How Does a Business Operate: Everything You Need To Know
Each company can establish its own policies and procedures for operation in a document such as bylaws which is in accordance with local, state, and federal law.3 min read
How does a business operate? Each company can establish its own policies and procedures for operation in a document such as the bylaws, provided these rules are in accordance with local, state, and federal law.
As you start to build your business, initial key steps include:
- Familiarizing yourself with the various laws and regulations that apply to your business, including tax and employment laws. It's important to understand the guidelines at the federal and state levels as well as specific laws in your municipality.
- Obtaining the necessary business licenses and permits, which vary by location and industry but may include professional licenses, general business licenses, sales tax licenses, health permits, and/or zoning and land use permits.
- Registering with the IRS for an employer identification number (EIN). If you are a sole proprietor with no employees, you can pay taxes and open a business bank account using your Social Security number. When you become an LLC or corporation, however, you need to file taxes with an EIN. This number is also used to open financial accounts and hire employees.
Creating an Operations Plan
An operations plan, sometimes called a business plan, provides a comprehensive blueprint for running your business. You may not think you need a plan, especially if your business is small, but having one helps ensure that you're moving in the right direction during the critical initial growth period. In addition, if you plan to seek loan financing or investor funding, you'll need to present a business plan to the decision-makers.
The operations plan contains the complete guidelines for running your business. This plan can start small and become more complex as your business grows. Some of the items that should be included in the plan include staffing information, production processes, equipment, technology, location, customer base, marketing plans, potential vendors and suppliers, and other industry-specific notes.
The operations plan should also appeal to investors if you plan to seek funding. For example, describe your chosen business location and the local demographics. What are the terms of your lease? What major equipment do you need to get started? If you're an online-only business, describe how you made that decision.
Supply and inventory management processes should be designed for efficiency and include measures to check your sales and make adjustments accordingly. If your business will engage in manufacturing, providing sourcing, production, and distribution information.
A human resources framework is essential if your company will have employees. What will be the management structure of the business? Do you need specialized consultants? Will you outsource HR or hire a director for that purpose?
Choosing a Location
An ideal location is particularly important for retail businesses that rely on foot traffic and being convenient for visits from customers. If you need a warehouse or office space, it should create a safe, productive, and comfortable work environment. After all, you'll be spending plenty of time at your business location, particularly as you launch. Make sure the space you choose can accommodate all the equipment and storage you need. Once you find the perfect place for our business and sign on the dotted line, you can make delivery arrangements with your vendors.
Marketing Your Business
Once you've registered your business and trademarked your business name, you can begin developing marketing materials in anticipation of your launch. You should seek professional help to obtain an attractive logo, stationery, website, business cards, and other marketing collateral. Well-designed materials will lead others to take your business seriously and increase your credibility. This also contributes to making a good first impression.
You can also focus on networking with other business owners and providing incentives for new and return customers.
Hiring Employees and Consultants
An experienced, trustworthy team of advisers is a must for any business owner. These professionals provide support in areas that are beyond your expertise. You should seek recommendations for an excellent banker, business attorney, and tax specialist.
Rapid business growth will also require great staff. Providing generous pay and incentives can help you attract the most qualified candidates. Start small by hiring only the people you need immediately. Create clear job descriptions and a written management plan.
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