Ever since the advent of information technology, IT-based businesses have grown in numbers and have shown exponential growth. A big percentage of active and upcoming start-ups are all IT-based businesses.
Companies like Apple, Microsoft, and Facebook aren’t just IT companies. They project an inspiring image of the middle-class rising above their financial setbacks, solely by the power of their passion for IT and one revolutionary idea that changed the world forever.
The idea of owning an IT-based company is very attractive. But IT-based businesses are high-risk investments. They require a large starting capital and are highly susceptible to failure because the market is over-saturated by IT companies offering a variety of services.
But fret not! If you are an entrepreneur looking to build a legitimate business out of your passion for IT, look no further than this step-by-step guide to starting an IT-based business from scratch.
1. Determine What Services you Want to Offer
Before starting your company, you need a suitable business plan. To make an effective business plan, you need to decide on what type of services you want to offer.
Primarily, there are two broad categories of services that IT-based firms offer: General services and Specialized services
Through general services, you can offer a wide range of services to a variety of clients. This could include everything from hardware fixes to specialized software installations – basically, everything that a client might need for their computers.
Specialized services, as the name suggests, provide specialties such as data management/recovery, cloud computing, and cybersecurity to a narrow range of clienteles.
2. Make an Effective Business Plan
A business plan is basically a road map of your company. It includes the objectives of your company, the services you will offer to achieve those objectives, and the time you think you’ll need to accomplish those objectives.
A business plan is your mission statement. It guides the various departments in your company to function according to the vision you have for the start-up.
3. Register your Company as a Legal Business Entity
Primarily, there are 4 types of business structures you can choose from:
You are the only owner of your enterprise. You will own the company and all its intellectual properties. You will also pay all the taxes. This structure works for small businesses and is not advisable for IT firms.
This structure is ideal if you’re working with multiple partners. Through this arrangement, you and your partners will own the company and its intellectual properties. Each partner will pay their taxes individually.
This is a complicated arrangement, which is suitable if your objective is to take your company public. There are certain guidelines to follow while opting for this structure.
Limited Liability Corporation
More or less the same as a general partnership arrangement. But in LLCs, partners have the option to be taxed individually or as a corporation.
4. Acquire Appropriate Certifications
Before you can start providing your services, you need to be certified by certain business and trade bodies. This certification implies that a company is qualified to provide the services it’s offering to the customers.
5. Hire Working Personnel
The next step is to hire a talented, driven, and efficient workforce for your company. A company cannot function without its workers. So, workers need to be picked carefully after challenging aptitude tests, and multiple rounds of interviews.
Your company can also conduct a trial run for them. During this trial period, the workers get an idea of the work that is expected of them, and you can get an impression of whether they are a good fit for the role.
During the initial stages of the company, hire personnel that is absolutely necessary, the rest, like customer care, for example, can be outsourced. Once your company grows, you can focus on expanding and hiring more.
6. Get Necessary Insurance Coverage
Businesses need numerous insurance coverages like commercial property insurance, general liability coverage, product liability insurance, vehicle insurance, business interruption insurance, and workers’ compensation. These coverages are necessary for the protection of the company, its equipment, its products, and its working personnel in the event of theft, natural disasters, on-site accidents, product liability, and claims of negligence.