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Tips for Small Business

Business Startup motivation

 

How to start a small business

Most entrepreneurs are not adequately prepared to go into business.  While they have the motivation, desire and talent, many have not taken time to properly investigate and research the business they are interested in starting.

Similar to the game of chess, success in small business starts with decisive and correct opening moves. And although initial mistakes are survivable, it usually requires skill, discipline and hard work to regain the advantage.

Reasons to Start a Business

Before starting a small business, list your reasons for wanting to go into business. Whatever they are, use a specific and systematic approach to build a plan from which your success can be evaluated.

Some common reasons for starting a business are:

  • You want to be your own boss.
  • You want financial independence.
  • You don't work well with others.
  • You dislike policy and procedures.
  • You want creative freedom.
  • You want to fully use your skills and knowledge.

      

    To determine what business is "right for you," answer the following questions:

    What do you like to do with your time?

    What technical skills have you learned or developed?

    What do others say you are good at?

    Will you have the support of your family and/or spouse?

    How much time do you have to run the business?

    Do you have any hobbies or interests that are marketable?

      

    The next step is to determine what niche your business will fill.

    The following helps you to answer that question.

    Is your idea practical, and will it fill a need?

    What is your competition?

    What is your advantage over existing businesses?

    Can you deliver a higher/better quality service?

    Can you create a demand for your business?

      

    The last step in your model is the pre-business checklist. The following are questions you should answer. Write down your responses to each question before developing the plan.

    Describe the business you are interested in starting.

    What services or products will you sell?

    Where will you locate?

    What skills and experience do you bring to the business?

    What will be your legal structure?

    What name will you go by?

    What equipment or supplies will you need?

    How will your business records be maintained?

    What insurance coverage will be needed?

    What financing will you need?

    What are your resources?

    How will you compensate yourself?

      

    From the checklist, start to organise your business plan.

    It is recommended that you break down the plan into several components.  This allows you to work on several sections at a time or as information is received. The following summary should serve as a guide for this process.

Business Plan Outline

Introduction

  • Give a detailed description of the business.
  • Explain the type of business.
  • Discuss the ownership of the business and the legal structure.
  • List the skills and experience you bring to the business.
  • Discuss the product/service offered.
  • Discuss the advantages over your competitors.

      

Marketing

  • Identify the demand for your product/service.
  • Identify your customers and their location(s).
  • Explain how your product/service will be advertised.
  • Discuss how your product/service will be delivered.
  • Explain pricing strategy.
  • Explain your source and amount of initial equity capital.
  • Develop a monthly operating budget for the first year.
  • Provide three years of projected quarterly balance sheets and profit or loss statements.
  • Provide monthly cash flow statements which tie to other statements provided for a two-year period.
  • Discuss your break-even point.
  • Explain your personal balance sheet, and method of compensation.
  • Discuss how and who will maintain your accounting records.
  • Provide "what if" statements to demonstrate alternative approaches to addressing any negative which may develop.

      

Operations

  • Explain how the business will be managed on a day-to-day basis.
  • Discuss how you will hire your employees and discuss personnel procedures.
  • Discuss insurance, lease or rent agreements, and issues pertinent to your business.

      

    Once you have completed your business plan, review it with a friend or business associate. When you feel comfortable with the content and structure, make an appointment to review and discuss it with your banker. The business plan is a flexible document that will change as your business grows.

How To Get More Information

Information is power!  Make it your business to know what business information is available, where to get it and most importantly, how to use it. Sources of information include:

U.S. Small Business Administration

  • SBA District Offices
  • Small Business Development Centers (SBDCs)
  • Service Corps of Retired Executives (SCORE)
  • Small Business Institutes (SBIs)

      

    Consult your telephone directory under U.S. Government for your local SBA office or call the Small Business Answer Desk at 1-800-8-ASK-SBA for information on any of the above resources. Also, you may request a free copy of The Small Business Directory, a listing of business development publications and videotapes, from your local SBA office or the Answer Desk.

    Other Sources:

    State Economic Development Agencies

    Chambers of Commerce

    Local Colleges

    The Library

     Manufacturers and suppliers of small business technologies and products.