Business Lifecycle

Managing through the business lifecycle: Seed

Turn a great idea into a viable business.

Published: June 02, 2009
Updated: February 15, 2017

Your business starts with a vision: your unique idea for a compelling new product, service, approach, or market. At this point, you may still be a long way from serving your first customers. Yet the decisions you make during the seed stage will shape the future of your business. Take the time now to build a strong foundation for success.

The decisions you make during the seed stage will shape the future of your business.

Five steps to prepare for success

  • Choose the right opportunity. Success will depend on your expertise and your passion, but the market opportunity and the timing have to be there, too. Do your research and pick your moment.

  • Cover all the details. Prepare for all aspects of running a company, from strategy and management to marketing and sales, to day-to-day administration. And be sure to consider all applicable legal and licensing requirements.

  • Devote enough time. Juggling a new business and another job, a family, or simply the rest of your life will be a challenge. Make sure you're ready.

  • Create your business plan. A strong business plan is a key asset for success.

  • Plan your financing. Estimate how much funding you'll likely need to generate revenue and reach profitability. Then consider how you can best secure financing, and start making plans to do so.

Business plans 101

Your business plan is a blueprint for turning your idea into a functioning, profitable reality. This document should describe the essential components of your company, provide a clear roadmap to help you stay on track, and help tell your story to potential lenders or investors. Even if this is a very busy time, don't be tempted to skip this essential step.

A business plan is a unique, living document that evolves over time. Depending on your circumstances your plan might be very simple — or quite complex. A fully built-out business plan typically includes the following information:

Executive summary. Briefly describe your company, management, objectives, and financial plan. Include a description of what your business is, the services it provides, and how it makes money. Also include your marketing strategy, competitive analysis, operating procedures, and expectations about the future, including employees you'll hire.

Finances. Detailed estimates of your future income and expenses are essential. Describe funding sources, provide "pro forma" income projections, and include an analysis of future cash flow. For the first year or two you'll be in business, track these details by month, then by quarter thereafter.

Supporting documents. Include any other important documentation that a lender, investor or partner may want to see, such as tax returns, personal financial statements, contracts, proposed lease agreements, insurance documents, licenses, and copies of letters of intent from suppliers. Also include your insurance declaration page, containing your coverage information, policy forms, and deductibles.

New Wells Fargo Business Plan Center

Discover business plan essentials including a guided tool to create your own business plan, industry and competitive insights, and online tutorials that cover everything from finance to marketing.

Determine your legal structure

The legal structure of your business affects everything from the taxes you pay to the people who make decisions and assume liability for your company. Before you start out, decide what form of business entity to establish:

  • Sole proprietor. An unincorporated company under one individual can be the simplest type of business structure.

  • Partnership. A partnership lets two or more people or entities share the risks and rewards of a business venture.

  • Limited liability company (LLC). Similar to a partnership, however, this structure seeks to minimize the personal liability of individual owners.

  • S-corporation. A simplified corporate structure can help to avert double taxation on earnings.

  • General "C" corporation. A corporate structure can maximize the ability to raise capital, but is often complex to establish and run.1

Action steps

Financial

  • Develop a business plan.

  • Establish business checking and savings accounts.

  • Hire an accountant or set up accounting software.

  • Talk with your banker about establishing business credit.

  • If you plan to accept credit and/or debit card payments for products or services, establish a merchant services account.

  • Secure any appropriate insurance coverage, such as for business property, liability, or workers' compensation.

Legal

  • Seek professional advice to choose the right legal structure for your business, and file any required paperwork.

  • Apply for a business license from the county registrar or other authority.

  • Register your DBA ("doing business as") if this differs from the legal name of your business.

  • Obtain any other licenses or specialized permits you will need to operate.

 


Discover more Wells Fargo resources

Learn how to write a sound business plan that will move your business forward.

Read our article "How to determine if you have a viable business idea." 

1"Choose Your Business Structure." SBA. sba.gov/category/navigation-structure/ starting-managing-business/starting-business/choose-your-business-stru

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