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September 14, 2019

What To Consider Before Setting Up a Business

When you’re considering setting up a business, you will need to get your priorities straight. It will take an enormous amount of time, energy and focus to start a company and make it successful. In fact, it’ll end up being far more time than you expect. Your personal life will suffer for a while and if you have a significant other, they’ll need to be understanding about the reality because your work/life balance won’t exist again for a while.  

In this article, we cover some other things that are important to think about when starting a new business.

Get the Name Right
Planning to register a company or corporation is easier to do when you know what you want.
Undoubtedly, you’ll need to run an LLC name search to check whether your chosen business name is available in the state you wish it to be registered. 

Also, bear in mind that there are certain requirements with naming conventions too. For instance, a company name cannot be easily confused with one that already operates within the same state. It must have ‘Limited Liability Company’ or a suitable abbreviation in the name too. 

It’s also important that any name selected through an LLC name search doesn’t suggest a link or implied connection to an agency, entity of the state or other body. Also, avoid a name that gives the impression that you’ll offer services or operate in a way that you’re not licensed or allowed to do so in that state. 

Also, note that a name search feature won’t necessarily automatically exclude the above – that’s something to seek advice about. Furthermore, each state has unique rules for LLCs that you should become aware of too. 

Market Size

What is the current market size for the products or services that you plan to offer through an LLC? If you don’t know the answer to this question, then you’re probably not quite ready yet!

It’s better not to go off half-cocked into any business venture. Perform enough research to sensibly gauge the size of the market first. Put together a business plan that lays out what you intend to do with the business, how large the market is, and how you plan to proceed. This type of plan doesn’t need to be extensive, but it’s a useful guide in itself. It also highlights gaps in your knowledge where more information is needed.    

Growth Potential
Think about the growth potential with the market that you’ve selected. Is it large enough to sustain the business if you grab a small percentage of the market share that’s available now?
Is it expected to grow in size over time, or is it a passing fad? While you can make your millions on a passing fad, most business people prefer to aim for building a sustainable business while avoiding short-term crazes.

Also, consider the marketing side. How will you find your first customers? Will you use local advertising, online advertising or another method? It’s important to know how you’ll secure your customers and what the cost of customer acquisition will be. 

While we all like to think about creating a huge business that eventually lists on the stock market, allowing us to cash out part of our stake, the reality is that it’s necessary to start at the beginning. However, when doing a few things right, there’s no reason that a new business cannot see rapid growth in its early years. 

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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