Starting A Business

Business Plans

SBOCTeam — Fri, 19 Sep 2008 17:21:00 GMT

Do I Need One? How Do I Go About It?

By Christopher Freeburn

You're ready to take the plunge. You have a good idea for a new business. You've done the requisite soul-searching and determined that owning your own business is the thing for you. You've spent some time researching the idea and you've figured out where you will locate the business, who your customers will be and what sort of market exists for the business. Now it's time to sit down and create a real business plan.

Benefits of a business plan
There is no understating the value of having a properly written business plan. A business plan helps to clarify the challenges you will face when trying to get your business off the ground. It helps you anticipate problems and obstacles in advance and thus work out solutions before you actually run into trouble. It allows you to make a reasonable estimate of how much money you will need to get things going and to keep them going through the early days. A well-researched plan can give you a handle on how much revenue to expect and how to target your business's promotional efforts.

Business plans are not for your eyes alone, however. If you need to borrow money to get your business started, having a professional looking business plan is crucial. "You want to demonstrate to any potential lender that you are serious about your new business and that you have a good idea of what running it will entail," says Martin Lehman, counselor at the New York chapter of the Service Corps of Retired Professionals (SCORE). By providing potential lenders with a well-drafted business plan that deals honestly with potential expenses and problems and demonstrates that you have done the necessary market research, you greatly improve the chances of landing that loan.

Anatomy of a business plan
In general, most business plans follow a basic format.

Executive summary: The purpose of the executive summary is to define the business-what it does and why you are the best person to run it. The summary should be no more than a few sentences, a paragraph at most. The idea is to convey your business's basic activities as concisely as possible.

Market Research: Follow the executive summary by making a case for the viability of your business in the marketplace you've chosen. Is there enough consumer demand to keep your business going? Are there enough potential customers in the given area in which your business will operate? What are the costs of getting the business started? What sort of revenues can you expect in the first year? What will be the cost of rent, utilities, office supplies, equipment, and materials for your products or services? Are there any competing businesses similar to your own in the same area? How does your business differ from them? Government publications, industry publications, trade groups and local chambers of commerce are excellent sources of demographic and marketplace data that you can use when compiling your research. Be as realistic as possible.

Business Outline: Here you will sketch the anatomy of your business. Identify your management structure, supply chain, and operations. "Be as detailed as you can," advises Lehman. "This is the time to work out fundamental questions about how everything in your business will work." Ask yourself the basic questions. Where will your business be located? Will it be a sole proprietorship, a partnership or a corporation? Who will be the owner? Are there employees? How does it provide products or services to customers? Who are the suppliers? "Iron out ownership and decision making roles ahead of time," advises Lehman. "Who gets the final word on things? If there are other people involved in the business, this is the time to figure that out." If there are partners or employees already in place, make sure that their duties and powers are well defined.

Marketing: The business plan should make clear exactly what you are selling and how you plan to let potential customers know about your business. Detail any advertising plans and their likely cost.

Cash Flow: How much money will your business need to get started? How much revenue can you expect from operations? This is an extremely important part of the business plan, and the one that requires considerable research and attention. Try to estimate, as best you can, exactly how much it will cost to keep things going for the immediate future and how much revenue you think your business can reasonably gain. "This can be really difficult for the first time business owner," Lehman warns, "If you don't have an established track record to draw on, you are going to have to make an educated guess. This is where your market research becomes essential." Lehman says that the biggest mistake new business owners make is being too optimistic with their revenue projections while underestimating costs. "Then they find themselves stuck with higher than expected bills and too few customers and they can't afford to keep things going," he says. It's better to err on the side of pessimism when estimating costs and potential revenues. Potential lenders or investors appreciate a little pessimism in financial projections since it indicates a more realistic outlook on the part of the small business owner.

So You Want To Have Your Own Business

SBOCTeam — Thu, 04 Sep 2008 13:16:00 GMT

By Adducent

Perhaps you need to do something new, a change from what you've been doing or you hope to build the financial security you aren't able to find by working for someone else. Maybe you can't find the right job to suit you and having your own business could be the solution. Whatever the reason; if you have the "itch" to have your own business you have two choices:

Do you start a business?

Do you buy a business?

Why start a business when you can buy one?

A start up:

Has no customers.
Has no track record.
Has no infrastructure.
Has no inertia. Everything is at square one.

There's a lot to learn about starting and running even a small business. Everything required to launch it is on you as the entrepreneur.

An established business:

Has customers.
Has a track record.
Has an infrastructure.
Has inertia. You become part of a business that is moving.

Generally, when you buy a business there is a transition period between you and the former owner helping get you used to the business. And there are usually experienced employees that know the details of the business operations. That help can be invaluable in cutting down your learning curve if you are new to business ownership or to that type of business.

Why buy a business when you can start one?

A start up:

Can be molded exactly the way that you want it.
Starts with a clean slate; no potential for anything in the past popping up that may be a problem to address.
Can easily be a 1-person operation with very low overhead to support.
Has no personnel management or significant administrative requirements.

An established business:

Has a defined business model that you must fit into initially.
Has a history, some of which may be unknown to you as the new owner.
Usually has overhead to support.
Usually has some personnel and administrative requirements.

Also, keep in mind:

It is usually easier to get funding to buy a business; established businesses have better access to capital and more opportunities to raise capital than does a start up business. Many start up businesses can be done on the "cheap" with the entrepreneur putting the effort and their own money into the business to get it launched.

If you don't want to undertake a financial or management burden of any size ... then you may want to start a small, single-person business where you have total control without management hassles and no overhead to support. That might work best if you are a person with a specific skill-set that translates into a service business.

If you want something that is more "turn-key", where you can step onboard a business already moving then you may want to look at buying a business. That might work best if you are more of a "manager" type and want to grow the business into something more substantial.

The above is all food for thought; and going into business requires a lot of thought on your part.

Bottom line it comes down to the one most important deciding factor.

Want to know what that is?

You! The option that has the most in favor and matches your own mindset should be the one you go with.

Remember, having your own business should begin with you thinking through what it is that you want to do, and what best suits you.

Starting a Business - Part II

SBOCTeam — Mon, 18 Aug 2008 15:18:00 GMT

Do I Need a Great Idea?

By Chris Freeburn

You know you want to be your own boss and run your own business. You've thought it through and asked yourself the hard questions and you are sure that being an entrepreneur is not only something that you find appealing, but something that you believe fits with your personality and work ethic. Now you need to decide what your new business will do.

Some entrepreneurs start off with a great idea. Maybe it's an original idea for a great invention, or software application, or even a service that no one else is providing to the public. In many cases, these people are so motivated by their idea that setting up a business to deliver on its promise is almost a natural step.

Not every entrepreneur has a Big Idea first, however. Many entrepreneurs begin with the desire simply to own their own business and then decide what that business should be. Having a bold, radical idea is good-even helpful-but it isn't a requirement for becoming an entrepreneur. Many entrepreneurs get their start in well-established, almost generic types of business like dry cleaning, landscaping, or repair services.

So how do you find the right idea for your business?

Start with yourself

The best place to begin your search for business ideas is yourself. First, take a good look at your own skills and interests. Do you have any specific skills or work experience that could translate into a business opportunity? For example, do you possess a technical education in a particular field (electronics, computer science, or engineering, for example)? Or perhaps you worked in a company that did something you think you can do on your own. If you did and you found that education or experience rewarding, than you may wish to leverage that asset into a new business.

Prior educational or work experience in a given field can also provide more than just knowledge -it can give you contacts with potential customers or experts who can help you launch your business.

More importantly, is there something that your particularly enjoy doing? Could that activity be the basis for a new business? Debbi Fields turned her passion for baking into a multimillion-dollar cookie empire when she and her husband founded Mrs. Fields Cookies in the 1970's. It's always easier to put in long hours building a business when you genuinely enjoy the work.

Look around

Is there something you think is missing where you work or live? Maybe you've noticed that the nearest dry cleaning business is in the next town, or that there is a pressing need for local child-care or dog walking for people who work all day. You can learn a lot about what products or services people in a given area might be willing to pay for by listening to your neighbors. Is there something they continually complain about needing, or not having nearby? If so, that might be the basis for your business opportunity.

The franchise option

If you want to own your own business, but are having difficulty generating an idea on your own, you might want to consider purchasing a franchise. By buying a franchise you are purchasing the right to open a store, restaurant, or outlet of an existing, and presumably successful, business.

A franchise reduces some of the risk of starting a business by yourself because you are purchasing an already established brand name complete with a track record and some level of support and advice from the corporate parent. Franchises usually have chain-wide policies governing pricing, vendors, location, decoration, advertising, and employment policies. Some entrepreneurs, especially first time business owners, find it easier to have all these decisions already made for them. Additionally, many franchisors-though not all-provide training for their franchisees on the mechanics of running their business, which helps further reduce first time-business owner anxiety.

Thousands of franchises-in diverse industries ranging from food vendors to skin care-are available for purchase in the United States and Canada.

However, owning a franchise isn't for everyone. While some business owners like having the details of their décor, prices, and products dictated by a corporate parent, others chafe under the restrictions. If total independence is something you crave, you may want to look for your own idea for a business.

Starting A Business - Part I

SBOCTeam — Fri, 08 Aug 2008 21:14:00 GMT

Is My Personality Right for This?

By Chris Freeburn

Many people dream of being their own boss - of setting their own hours, making their own terms, and having the big office where all the important decisions are made. It's a tempting idea, one nurtured by a national culture that prizes the ideal of the rugged individual who strikes out and remakes the world according to his or her vision. And every year, tens of thousands of Americans launch their own businesses, hoping that their fledgling enterprises might someday become the next Apple or Kinko's.

But creating a new business is a demanding task. It means that you'll be the one responsible for making sure everything that needs to be done gets done - and probably doing much of that yourself, at least at first. The ability to nurture your business through its infancy will require drive, passion and commitment Most likely, it also means a seemingly unlimited number of late nights, few vacations, and constant effort dedicated to nurturing the nascent business through its perilous first few years.

The Entrepreneurial Temperament

Not everyone is cut out for that sort of effort. Nor will every personality flourish in an entrepreneurial environment. "The thing about being your own boss is that you now have to worry about all the things that the other guy who used to be your boss had to worry about," says Boston - based business consultant Jim Sheridan. "It's easy to underestimate just how much work goes into building a new business and just how much of that you'll have to shoulder by yourself as a new entrepreneur."

In addition to making the big decisions, you'll be making all the little ones, too: paying yourself and any employees, making sure the taxes are done correctly, arranging advertising, dealing with customers and clients and suppliers, taking care to see that your business is in compliance with local codes and regulations. Being the owner means the buck starts and stops with you. A sense of personal responsibility and a willingness to work very hard are essential for entrepreneurs, as is the ability to multi - task, says Sheridan. "When you start a business, you need to be able to wear a variety of hats every day," he explains. "One minute, you're the personnel manager, dealing with your employees, the next minute you're a financial analyst looking at the balance sheet, and the next you're the marketing director planning your ad campaign."

Entrepreneurs must also be able to tolerate risk. "You'll be putting more than just time and effort into your business," Sheridan says. "You'll likely be investing your money, or someone else's." Many people use personal savings or borrow from friends and family or banks to open their own business, and a large percentage of businesses do not survive the first five years. "Not everyone is comfortable working with an uncertain income, or borrowing a lot of money when there's no guarantee of success," Sheridan says, adding, "risk - taking is part of the game."

You are your business

Owning your own business is very different from working for someone else. When the average employee leaves the office at 5 p.m., he or she leaves the job behind them and concentrates on family or the night's entertainment. That is not true for the small business owner.

Edward Paulson, author of The Complete Idiot's Guide to Starting Your Own Business, says that for the first few years, you and your new business will practically be the same entity. "There is simply no way to separate the owner from the company in the early stages. Customers write checks to the company name, but they think of themselves as doing business with the founder/owner. After all, when a company is small, there is really only one decisions matter: the owner."

Paulson notes that small business owners tend to treat their new businesses as if it were their own child at first. "Think about it;" he advises, "you will likely spend more time with your business than with your family, all the while working to improve your family's financial security." Be sure you have the commitment to devote the necessary time to building your business. Having a high level of personal energy is important.

Do You Have the Mindset and Skills to be an Entrepreneur?

SBOCTeam — Thu, 15 Nov 2007 14:43:00 GMT

You probably already know that starting a small business requires extensive research and analysis of many factors. But the one requiring the most critical assessment is often overlooked by many entrepreneurs. And, it's as close as the nearest mirror.

That's because wanting to be an entrepreneur is one thing; being one is quite another. You will take on responsibilities and commitments far different from those of an employee, even if you have management experience. It's a challenge that can be exhilarating and rewarding. Unless you're prepared mentally and emotionally, however, it can also be overwhelming.

Before you study financing options and plan store layouts, sit down and conduct a probing interview with yourself to see if you're the right person for the all important job of entrepreneur-owner-boss.

Are You a Self-Starter?
Nothing in business happens by itself. As the owner, you're responsible for everything from establishing your firm's vision to setting the daily work schedule. The fact that you're exploring small business ownership and asking questions is a good sign.

Are You a Positive Thinker?
The moment you become a business owner, you represent yourself, your business and your expectations for success. What you say and do must convey confidence and commitment to moving forward. Employees who sense these qualities will share that determination to succeed, even under difficult circumstances. If you work alone, there will be days when you have to be your own cheerleader.

Are You Disciplined?
Your days of the "9-to-5 routine" are over. Running a small business requires a continuous commitment to quality and detail. You cannot afford to cut corners, miss deadlines or make promises beyond your capabilities. If you plan to run the business from home, you must be able to resist temptations and distractions in order to get your work done.

Are You a Lifelong Learner?
Entrepreneurs who continually seek information, new ideas and sound advice have the best chance for success. Being attuned to market trends and issues makes it easier to adjust products and services to customers' needs and preferences. You're also in a better position to enhance your competitive advantage and efficiency, and address potential problems before they harm your business.

Can You Market Yourself and Your Business?
Some people have trouble with this one because of the negative (and often unfair) connotations associated with being a "salesperson." No business, no matter how good, will succeed without some kind of marketing. The good news is that promoting your business is easier than you may think as long as you know what to do and how to do it. After all, we all enjoy saying good things about ourselves. When you craft and tell your story in the right way, more people will be willing and eager to hear it.

Can You be Objective?
Your ideas and practices may seem "bulletproof," but reality may be far different. Is there really a need for a particular product or service in your area? Are the hours of operation fair to your employees? Is renting equipment better than owning it? A good business owner knows how to examine an issue from many perspectives and understand that strengths and limitations of each.

So how did your "candidate" for entrepreneur-owner-boss do? If every answer was a "yes," your small business dream is on its way to becoming a reality. For areas of concern, the solution may be business counseling, management courses, or a concerted effort to discard some unproductive habits in favor new ones.

Finally, make it a point to conduct regular self reviews. Thinking and approaches that worked in the start-up phase may not be as appropriate for a thriving concern, or if a major market shift occurs. When you work for yourself, you want to be confident the entrepreneur-owner-boss knows exactly what he or she is doing.

Brought to by SCORE "Counselors to America's Small Business" www.score.org