
if you want to have a strong partnership that is successful in the long run, you need
to think about all of the legal responsibilities, obligations, and considerations early on. Starting out with clear expectations, proper contracts and agreements signed, and other legal considerations dealt with right away can result in all of the partners being properly represented throughout the life of the business.

When you have proper contracts and agreements in place, it ensures that everyone knows what is expected of them and how the business is structured. This means that if anyone ever wants to leave the partnership, they know how to do so and what is expected of them.

Additionally, if anything were to ever happen where one partner wronged
the partnership or wound up in legal trouble, having your structure and
agreements in place early on can protect other partners from this ordeal.

Starting out strong with all of your legal bases covered is essential to ensure
that there are no troubles endured later on in your business. It may seem somewhat uncomfortable to talk about these dealings, especially if you are friends or family with this person and want to put it on a handshake or good-faith level, but it is essential.

Keeping everyone protected and well-represented is the best way to ensure that everyone within the partnership is legally protected and cared for in the long run.
This can also protect relationships and prevent disputes that may arise from miscommunication or misrepresentation on the legal and official front.

Part Three: Funding

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