A small business is an enterprise that is comparatively small in size, operating in a geographically localized area except for its marketing, employing fewer than 100 employees. It is financed by one individual or a small group of individuals.

Importance of starting a small business

Owning a small business has many advantages. Some of these include:

1. Independence: When you become an entrepreneur, you are your boss. You choose how to run your business and who you want to work with. You have the freedom to do as you wish.
2. Financial Rewards: Starting a small business offers greater possibilities for financial rewards than working for someone else.
3. Control: It allows you to have full control of the total operation of the business. This control is satisfying to entrepreneurs who are driven by passion and creativity and know what they aim to achieve. 
4. Dignity: Starting a business offers you the status of being the one in charge. You are called a boss and you take pride in what you do.
5. Opportunity: Entrepreneurship helps to create opportunities for people to contribute to the society and local economy. 

Challenges to starting a small business

Starting a small business has its unique challenges, big or small. These include building a brand, developing a solid customer base, or hiring the right people. Some small business challenges include;

1. Client Dependence: A small business should not rely on a single client. Having a customer who is ready to pay well for your products or services is a good thing but in the long run, the customer may not require your product and thus will leave you handicapped. It is important to diversify your customer base and be loyal to them. 
2. Money Management: In a small business it is important to have a business management plan to help you focus on business operations. Whether you have so much capital for your business or not, if you do not have a business budget, you might end up using your money on things that are not necessary for your business. Money management is an important practice every small business should have.
3. Balancing work and life: Starting a business requires a lot of work, time, and pressure to reach goals. Small business owners find themselves stuck when it comes to growing their business, they spend long hours for fear that their business will fail if they take a break. This leads to fatigue and can lead to making wrong decisions for the business. Finding a balance between your business and personal life is an important challenge that needs to be conquered early in the business process.
4. Sole Dependence: A business that cannot operate without the owner is due to fail. These are because one might get sick and cannot handle business operations, if the business is only run by one person then the business will have to stop. A small business should consist of two or more persons running the business operations so that a business can continue even in their absence.
5. Financial Challenges: Funding helps increase the ability, efficiency, and quality of business resources. Without enough finances to grow a business, the business might fail. Businesses can get funding or grants for their business through different sources, like bank loans or grants. Finding the right one that will work for your business will help in starting your business.

How to start a small business, the full process

• Identify your business idea

There are a lot of small business ideas one can choose from provided that you have the experience, training, and skills necessary to start it. If you plan on running a drop shipping business, take the time to research drop shipping to help you to understand what you are going to do. 

• Test the market

Can you start your business as a side hustle? This allows you to know the risks and returns that come with the business you choose. Knowing this will allow you to understand whether you can succeed in it or not.

• Decide which platform you will use

When starting a business, the critical part is putting yourself out there for people to know what you do. Deciding a platform that will best sell your product or service will help provide visibility for your business. Other platforms you can use to help in your business management like accounting, to-do lists, project management, and other tasks.

• Create a business plan

No business plan? No business. Every new business should have a business plan, this will not only help you achieve your goals but will also help your garner investors for your business.

Related: Business Budget Template.

• Decide between LLC and Sole proprietorship

There are two legal structures available for small businesses; these are limited liability corporations (LLCs) and sole proprietorships. LLC is more complex than a sole proprietorship, in LLC members can include individuals, corporations, and others. While sole proprietorship businesses are owned and operated by one person, it is a simple business structure where sole proprietors are responsible for their business.

• Create a business account

Once you have a legal business, you need to open an account specifically for your business. This will help you separate personal funds from business funds and understand the cash flow of the business. 

• Understand if your business can work from home

If you can run your business from home, then consider it an option. It will also help you save costs that are intended for setting up a business place. 

• Set up your space

Whether you run your business from home or not, set up a space or office for your business. If you work from home, set up a corner of your house for business purposes, and If you work away from home, set the space up to fit the business that you run. This will give you a business image especially when you have investors visiting.

• Start to work!

You have put in so much work to get started, but that is only the beginning. Running a business is hard and you are bound to experience difficulties especially if it's something you have not done before. Entrepreneurship pays off, with time and consistency. 

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If you find this article helpful, you might also want to know how you can create a great workplace culture for a small business. 

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