There’s a lot of planning that has to be done before even starting a business. Here are some aspects that you need to research and think about before opening your doors.
- Select Your Type of Business, and Consider Its Effects on Your Taxes and Liability
There are many types of business entities, and you need to choose the one that’s most appropriate for your industry and tax circumstances. There are 3 main types of businesses; and a brief outline of each.
- Sole Proprietorship. This is the simplest option if you’re the only business owner. You’ll keep all profits after taxes, but you’re also personally liable for all losses and damages.
- Partnership. This allows two or more people to share ownership of a single business. However, partners have potential liability.
- Private Limited Company. This is generally the most common. It’s a separate entity, and is the most scalable structure. On the other hand, though, it is the more complicated to set up.
To learn more about the different types of entities, check out Hawksford’s overview.
- Ask Yourself “Who Is My Competition?”
The answer to this question is critical. It’s important to know who your competition is, how they conduct business and what you can learn from their successes and mistakes as a company. There are many ways to research your competition: word of mouth, Google, conferences. You can also check with your suppliers. A great resource to start with is Inc.com’s article on competitive research.
- Understand Your Target Audience
Different target audiences would want to be reached in different ways. Understanding your target audience is the key to successful marketing; without it, your products will be tough to sell. Who is your product or service targeting, and what unique benefits does it provide? Once you understand that, test different forms of marketing to see exactly what your target audience responds to. For example, if your target is older consumers, traditional advertising is probably your best bet, but for a younger market, you’ll need to get creative and use new media (i.e. YouTube spots, social media posts, etc.). By using a variety of market-research tools from Google, you can get started on defining and marketing to your target audience.
- Choose Your Company’s Name
Before you launch your business, you should make sure someone else isn’t already using that name; it’s also a good idea to make sure your preferred name is available for a website domain. Use the ICRIS Cyber Search Centre to find out if your business name is currently in use by someone else. You should also use WHOis.net to find out if your domain name is already taken.
- Prepare a Business Plan
Your business plan is a roadmap to success. It demonstrates how your business plans on generating revenue, and it outlines what makes your team and its offerings unique and worth an investor’s time and money. It’s also very important if you’re looking to raise money from investors. How you write your business plan will vary according to your industry, so, again, research your competitors and use their plans to shape yours.
- Find Sources of Funding
You may not have the out-of-pocket funds to start your business. Research whether to take out a loan, get certain investors to buy equity, or look into what business grants are available for your business. Hong Kong has some government funds and schemes that may be worth looking into.
- Licensing and Legal Documentation
There are certain legal documentations and licenses you will need to obtain in order to lawfully run your business. After the initial documentation of registering your business, you’ll also need to consider industry- and/or location-specific licenses. For example, if you are a restaurant that will be serving alcohol, you will need a liquor license. For help with finding your business’ license requirements, a good place to start is GovHK’s licensing and permits portal.
As you’ll soon find out, this is just the tip of the iceberg when it comes to starting your own business. But having these 7 aspects in place will provide a solid foundation for you to build from.