What does it take to start a business? What does it take to start a business in China? I am always trying to learn more myself, because there are an infinite number of situations and types of businesses, and the answers to these questions change depending on the situation.
Just today, I listened to a speaker talking about starting up businesses, and he highlighted several general aspects that apply to all business start-ups. Depending on the type of business and the particular situation, different points will be more or less important. Having talked to so many folks that do not know the basics, I thought it would be helpful to talk through some of them.
There is nothing earth shattering here, but it is a good basic list of things we all have to think through when starting up a business.
Space to Run Your Business — This one is quite obvious. If you do not have a location for the business, you cannot do much. For some businesses, like our cafe, the location is probably the most important factor. A consultant, however, like New Frontier Consulting, may not need anything but a website and a phone line.
Office Equipment, Furniture, Supplies — Think through and calculate the costs of the stuff needed to do what it is you do.
Insurance — You need protection of some kind when the unexpected happens. I appreciated the speaker going beyond our traditional thoughts of insurance, that is, the big company concept. It also includes some personal "insurance" like computer backups. What happens if there is a theft of all your accounting records?
Utilities — What are your costs for electricity, water, and such to run the business.
Communications — All businesses will need some form of communication, whether it be phone, e-mail, fax, or Morse Code. Think through what you will need.
Labor — You cannot do it alone! This is always going to be one of the big costs, and underestimating the need for additional labor is one of the biggest and most common problems.
Raw Materials & Packaging Materials — These details add up, and failing to think through these will cut into your profits. If a cafe or restaurant, like ours, we have to think through the plastic cups for the iced coffee, the paper cups for the hot coffee, and the boxes for the deserts.
Advertising — Advertising on the web for a cafe in Southwest China would not be so effective. How do you let people know about your business, and most importantly, how do you turn them into customers?
Legal, Licenses, Accounting Fees, Visas, Work Permits — In the words of Darth Vader, "Do not underestimate the power of the dark side." In very few situations do we not pay taxes. In addition, in a place like China, this category will involve much more than most of us initially think.
