So you want to start a business
You have thought about starting a small business, you have an idea, but where do you go next? Planning your business is extremely important for small business success. There is a great deal of work that goes into planning a business. Having a plan will allow you to ensure that nothing is overlooked. It will also give you a clear map of short-term and long-term goals for your business. Finally, it will give you something concrete to take to banks, attorneys, or consultants should you need some help along the way. Keep in mind that starting a business requires flexibility and determination, so be prepared to revise your plan as needed. However, laying out a plan will put you on a path to starting a business of your own.
As you begin to lay out your business plans be sure that you answer the following questions:
What is my product or service and to whom am I selling it?
This question will define your business and allow you to plan for marketing as well as what your business will or will not do. Start small with this. Do not try to offer beyond what you can sustain. For example, you may want to start a bookstore and coffee shop. However, do you have the finances to obtain all of the inventory that you need to open and sustain this business? In some cases you may need to open the bookstore first in order to finance a coffee shop expansion later.
Is there a demand for my products or services? Is this already offered in my area?
Do your research. The Small Business Administration at www.sba.org will provide you with industry outlooks for your area. You may have a great idea, but if no one in your area needs it, you will not be able to sustain a business. Additionally, consider the amount and kind of competition in your area. If you live in an area saturated with restaurants, you will need to be sure that your restaurant is spectacular or unique in order to survive. In other words, if there is a lot of competition, you will need to be sure that you can differentiate yourself from the competitors.
What kind of business do I want to be?
This question is more for legal purposes than anything else. Do you have a partner or are you working alone? Do you want to be listed as a corporation or another kind of company? There are benefits and drawbacks to each kind of business. Be sure that you know what they are because this filing will determine how you are taxed and how liable you personally are for your company. If you cannot decide what you would like to classify your business as, you can view a tutorial to help you decide at http://www.score.org/Legal_Structure.html .
Where will I do business?
This question basically determines whether your business will be a storefront, online, or out of your home. A storefront will give you a physical presence, however it may require a lease and utility payments that are monthly and cannot be easily broken. A home business and an internet business will prevent you from being stuck in a lease, but will reduce the accessibility of your business and bring work into your personal life.
How am I going to handle finances?
This is very important. Begin with how much you currently have to invest into the business. Now, do you need more? If you do not need more financing, set up a potential budget for the first year. If you do need more financing, where is it going to come from? Some people borrow from friends and family while others take out loans or try to qualify for grants. If you are going to take out a loan or attempt to qualify for a grant, you will need to write a business and marketing plan before you approach a bank for a loan. Once you know how much you have to work with, set up a budget. Include bills for a lease if you have one, initial inventory, supplies, marketing, and anything else you might need. Be sure that you are frugal with this budget.
What are my goals for this year?
These may be as simple as breaking even the first year, or as complex as reaching a certain sales goal. Whatever the goals may be, they need to be specific and measurable so that you can chart your progress.
What are my long-term goals?
You may have a dream of expanding your business after a year or two. This would count as a long-term goal. It is important to remember this goal because it will affect your finances. If this is a long-term goal, you as the owner may have to forego profits during the first year because you may have to put any profit directly back into the company in order to expand it. Therefore, know your long-term goals.
A word on Marketing
Marketing is absolutely essential to a successful business. If a consumer does not know that a business exists, that consumer cannot choose to purchase from that business. However, not all small businesses can afford a major marketing plan. It is really up to the business owner whether or not to allot a set amount or a set percentage of sales to marketing. Marketing based on what funds are available will often fail to create an effective marketing plan. You as a business owner must determine your initial marketing strategy and then create a marketing budget. For a small business it is often best to set aside a specific amount for marketing and then switch to the percent-of-sales method of marketing in order to get the business up and running.
A Final Suggestion
Network. Find other people in your area who have been through what you are about to embark on. This will allow you to learn from their success and their mistakes. SCORE is a non-profit organization of volunteers that have experience in the business world. This organization works with small businesses to get them up and running and will meet with people who have an idea or who have already started a business. The Small Business Administration offers a great deal of resources based on general and regional knowledge. Additionally, there are groups dedicated to specific people attempting to enter the small business world. Ladies who Launch is a nationwide network of women who own small businesses, and there are other groups dedicated to networking minorities who own small businesses. Others focus on specific industries. Networking is a resource that will provide you with invaluable support and knowledge. If you cannot find a group, SCORE offers mentors to help you succeed.
After working through all of this, you are much closer to fulfilling your dream of owning a small business. This is not a path for the faint of heart. It takes much determination and many, many hours of work. However, it is possible to reach this dream.
Small Business Administration
SCORE- Counselors to America’s Small Businesses
Ladies who Launch