According to Score.org, over 600,000 new small businesses were created in 2008. Owning a small business entails significant work and hardship, but it also yields creative freedom and substantial wealth to those who succeed. Aspiring entrepreneurs need to address several critical facets of small business formation.

Research and Business Plan

Select a type of business that coincides with one of your hobbies or passions. Most successful small business owners started their venture out of a labor of love seeking to provide a product or service that is of great interest to them. Study your market to see if other businesses currently exist offering the same products or services as your proposed business. Research pricing in your area to ascertain how much you can charge your potential customers while still remaining competitive. If you envision having a brick-and-mortar location, then research available commercial real estate in your area. Research the cost of goods needed to run your business, and project your ongoing monthly business expenses. Incorporate your sales and expense projections into a business plan ideally encompassing the first three years of operation. Ensure you have sufficient capitalization in order to survive until the business gains traction and becomes profitable. Take advantage of potential financing from the SBA as well as other organizations offering grants for aspiring business owners. According to Newswiretoday.com, 80 percent of new businesses fail because they are undercapitalized.

Business Formation and Initiation

Form a corporate entity with which to operate your business. Different business types have varying tax ramifications, so consult with a qualified tax professional if you do not know the difference between chapter S corporations, limited liability companies and C corporations. Negotiate and sign a lease if you are opening a storefront location. Verify that the operation of your business conforms to zoning and other land use regulations applicable to the location you are considering. Create an online presence for your business utilizing a website, blog and pages on popular social networking websites. Devise a marketing plan; it may include online advertising, direct mail, print and television spots. Obtain all requisite licenses and permits required to operate your business within the locality you select. Make a splash with the grand opening of your business using special promotions, sales and other imaginative ways to create buzz about the arrival of your business.

Source:

Score.org - Small Business Trends

Newswire - Why Businesses Fail

Resource:

IRS- Small Business Tax Center

US Small Business Administration

BusinessWeek - Small Business Resources and News