WANT TO START YOUR OWN BUSINESS,
AND DON’T KNOW HOW???
Ask Yourself
Is Entrepreneurship for You?
There is no way to eliminate all the risks associated with starting a small business. However, you can improve your chances of success with good planning and preparation. A good starting place is to evaluate your strengths and weaknesses as the owner and manager of a small business. Carefully consider each of the following questions.
Are you a self-starter? It will be up to you – not someone else telling you – to develop projects, organize your team, and follow through on details.
How well do you get along with different personalities? Business owners need to develop working relationships with a variety of people including customers, vendors, staff, banks and professionals such as lawyers, accountants or consultants. Can you deal with a demanding client, an unreliable vendor or cranky staff person in the best interest of your business?
How good are you at making decisions? Small business owners are required to make decisions constantly, often quickly, under pressure and independently.
Do you have the physical and emotional stamina to run a business? Business ownership can be challenging, fun, and exciting. But it is also a lot of work. Can you face 12-hour work days, six or seven days a week?
How well do you plan and organize? Research indicates that many business failures could have been avoided through BETTER PLANNING. Good organization of – financials, inventory, schedules, and production – can help avoid many pitfalls.
Many people desire to start their own business. However, they are unaware of the most important ingredient in operating an efficient business. This ingredient is vital to the very existence and viability of the business.
There are three types of people who want to start their own business:
(1)Those who have an idea and never put their ideas into action;
(2)Those who have ideas and say “Let me do this and see what happens”;
(3)Those who have ideas, plan how they are going to transform their ideas into a vision, and implement their vision.
Of the three kinds of people mentioned above, only the type of person in (3) will be successful because he/she has engaged in PLANNING – the key ingredient. As a matter of fact, the Small Business Association (SBA) estimates that 80% of start-up businesses fail in the first three (3) years of operation due to the lack of planning. Therefore, it is crucial to convert your ideas into a Business Plan (action plan) in order for them to produce fruit.
The Business Plan is the foundation of the long-term success of any business venture, and it must be:
- Well-conceived and Researched
- Communicated to All Levels of the Organization
Benefits of an Effective Business Plan are:
- Clear direction for the organization
- A focused organization working together
- Participation of all levels in developing the plan
- Ongoing analysis and improvement
- A benchmark for evaluation
- Forum for idea generation and sharing
Five Basic Components that must be discussed in the Business Plan are:
THE COMPANY
- Short Term and Long Term Objectives
MARKET ENVIRONMENT
MARKETING STRATEGY
- Discuss the products/services offered.
- Identify the customer demand for your product/service.
- Identify your market, its size, and locations.
- Explain how your product/service will be advertised and marketed.
- Explain the pricing strategy.
MANAGEMENT/OPERATIONS
- Explain how the business will be managed on a day-to-day basis.
- Discuss hiring and personnel procedures.
- Discuss insurance, lease or rental agreements, and issues pertinent to your business.
- Account for the equipment necessary to produce your products or services.
- Account for production and delivery of products and services.
FINANCIAL ANALYSIS
- Explain your source and the amount of initial equity capital.
- Develop a monthly operating budget for the first year.
- Develop an expected return on investment and monthly cash flow for the first year.
- Provide projected income statements and balance sheets for a two-year period.
- Explain your personal balance sheet and method of compensation.
- Discuss who will maintain your accounting records and how they will be kept.
START PLANNING TODAY, DON’T DELAY –
You will be on your way to operating an efficient business.
Karmen A. Booker is an Attorney and Business Consultant. She is also the owner of Compu-Perfect Professional Services – a business consulting firm that specializes in providing business services such as business incorporation, establishing limited liability companies, contract drafting and reviewing, etc. (Please refer to her website at www.compuperfect.net and e-mail her at kbooker@victorypress.net)
