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Steps to Starting a Business - Coggle Diagram
Steps to Starting a Business
Advertising
• Expensive but necessary for business growth.
• Word-of-mouth can help spread information about your business.
• Informing potential customers that you are in business.
Risk
• Risks include customer non-payment.
• Costs for equipment and advertising may not pay off immediately.
• Balance between risk and potential reward.
Steps to Starting a Business
Factors of Production: choose a business structure, learn about laws and tax codes.
Customers: advertise services, make them aware of your business.
Decision: start a business to gain profit, willingness to take risk.
Key elements: expenses, advertising, receipts, record-keeping, and risk.
Expenses
• Purchase of equipment (brushes, paint, etc.).
• Initial expenses may exceed early income.
• It is important to keep all receipts.
Forms of Business
Limited Company (LLC)
• Investors’ liability is limited to the capital they invested
• In case of bankruptcy, assets are sold to pay off debts
Partnership
• Several owners
• Equal capital and authority
• Unlimited liability
Corporation (USA)
• No distinction between private and public corporations
• Registered with the Securities and Exchange Commission
Sole Trader
• One owner (shop, taxi)
• Unlimited liability
Bookkeeping
• Keep records of all transactions (income, expenses, inventory).
• Store all financial documents and receipts.
• Purchase a computer for tracking expenses and income.